Question

An umbrella policy covers:

A. Outside events (carnivals, fairs, etc.)
B. Excess liability and property damage to the insured
C. Excess liability coverage beyond the underlying limits on a homeowners policy and auto policy
D. Excess liability beyond the underlying limits on an auto policy only

Answer 1

An umbrella policy offers excess liability coverage beyond the limits of homeowners and auto policies, providing additional protection against large liability claims.

Step-by-step explanation:

An umbrella policy is a form of insurance that provides additional liability coverage beyond the limits of the policyholder's homeowners, auto, and boat insurance policies. It pays out when claims exceed those limits, offering protection against large lawsuits or judgments for liability. The correct answer to what an umbrella policy covers is: C. Excess liability coverage beyond the underlying limits on a homeowners policy and auto policy. This coverage serves as an extra layer of protection on top of the primary insurance, safeguarding the insured's assets from being depleted due to a major claim.