Personal Umbrella Policy: Essential Details on Excess Liability Protection

While we introduced the concept of **Umbrella Insurance** in Article 10, a deep dive into the **Personal Umbrella Policy (PUP)** reveals why it is the most critical financial safety net for anyone with significant assets. It provides an extra layer of liability coverage, typically purchased in million-dollar increments, that kicks in when primary policy limits are exhausted.

The Trigger: Underlying Policy Limits

A PUP sits “above” your primary policies (home and auto). Before the umbrella policy pays a single dollar, the liability limits of the **underlying policies** must be fully exhausted. Insurers usually require high underlying limits (ee.g., $300,000/$500,000 on auto and $300,000 on home) before they will issue a PUP.

Broad Coverage Beyond Home and Auto

A PUP extends coverage far beyond basic auto accidents or home incidents. It often covers personal liability claims that your standard policies don’t, such as:

Libel, slander, and defamation (including social media comments).
False arrest or wrongful eviction liability.
Liability claims arising from rental properties you own.
Liability incurred while traveling internationally.

Who Needs It? Anyone whose net worth (assets) exceeds the liability limits of their car and home insurance, as a **catastrophic lawsuit** can put your entire financial future at risk.

Given the relatively low cost of a **Personal Umbrella Policy** compared to the million-dollar protection it offers, it is arguably the best value in personal insurance for asset protection.