What is a personal umbrella policy?
A personal umbrella policy or personal excess liability policy is a separate insurance policy that increases your liability limit on top of the liability limits on all of your policies - homeowners, auto, dwelling, boat, RV or any other underlying policy. The personal umbrella policy acts in excess of the underlying policy. That means, in the event of a claim, the umbrella policy only comes into effect once the the underlying policy's liability limit has been exhausted.
Example - You and your wife have a home in Montgomery County, two cars, a shore house in Ocean City and a boat, You have individual policies for each risk with the max liability limit of 500k. Adding a $1M umbrella policy would give you a total liability limit of $1.5M on all of your risks.
If you were to injury someone in a boating accident that warranted a lawsuit of $1.1M, the boat policy would cover the first $500k and the umbrella policy would cover the remaining $600k. Without an umbrella policy, you would be responsible for the $600k
Things to keep in mind while shopping
Make sure to have an honest conversation with your agent about your assets - your home, cars, personal property, savings accounts, investments. Your agent will help you determine if an umbrella policy makes sense for you.
Let your agent know of every policies you have. Even if some policies aren't insured with that agent. We want to make sure your umbrella policies all of your underlying policies.
If you are debating about getting an umbrella, just ask your agent for a quote. It is an easy policy for your agent to quote and most people are surprised about how inexpensive they are for the amount of additional liability. Usually a couple hundred dollars per year.