Facing a lawsuit is no fun, especially if you don’t have enough insurance to cover the damages. If someone brings a lawsuit against you, then the compensation they seek may exceed the limits of your liability policies. That's how umbrella insurance helps. It is a policy that provides coverage that exceeds the limits of liability of other insurance policies.
There are several advantages to this type of policy. The first is the additional coverage it offers – usually $1 million or more. The second advantage is it provides funds to cover the cost of hiring legal representation. An attorney is a huge expense, and can cost thousands of dollars. An umbrella policy means the policyholder is not subjected to extra financial stress or the threat of bankruptcy.
Another advantage of an umbrella insurance policy is it offers liability coverage not already covered by auto or home insurance. This is beneficial if you are sued over an accident that happens while you are operating a leased car or boat, and can even cover your legal matters. Say you have $1000 worth of auto liability coverage. You get into an accident, and someone sues you for $10000. The umbrella policy picks up where the auto liability coverage ends.
An umbrella policy puts the policyholder at ease. No matter how much money someone is seeking, you have insurance coverage in place to ease the financial burden.