What is the purpose of a Personal Umbrella Policy (PUP)?

A Personal Umbrella Policy (PUP) serves to provide an additional layer of liability coverage beyond the limits of standard primary insurance policies, such as homeowners or automobile insurance. When individuals face legal claims that exceed their primary policy limits, a PUP kicks in to cover the remaining costs. This is particularly valuable because legal fees, damages, and settlements can quickly exceed typical policy limits, exposing individuals to significant financial risk.

This policy not only safeguards assets but also provides peace of mind, knowing there’s extra financial protection in place for unexpected events that might lead to substantial claims. The PUP can cover incidents such as serious injuries or property damage that result from an accident for which the policyholder is held liable, making it an essential component for anyone looking to strengthen their overall liability protection.

Other choices, while related to insurance, do not capture the primary function of a PUP. Legal fees for lawsuits may be covered under the policy, but that is not the main purpose. Theft of personal property would typically be addressed by other types of coverage rather than a PUP. Similarly, coverage for specific catastrophic events does not represent the broad-based protection offered by a PUP, which is aimed at increasing overall liability limits rather than focusing on singular types of risk