Do You Need an Umbrella Policy?

While it's common to be covered by a certain amount of liability insurance protection as part of your homeowner's insurance policy and your car insurance policy, the limits on this type of liability protection are often woefully inadequate in the real world when you're facing a serious liability lawsuit. A typical example could be if you're involved in a vehicle accident for which you are found to be at fault and held liable. If one or more other cars are involved and anyone in these vehicles (or bystanders) suffers serious injuries, the cost required to pay the damages and the medical bills associated with said accident could very well be disastrously high, perhaps even ranging into the millions of dollars. It's unlikely that you have the necessary coverage on your auto policy to handle such a situation. An umbrella policy could save your assets in this case.

Homeowner's Coverage

As a homeowner, you're responsible for someone becoming injured while on your property. You may even be held liable if you serve someone alcoholic drinks at your home and they drive away under the influence and end up causing an injury or death while driving home.

If you have a backyard swimming pool or a trampoline, your risk of liability is increased significantly, even if your yard is totally fenced and locked against the intrusion of neighborhood kids. Someone suffering a broken neck on your property while bouncing on your trampoline or drowning in your pool could add up to a liability charge far outstripping the limits of your homeowner's liability coverage limits, even if you've gone the extra mile and bumped your coverage up to $300,000 (which may be the most allowed on your particular policy).

Get an Umbrella                                              

Umbrella coverage is liability protection that works along with your ordinary liability coverage, kicking in once your other coverage becomes exhausted. Typical minimums on umbrella protection start at one million dollars, for which the cost is surprisingly affordable (usually around $200 annually), but you can increase your coverage to $2 million for about another $100.

This umbrella coverage is protection against the big liability judgements, meant to protect your current and future assets against large judgement claims. The more assets you have and the greater your income, now and in the future, the greater your need for umbrella protection. It's a small price to pay for a great deal of protection.