What is the definition of Umbrella Policy?

An Umbrella Policy provides cover for losses, usually for amounts that are above the limit of a standard coverage of an existing or underlying policy. This is especially applicable to auto insurance policies and homeowners policies.

It may cover for risks that are not covered by a standard policy (which includes invasion of privacy, slander, libel and vandalism), unless a risk is specifically excluded from the coverage. Thus, an umbrella policy provides extra liability insurance, particularly if the insured person or entity is sued by someone who suffered injury or damage to property due to an accident.

Umbrella policies usually involve a deductible, but may prove helpful one the insured is sued and the original policy has already exhausted its limit.

• Insolvency
• Misstatement of Age or Sex Provision
• Modified Premium Policies
• Moral Hazard
• Comprehensive Coverage