What is the benefit of having umbrella insurance?

Umbrella insurance is beneficial primarily because it provides additional liability coverage above the limits of underlying policies such as homeowners, auto, or boat insurance. This means that if there is a claim that exceeds the limits of those underlying policies, the umbrella insurance can help cover the additional costs. This type of coverage is especially important in situations where a significant accident occurs, or if someone faces a lawsuit that leads to costs surpassing the primary insurance policy limits. As liabilities increase and settlements can be substantial, having an umbrella policy serves as a critical financial safety net to protect one's assets.

The other choices do not accurately represent the nature of umbrella insurance. The false options suggest benefits that are not true for umbrella insurance, such as reducing the premiums of other insurance policies, automatically covering natural disasters like floods and earthquakes, or serving as a form of life insurance. These statements do not align with the fundamental purpose and functionality of umbrella insurance.