Should I Purchase And Umbrella Insurance Policy?

By Leigh Jackson

Umbrella insurance is extra insurance that you can buy to give you coverage on top of your normal insurance coverage when you face a major financial catastrophe, most commonly it insures people against major lawsuits brought against them where all of their assets are in jeopardy. Where your normal car, homeowners or other insurance will fall short of protecting you, an umbrella policy will fill the gap and keep you safe when you are asked to be responsible for a large personal liability claim.

An umbrella policy has three advantages. It provides additional lawsuit coverage of $1 million or more. It provides added coverage for defense costs, which can easily amount to $100,000 or more. And finally, it provides liability coverage for some lawsuits not covered by your underlying auto or home insurance. Examples include if you're sued over an incident involving a boat you rented on vacation, a car you rented in Europe, or even your work on a nonprofit board of directors.

Everyone concerned about losing income or assets in one large lawsuit needs an umbrella policy. An umbrella insurance policy is the absolute best buy in the insurance business. It costs only about $150 to $200 for the first $1 million of coverage, then about $100 for each additional $1 million.

It is a good idea to carry an umbrella insurance policy to cover you in the event of a major accident that you might not be able to control. Accidents happen and if you are on the end of one where you find yourself at fault and the injured party is someone of esteem or value, you could be responsible for them financially - for their lost wages and medical bills in addition to emotional compensation for suffering - this can cost you literally millions of dollars. If you have assets to protect, an umbrella policy will make it possible to cover these damages without losing it all.

You should get an umbrella insurance policy if you own your own home, if you have significant assets outside of your home and if you have a retirement or any other type of investment portfolio. These assets are vulnerable in the event of a lawsuit and should be protected to the greatest degree possible, a typical homeowners insurance policy will not protect them all the way, an umbrella policy will make sure you're covered from harm in the event of a catastrophe.

When you start building your own personal assets, make sure to contact your insurance company and ask about adding an umbrella policy. This will keep you and your assets safe and protect you from financial ruin.