What does umbrella insurance provide?

Umbrella insurance serves as an important layer of protection that goes beyond the limits of standard liability policies, such as those found in auto, homeowners, or renters insurance. Specifically, it provides supplementary liability coverage, which is designed to safeguard individuals and businesses against major claims and lawsuits. This can include personal injury claims, property damage claims, and certain tort claims that exceed the primary policy limits.

The significance of umbrella insurance lies in its ability to cover costs that may arise from serious incidents where the primary insurance policies have been exhausted. For instance, if an individual is found liable for a significant accident or injury, the umbrella policy would kick in to cover any expenses that exceed the limits of their auto or homeowners insurance, ensuring that they are not financially devastated by an unexpected event.

In this context, while the other options pertain to specific types of coverage, they do not encapsulate the unique function of umbrella insurance, which is to provide additional liability because it specifically addresses gaps left by primary insurance policies.