Definition
Extra liability coverage that kicks in above the limits of an HOA's underlying policies for large claims.
An umbrella policy provides an additional layer of liability coverage that sits on top of the association's underlying policies (like general liability and D&O). If a claim exceeds the base policy limits, the umbrella covers the excess up to its own limit.
For a modest premium, an umbrella protects the community from catastrophic claims that could otherwise exceed coverage and expose the association's assets. Many boards consider it essential risk management.