Umbrella policy
An extra liability policy on top of homeowners and auto. Kicks in when the underlying policy limits are used up. Used more often by owners with rental properties.
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Part 1 of 4
Why a seller cares
An umbrella policy sits above homeowners and auto liability, and landlords carry them because tenants and visitors can sue. It has no place in a sale except that a rental's insurance history is part of what an investor buyer reviews.
Part 2 of 4
A simple example
You own a rental and carry a $1 million umbrella above the landlord policy. A visitor's injury claim exceeds the underlying limit and the umbrella pays the rest.
| The claim | Which policy pays |
|---|---|
| Under the homeowners liability limit | The homeowners policy |
| Above it | The umbrella, up to its limit |
| After you sell | Coverage for the home ends; the umbrella continues on what you still own |
An umbrella is liability coverage beyond the limits of everything under it.
Part 3 of 4
What people get wrong
That an umbrella covers the house itself. It covers lawsuits against you, not damage to property.
Part 4 of 4 · where to read next
Where it appears in the sale
What a definition is, and what it isn't
Keighbor is a software company, not a law firm, brokerage, or tax adviser. This is general information, not legal, tax, financial, or real estate advice about your sale. Your situation may differ. Before acting on a contract, disclosure, title, tax, or pricing question, ask an appropriately licensed professional in your state.
Written and researched by Keighbor Research · drawn from the reference glossary · how we research and check what we publish
In your Room, this word explains itself where it appears.
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