What type of policy can broaden coverage and increase the limits of the underlying insurance?

An umbrella policy is specifically designed to provide additional coverage beyond the limits of an insured's primary liability policies, such as a homeowners or auto insurance. It acts as an extra layer of protection and can broaden coverage by extending limits and filling gaps in the underlying insurance policies. This type of policy is particularly advantageous for individuals or businesses looking to protect their assets from significant liability claims that could exceed what their primary policies would cover.

In essence, if an individual faces a large claim that surpasses their standard policy limits, the umbrella policy kicks in to cover the additional costs. This is especially relevant in situations where a lawsuit or claim could lead to financial damages exceeding the regular coverage limits. Overall, an umbrella policy is a strategic approach to managing risk and protecting financial stability against unforeseen liabilities.