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What is umbrella insurance?
Umbrella insurance is a type of liability insurance that provides additional coverage above and beyond the limits of your primary liability policies, such as homeowners insurance and auto insurance. It can help protect you from financial ruin if you are sued for a large sum of money.
Umbrella insurance typically covers a wide range of liabilities, including:
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Bodily injury and property damage caused by you or your family members
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Slander and libel
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Invasion of privacy
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False arrest & imprisonment
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Employment practices liability
Umbrella insurance is a relatively inexpensive way to protect your assets and your financial future. It is especially important for people who have high-net-worth assets, such as a home, business, or investment portfolio.
Here is an example of how umbrella insurance can work:
A family has a homeowners insurance policy with a liability limit of $500,000. They also have an umbrella insurance policy with a limit of $2 million.
The family's daughter is involved in a car accident and is sued for $1 million for the injuries caused to the other driver.
The homeowners insurance policy covers the first $500,000 of the liability, and the umbrella insurance policy covers the remaining $500,000.
Without umbrella insurance, the family would have been responsible for paying the remaining $5000,000 out of pocket