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Umbrella insurance covers you for liability claims that are above the limits of your auto insurance or home insurance policy. It also covers some things that aren’t covered by either auto or home insurance liability, including slander and libel.

However, it doesn’t cover everything, and it’s important to understand what it does and doesn’t cover before you buy a policy.

Key takeaways

  • Umbrella insurance covers injuries to others and property damage you cause when the claim exceeds the limits of your underlying home or auto policy.
  • There are some claims that are covered by umbrella insurance but aren’t covered by the personal liability coverage on your homeowners policy.
  • Umbrella insurance also covers legal fees to defend you in court.

What’s covered by umbrella insurance?

Umbrella insurance covers the following when the damages are in excess of the limits on your home or auto policy:

  • Significant property damage. Your standard auto insurance liability limit may be exhausted if you’re at fault in an auto accident in which you destroy another vehicle and/or other property.
  • Serious bodily injury liability. Your homeowners insurance liability limit may be insufficient to cover medical and other costs related to a guest falling off a balcony at your home or being bitten by your dog.
  • Landlord liability. A tenant might file an expensive suit over an injury sustained while renting your property.
  • Legal fees. If you are sued, umbrella insurance will cover legal fees to defend you.

In addition, umbrella insurance covers a few things auto and home usually don’t:

  • Libel or slander. Lawsuits could result from something that you say or write about another person.
  • Malicious prosecution. You may file a suit against someone and get sued for wrongfully or maliciously prosecuting that individual.
  • False arrest, detainment or prosection legal procedures.
  • Wrongful eviction legal procedures.
  • Invasion of privacy lawsuits against you.

Umbrella insurance offers much higher limits of coverage, up to $5 million or more. Make sure you know how much umbrella insurance you need.

"If someone is severely injured, the immediate medical costs and projected future costs of medical care and perhaps remodeling a home to accommodate the person's injuries could quickly exceed $1 million," says Ronald Moore, a former senior product manager for MetLife.

What’s not covered under an umbrella insurance policy?

Umbrella insurance covers you for liability. It doesn’t cover:

  • Your injuries
  • Personal belongings 
  • Intentional or criminal acts
  • Business losses
  • Nuclear accidents, war or terrorism
  • Contracts that are written or oral
  • Communicable disease transmission

Read the fine print in an umbrella policy to see what coverage is excluded and be sure you understand how your umbrella insurance works.

Frequently asked questions: What does umbrella insurance cover?

Does an umbrella insurance policy cover dog bites?

Home insurance liability generally covers dog bites. However, there are some breed exclusions. If the dog bite damages are covered and exceed your standard policy coverage limits, your umbrella policy will kick in.

Does umbrella insurance cover lawsuits?

Yes, in some situations, umbrella insurance covers lawsuits. Before committing to a particular policy, determine what types of lawsuits are covered by reading the fine print. 

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