Umbrella Policy
An umbrella policy provides additional protection over your car, home, other insurance policies against lawsuits that might be brought against you. If you own substantial assets, you should consider obtaining umbrella coverage to help fend off large lawsuits that you might be brought into.
When you have umbrella insurance, the underlying auto, home, or other invoked policy provides coverage for the first portion of a lawsuit. After the liability coverage in the underlying policy is exhausted, the umbrella policy picks up and continues to provide coverage. You need to have minimum amounts of coverage (usually $500,000 in auto liability and $300,000 in home liability) in order to be issued an umbrella policy and to avoid a "hole" in coverage.
Umbrella policies are usually given in increments of $1,000,000 per incident, and are relatively inexpensive. You need to have a relatively good recent history (3 to 5 years) with regard to insurance claims to be able to qualify for most companies' umbrella products.
Umbrella policies are all-inclusive by nature- that is they cover all aspects of a customer's insurance, much like shotgun covers a wide area. If there is a difficult exposure to cover, such as a motorcycle, a special kind of umbrella called an excess policy can be used to provide coverage on a "rifle shot" basis to provide only coverage over policies desired or covering acceptable risks.
If you are a landlord, consider adding personal injury to your home policy to cover civil lawsuits and tenant disputes. Most umbrellas will "follow form" and continue to pay lawsuits covered by this.