Umbrella Insurance (Umbrella Policy)

Umbrella Insurance (Umbrella Policy)

Umbrella insurance provides additional liability coverage for claims that exceed the limits of an existing liability insurance policy. Businesses and individuals purchase it as a separate policy to supplement policies such as general liability, commercial auto liability, and employers’ liability insurance. For example, if a lawsuit results in damages that exceed the limit of a business’s general liability policy, the umbrella policy may pay the portion of the claim that exceeds the underlying policy’s limit, subject to the umbrella policy’s terms and limits. Some umbrella policies also cover liability risks that the underlying policies exclude. See also: Bumbershoot Insurance, Excess Insurance, Underlying Policy, Follow Form, Liability Insurance, Commercial General liability (CGL) insurance.