If Stan is found liable for damages caused by an auto accident, which statement is true regarding his personal umbrella policy?

The statement that the umbrella policy pays the loss exceeding the Personal Auto Policy's limits is accurate because personal umbrella policies are designed to provide additional liability coverage beyond the limits of specific underlying policies, such as a Personal Auto Policy (PAP). If Stan is found liable for damages in an auto accident, his PAP will cover the costs up to its limit. However, in the event that the damages exceed that limit, the umbrella policy will come into play to cover the remaining amount, thus offering broader financial protection.

This layered approach significantly enhances a policyholder's liability coverage, as an umbrella will effectively fill in the gaps and cover substantial claims or lawsuits. Understanding this relationship between the underlying policy and the umbrella is crucial for anyone holding a personal umbrella policy, as it ensures they have adequate protection against large liability claims.