Personal insurance policies have reasonable limits on most liability coverages, but in unique circumstances those limits may not be enough, especially if you are sued and must mount a legal defense. There also may also be remarkable circumstances that are not covered under normal liability policies.
Consider a hypothetical in which you cause an auto accident that injures several people. Damage to the other vehicle (or vehicles) exceeds $50,000. Medical bills for the injured total more than $200,000. Furthermore, one of the injured must miss work for an extended time, and sues for $100,000 in lost income. If your liability policy limit is set at $300,000, you have exceeded the total and are responsible for the overage out of your own pocket.
What if a fire at your home spreads and causes damage to other surrounding properties? What if you injure a swimmer while operating a rented boat? What if you cause an accident while travelling internationally? What if a business or high-profile figure sues you for libel or slander for something you posted online? As crazy as some circumstances may sound, incidents such as these do happen. It is times like those when an umbrella policy fills the gaps of any other existing insurance policies you may carry.
