Umbrella Reinsurance

What Does Umbrella Reinsurance Mean?

Umbrella reinsurance is a policy that protects the insured insurance company against all potential claims not covered by its other reinsurance policies. In other words, an umbrella reinsurance policy provides protection for contingencies that may be excluded from its other policies.

Insuranceopedia Explains Umbrella Reinsurance

For example, if an insurance company has a separate reinsurance policy covering only life and health policies, umbrella reinsurance would extend coverage to the company’s liability, property, and other insurance policies.

Typically, umbrella reinsurance contracts involve a group of reinsurers, each assuming a fixed percentage of the risk. This arrangement ensures that in the event of a catastrophic loss, no single reinsurer bears the entire burden, reducing the risk of financial insolvency.