What is the primary purpose of a personal umbrella policy?

The primary purpose of a personal umbrella policy is to provide additional liability coverage beyond the limits of standard policies, such as homeowners and auto insurance. This type of policy is designed to protect individuals from large and catastrophic losses that may arise from lawsuits or significant claims.

Personal umbrella insurance kicks in when the liability limits of the underlying policies are exhausted, offering an extra layer of financial protection. For instance, if you are found liable for a serious accident resulting in significant medical expenses or property damage that exceeds your auto policy's coverage limit, your umbrella policy would help cover the remaining costs.

This is particularly important in today’s litigious society, where the potential for large claims can impact an individual's financial stability. This policy acts as a safety net, ensuring that you are not left financially vulnerable in the event of overwhelming legal judgments or settlements. Therefore, option C accurately captures the essence of what a personal umbrella policy is designed to do.