Our Blog‎ > ‎

What is an umbrella insurance policy? | Michigan Insurance

posted Jan 24, 2017, 9:23 AM by Jason Grubbs   [ updated Jan 24, 2017, 9:24 AM ]
The liability portion of any insurance policy is the coverage that responds if you are sued for causing damages to other people or property.

For example, the liability portion of your auto insurance policy would respond if you were at-fault in a car accident, injured the other party, and were sued as a result.  If the injuries were serious enough, such as an individual being left handicapped for life, the resulting lawsuit could be for hundreds of thousands, or even millions, of dollars.

An umbrella policy is extra liability insurance.
It is designed to help protect you from major claims and lawsuits, by supplementing the liability protection provided by your home, auto, and other insurance policies.  An umbrella policy does so by providing coverage above and beyond the limits of those policies.
Michigan Umbrella Insurance

The way in which this is accomplished is when you purchase an umbrella policy the insurance company will have requirements for how much liability coverage is maintained on what is known as your "underlying policies" - your home, auto, and other insurance policies.  Typically this requirement is $500,000 and you then purchase extra liability coverage in $1 million dollar increments on the separate umbrella policy.

Returning to our earlier example, if you were successfully sued for injuries resulting from an auto accident in the amount of $750,000 then your auto policy would pay the first $500,000 while your umbrella policy would pay the additional $250,000.