What is a personal umbrella policy?

A personal umbrella policy provides liability coverage above and beyond the underlying liability limits on the insured's auto, homeowners, and (sometimes) recreational vehicle policies. Typical features: minimum $1 million limit, with $2-5 million common; requires underlying policies meet minimum limits (often $250/500/100 auto and $300,000 home liability); covers some claims not covered by underlying policies (e.g., libel, slander, false arrest in some forms); broader worldwide coverage. Premium is relatively low for the coverage amount ($150-$400 per year for $1 million is typical) because it pays only after the underlying limit is exhausted. Umbrella is particularly valuable for: drivers, especially with teen drivers; homeowners with pools, dogs, or trampolines; high-net-worth individuals with assets to protect; and people in professions or activities with elevated lawsuit exposure. Many financial advisors recommend umbrella coverage as one of the highest-value insurance purchases.