Umbrella Insurance Explained — Extra Protection Beyond Standard Policies (2025)

What is umbrella insurance? In this quick guide, we explain how it works, when it kicks in, and who actually needs it. Umbrella insurance provides extra liability coverage beyond your auto, renters, or homeowners policy. • Example: covers damages higher than your auto or home policy limit • Can protect against lawsuits, libel, or slander • Usually $1M+ in coverage, often affordable (a few hundred per year) Who needs it? People with significant assets to protect or a high risk of being sued. Everyday Finance Explained makes insurance and money basics simple. Subscribe for more quick guides on insurance, business, and personal finance.