Which of the following describes an umbrella insurance policy?

An umbrella insurance policy is designed to offer additional liability coverage that goes beyond the limits of standard homeowners, auto, and other basic liability policies. This type of policy serves as a safeguard against major claims or lawsuits that could exceed the coverage limits of the primary insurance, providing an extra layer of financial protection.

For instance, if a person is involved in an accident where they are found liable for significant damages that exceed their auto insurance coverage, an umbrella policy can help cover the remaining costs, up to its limit. This feature makes it a crucial protective tool for individuals with significant assets to safeguard, as it can help prevent the loss of those assets due to unforeseen incidents.

The other options do not accurately describe the function of an umbrella policy. Standard policies do not provide the same extensive coverage; they have specific limits that the umbrella policy is designed to complement. Umbrella policies are not limited to personal injury claims and can cover a wide range of liabilities. They are not restricted to business-related incidents, either; rather, they can apply to personal liabilities as well, making them versatile in their coverage.