The Walters Agency
Umbrella insurance usually picks up losses that have been accrued after a policy's limits have been exhausted or it covers losses not covered by an original insurance policy. This often takes the form of jury awards for damages, or the legal fees accrued in dealing with litigation relating to the original claim. Simply put, if a large lawsuit is filed against an insured party that is related to a possession of theirs that is insured, and the original policy will not cover or will only cover part of the fees associated with the lawsuit, the umbrella policy will kick in and cover the rest. The policy is usually to the tune of one or two million dollars over what an original policy would cover.
This type of insurance is for anyone that may be held liable for injury in the event of an accident, like a home owner or automobile owner, or in the event that another person's property is damaged by the insured party (or even a pet owned by the insured party). It is also useful to have if you are in any danger or being sued for work-related dealings. For example a journalist can be sued for liable or slander, so an umbrella policy would cover the litigation cost. Umbrella insurance policies can also be purchased to cover instances like false arrest. It can also be used to cover landlords in the event that something happens at a rental unit they own that they are sued over.
The greatest benefit of an umbrella policy is greater peace of mind for a wider range of possible occurrences that most insurance policies won't cover at all or only to a certain point. The cost of litigation can be extremely costly and you don't have to be a millionaire to be the target of it.