Umbrella insurance is additional liability insurance
. It is often bought as an ad-on insurance policy to one of the regular insurance policies. As the name suggests, umbrella insurance works like an umbrella sitting on the top of your other insurance policy and provide added financial protection if other policies cannot compensate the loss.
For instance, your vehicle damages another vehicle, and you find out that you have to pay far more than your insurance coverage allows. In this case, if you don't have an umbrella insurance policy, where will you to get that money? Umbrella insurance, this aspect of additional payment is easily taken care of and you dont have to worry for it.
Earlier the common belief was that only the rich and elite need to buy umbrella insurance. This is no longer the case now as people have realized that anyone can be sued for anything at any point of time. Umbrella insurance is therefore now popular among one and all as it throws in added protection against losses.
Suppose a man falls on your front steps or the tree that you have on your land falls on a neighbor's house during a storm, you can be successfully sued for damage. Remember every incident that takes place on your property or has something to do with your property is your liability and you can be sued for it. Often it happens a traditional homeowners' insurance doesnt cover these additional losses. Umbrella policies will provide protection in all such situations which usual liability policies can not cover.
Though being being wealthy isn't a prerequisite for needing umbrella insurance, most of the people who fall into this category require it. Reason- the more money you have the more of a target you become for lawsuits. Therefore you have to make an extra effort in ensuring protection of yourself. Umbrella insurance simply does that.
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