A personal umbrella policy increases the limits for individuals with a homeowners, boat, car or motorcycle insurance policy. In the event of a devastating claim exhausting your underlying limits, a personal umbrella provides an extra layer of protection for you or your family.
The umbrella policy serves three main purposes:
- Provides excess limits when the limits of underlying liability policies are exhausted by the payment of claims.
- Drops down and picks up where the underlying policy leaves off - when the aggregated limit of the underlying policy in question is exhausted by the payment of claims.
- Provides protection against some claims not covered by the underlying policies, subject to the assumption by the underlying policy in question is, an umbrella liability policy. An excess liability policy is no broader than the underlying liability policy: its sole purpose is to provide additional limits of insurance.