Umbrella Policy — Insurance Claims Definition
Liability
Excess liability insurance that sits above primary policies and may broaden coverage for certain claims.
An umbrella provides additional limits — often $1M to $10M or more — after underlying auto, GL, or employers liability limits are exhausted. It may drop down to cover gaps if underlying coverage is broader, subject to a self-insured retention.
Underlying policy maintenance and notice requirements are strict.
Examples
A serious auto accident exhausts the $500,000 auto liability limit; umbrella pays the next $2 million of a judgment up to its limit.
Common Mistakes
Letting underlying policies lapse voids umbrella coverage. Confusing umbrella with excess follow-form only — umbrellas can have different terms.
