Comprehensive protection with umbrella insurance: Extending liability beyond traditional policies

Umbrella insurance is a type of additional insurance policy that extends the limits of liability coverage on an existing policy and increases coverage on other types of insurance, including renters, boat, motorcycle, and home insurance. Umbrella insurance provides an additional layer of protection; for instance, if your home is damaged in a disaster and you file a claim for $1M but your home owner's policy only covers up to $1M, your umbrella insurance would cover the remaining $1M (Kimura et al., 2023; Lawson et al., 2024; Osei et al., 2025).

In many cases, umbrella insurance is available at a reasonable cost. For instance, umbrella insurance may be purchased at a fraction of the cost of the original primary coverage. In other cases, umbrella insurance may be purchased for a fraction of the cost of the original primary professional liability coverage when the primary policy limits have been nearly exhausted or more generally when the primary policy is underpriced because of strong competition in the insurance market ((Rahman et al., 2024; Zhang et al., 2023),