You're probably familiar with auto and homeowners insurance, but umbrella insurance is not as commonly understood. It could be a short- or long-term solution for your family.

In this article, we'll guide you through umbrella insurance 101, including what's covered and who’s best suited for this policy.

What is an umbrella insurance policy?

In sum, umbrella insurance is additional liability coverage that supplements your home and auto insurance.

There are essentially two different types of umbrella insurance: personal and commercial.

Should a personal incident occur that requires payouts from your home or auto insurance, umbrella insurance can supplement those payouts if you have maxed out the amount possible on the former plans. Additionally, it covers members of your family or household.

Some commercial umbrella insurance also provides coverage to protect you from charges or lawsuits such as libel, slander, business liability, landlord liability, and bodily harm. 

Some umbrella insurance policies even cover recreational vehicles like boats, motorcycles, and ATVs — though it depends on your qualifications and the insurer.