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Umbrella Insurance 2026: Extra Liability Protection Explained Your auto and home insurance have liability limits — but what if a lawsuit exceeds them? Umbrella insurance adds $1M-$10M+ in extra protection for a surprisingly low cost. This guide explains what it covers, who needs it, and how much it costs. What Is Umbrella Insurance? Extra liability coverage that kicks in when your underlying auto or homeowners policy limits are exhausted. Example: You're at fault in a car accident with $1.5M in damages, but your auto policy covers only $500K. Umbrella pays the remaining $1M. It also covers claims your base policies don't (libel, slander, false arrest). What Does It Cover? Bodily injury: Medical bills, lost wages, pain and suffering from accidents you cause. Property damage: Damage to others' property. Personal injury: Libel, slander, defamation, false arrest, invasion of privacy. Legal defense: Attorney fees and court costs (often above policy limit). Worldwide: M...