What is an umbrella policy

[Shonda Rountree]

I have 5 rental properties in my name. A FB friend mentioned that she has an umbrella policy on properties. Her explanation was vague, so I'm here to ask...What is an umbrella policy, does it replace the current insurance I have on my properties and where can I obtain this policy? Thanks.  

[David M.]

@Shonda Rountree

Umbrella polices provide LIABILITY coverage "over and above" an underlying coverage.  Your homeowner's / landlord policy will provide a certain amount of liability.  In the case of a claim, should the amount exceed that coverage limit, then the umbrella kicks in.

You can obtain the policy usually from your regular insurance company. Usually comes in $1m increments up to $5m. You can get it for yourself and so can LLC's.

The policy premium is pretty cheap since the majority of the risk is covered by the underlying policy.  The "nifty" thing about owning personally is that ONE umbrella policy can cover all your personal liabilities.  So, your auto insurance, primary home, rental properties, etc. are all covered under one relative cheap policy.  Its a good peace of mind.

Hope this helps.  Happy to chat.  Good luck.