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What is umbrella insurance? Umbrella insurance is basically extra liability coverage. Instead of protecting you from rain, like the name suggests, umbrella insurance is meant to cover any limitations you may have with your existing insurance coverage.

If you’re involved in a lawsuit where the judgement is more than what your auto or homeowners insurance policy covers, the difference would normally have to come out of your pocket. If you have an umbrella policy, though, it will cover the difference and protect your assets.

What does umbrella insurance cover? Like many insurance policies, the details depend on what you sign up for. The are some surprisingly broad situations that umbrella insurance can cover for you. They include:

• Property damage liability – This covers any loss or damage to someone else’s property due to your vehicle, pet, or yourself.
• Slander/libel – If you make an injurious statement that causes someone a loss, your umbrella policy might provide some protection.
• Bodily injury liability – This covers any medical bills another person suffers due to an accident where you’re at fault.
• Legal fees and defense – This coverage almost makes umbrella insurance worth the cost itself. Attorneys can be expensive, and if you’re getting sued, having your legal costs covered can give you some peace of mind.