What is the primary purpose of a personal umbrella policy?

The primary purpose of a personal umbrella policy is to provide limits of catastrophic liability coverage. This type of insurance serves as an additional layer of protection beyond the limits of standard liability policies, such as home or auto insurance. It kicks in to cover significant claims that could exceed those limits, ensuring that the insured is financially safeguarded against serious lawsuits or claims that could threaten their assets and future earnings.

Basic liability policies often have limitations on coverage amounts, which may not be sufficient in the event of a severe accident or incident. In such cases, the personal umbrella policy can provide substantial coverage to help protect against major liabilities like serious personal injuries or property damage claims, thus helping to avoid devastating financial consequences.

In contrast, options covering everyday liabilities, health insurance benefits, or property theft do not align with the specific purpose of a personal umbrella policy, which focuses mainly on extending liability coverage to manage higher risks effectively.