Final answer:
An umbrella policy provides additional coverage for major personal liability suits beyond standard insurance limits, ensuring protection for policyholders' assets and future income.
Step-by-step explanation:
An umbrella policy is a type of personal liability insurance that provides additional coverage beyond what is provided in a standard homeowners, auto, or watercraft policy. When the liability limits of these other policies are exhausted, an umbrella policy kicks in to provide an extra layer of protection. The correct answer to what an umbrella policy is designed to cover is C) major personal liability suits.
This additional coverage helps protect policyholders from being personally responsible for large claims and lawsuits, thus safeguarding their assets and future income. An umbrella policy typically covers a wide variety of incidents, including bodily injury, property damage, certain lawsuits, and personal liability situations.