“Umbrella insurance” is a special additional coverage for liability not covered by your existing policies. The name “umbrella” improperly infers that umbrella insurance adds coverage in the “holes” of existing insurance policies; instead, umbrella insurance should be viewed as a “top hat.” It essentially raises your already existing limits and existing coverage. For example, if you have a $1 million farmowner’s insurance policy with the $2 million umbrella, the umbrella policy would protect the farm against a $2 million court judgment. Umbrella insurance does not “fill in holes” in your existing insurance policies – it simply increases the limits. From a practical standpoint, umbrella policies are typically the most affordable way to get higher policy limits.
This is an excerpt from my book that I co-authored with Pat Dillon, an Iowa food and agriculture lawyer and author of this Iowa agriculture law book. You can purchase a copy of the book “Field Guide: Legal Guide for New York Farmers and Food Entrepreneurs” on Amazon.com. A new (more user-friendly) Kindle version of my book has been recently uploaded (only $9.99 or $2.99, if you own the hard copy of the book).