What does an Umbrella Liability Policy provide in addition to underlying liability coverage?

An Umbrella Liability Policy is designed to provide additional limits beyond the coverage offered by underlying liability policies, such as homeowners, auto, or other personal insurance. This means that if the liability coverage from these underlying policies is exhausted due to a large claim, the umbrella policy can step in to provide further financial protection.

This extra layer of coverage is particularly valuable in situations where claims could exceed standard policy limits, offering peace of mind that you’re secure against larger financial liabilities that could arise from lawsuits or catastrophic events. The primary purpose of an umbrella policy is thus to enhance the available liability limits, protecting individuals and families from unforeseen financial risks associated with liability claims.

In contrast, the other options relate to coverage characteristics that aren't specifically defined by the nature of an umbrella policy. Broadening coverage terms is not a feature of an umbrella since it specifically extends existing policies rather than modifying the coverage; higher deductibles do not apply as umbrella policies typically have a lower deductibles than the underlying policies; and while the premium might be lower relative to the amount of coverage provided, this is not a characteristic that defines the function of an umbrella policy.