Legal Definitions - umbrella policy

An umbrella policy is an insurance policy that covers losses that exceed the basic or usual limits of liability provided by other policies. For example, if you have car insurance and someone sues you for more than your policy limit, an umbrella policy can cover the additional amount. It is like an extra layer of protection.

Another example is if you have homeowner's insurance and someone gets injured on your property and sues you for more than your policy limit, an umbrella policy can cover the additional amount.

Umbrella policies are useful because they provide additional coverage for unexpected and costly events. They are often purchased by people with significant assets to protect.