When looking for insurance, most people want only the basics. Insurance can be expensive, and while it’s important to save money, it’s also important to make sure you have the correct about of insurance to protect yourself and your assets.

Umbrella liability insurance is additional coverage designed to cover gaps left over by your other liability insurance policies. Your home insurance policy, for example, covers you and your family with general liability. Car insurance policies have multiple liability coverages, such as bodily injury, property damage and guest passenger liability. If an accident goes over the limits of these coverages, umbrella liability insurance can cover the rest.

Vehicle Accidents

For example, say you get into a car accident with multiple vehicles. You live in an at fault state and are ruled at fault for the accident, meaning each victim can seek compensation from your car insurance. One car is totaled and one victim ends up in the hospital. Along with possible legal costs all of the damages amount to $1 million. Your liability insurance only covers $500,000, leaving you to pay the remaining balance. With an umbrella liability insurance policy, you can seek compensation for the remaining $500,000 instead of struggling to pay the amount out of pocket.

Home Accidents

Most people think of home insurance policies as coverages to protect the home. While part of home insurance does cover the dwelling in case of a disaster or accident, another part of home insurance is designed to cover your financial accidents in regard to other people. General liability insurance provides compensation for incidents involving bodily injury and property damage of a third party at the home. For example, say you are having a summer barbecue. A few friends bring their children, who are running around the pool. One of the children slips, hits their head and falls into the pool. After emergency services are called and the child is hospitalized, their parents look for compensation for the expensive medical bills related to their child’s injuries.

An umbrella insurance policy can cover any remaining compensation, including if the parents decide to sue for the accident. Umbrella liability insurance can help with the immediate medical bills and following legal expenses if necessary.

As home general liability insurance can expand beyond the home, so can umbrella liability insurance. This insurance can also cover incidents that a family member on the policy causes resulting in bodily injury or property damage of another person.

Commercial Umbrella Liability

There are less personal uses for umbrella liability insurance, as well. If you own a business—whether it’s in a separate property or operates out of your home—umbrella liability insurance can be added onto your business policies. Common policies it covers besides general liability includes:

• Professional Liability: Professional liability insurance concerns accidents of professional negligence. If you offer professional or specialized services, clients can sue for any mistakes you make that cost them financially.
• Cyber Liability: Cyber liability insurance protects a business in case electronically stored sensitive personal information is hacked, damaged or lost.
• Product Liability: Product liability insurance covers bodily injury and property damage caused by a product made or sold by a business.
• Commercial Vehicle Liability: As with personal auto insurance, vehicles used or owned by a business should be insured with liability insurance. Umbrella liability insurance can cover accidents involving the commercial vehicle in cases of bodily injury, property damage, uninsured motorist and more.

A single lawsuit can cost millions of dollars and your basic insurance may leave gaps where you have to pay huge amounts in compensation. Consider an umbrella liability policy to cover your assets.

Also Read: Signs You Need Commercial Umbrella Insurance