Umbrella coverage is an excess liability policy that covers over and above the underlying liability in homeowners and auto policies. In other words, if you were to exhaust the liability limits of the underlying auto policy from a severe crash, the umbrella would kick in for all covered costs over an above the auto policy.

Typical umbrella policies have a limit of $1 million or more above and beyond the underlying limits. Take note that the underlying policies (homeowners & auto) must meet minimum limits set forth by the umbrella carrier before an umbrella will be available. Companies that sell umbrella coverage often require a $300,000 liability limit before they will underwrite an umbrella policy.