Umbrella Insurance Policy: Protection Against the Unexpected

You may need this extra coverage and not even know it.

Miniature red house on stacks of gold coins, with miniature red umbrella propped up to shield it iStock

How ready are you to handle a potentially devastating insurance claim? It’s probably safe to say that few of us are as prepared as we should be. Consider these scenarios:

  • Your teenage driver causes a car accident that injures others.
  • Carelessness sparks a fire in your condo that damages a neighboring unit.
  • A tenant falls on unsafe flooring in the rental property you own and breaks her arm.

Occurrences such as these keep people awake at night. If you’re a member of that sleep-deprived group, maybe you should consider an umbrella insurance policy. Not only is it for peace of mind, but the above real-world scenarios—and many others—won’t be financially devastating if you’re prepared with insurance coverage that provides an extra layer of protection.

Who needs umbrella insurance?

Just about anyone who owns property can benefit from umbrella insurance. Why? Because an umbrella insurance policy protects you when you’re liable for injuries or property damage that exceeds the liability limits of your home or auto insurance. Umbrella coverage can protect your greatest assets, such as your home or future income, and could save you from having to declare bankruptcy.

Umbrella policies are usually available in amounts of $1 million or more. So, if your home liability insurance policy covers you up to $800,000, adding a $1 million umbrella policy gives you up to $1.8 million in coverage.

What’s not covered by an umbrella insurance policy? Damage to your own home, car or possessions.

Another positive note about the additional coverage: The premiums tend to be reasonable when you consider how much protection you’re acquiring. In fact, buying an umbrella policy is often less expensive than simply increasing the liability coverage on your existing policies.

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