Umbrella Coverage

Umbrella Liability Policy is designed to provide protection against catastrophic losses. It generally is written over various primary liability policies, such as auto policy, commercial general liability policy, watercraft and aircraft liability policies, and employers liability coverage. The umbrella policy serves three purposes: it provides excess limits when the limits of underlying liability policies are exhausted by the payment of claims; it drops down and picks up where the underlying policy leaves off when the aggregate limit of the underlying policy in question is exhausted by the payment of claims; and it provides protection for situations that would be excluded by other policies, such as when you are accused of slander or libel.

Most people buy an umbrella policy for its excess coverage, including defense costs. It has, however, far greater value as a risk management tool than just excess coverage.