If you prefer to plan for anything unsavory that might happen to you financially, you might want to consider purchasing umbrella liability insurance. Umbrella liability insurance can protect your assets from large claims or lawsuits.

Review these elements of an umbrella liability insurance policy. Maybe the time is right for you to obtain an “umbrella” of your own.

1. An umbrella policy is an additional insurance. You can purchase an umbrella liability insurance policy as an adjunct to your homeowners’ or auto insurance policy. With some policies, you can add to other coverage, like your boat insurance, with an additional charge.
   
   
2. It provides extra financial protection. Should you ever be sued for liability, having, an umbrella policy to fall back on will provide extra coverage past the limits of your homeowners’ or car insurance policy. For example, if you cause an accident, liability claims could quickly go past your normal policy limits for property damage or medical care.
   
   
3. Umbrella policies are significant. The minor liability amount you can obtain through an umbrella liability policy is \$1 million. Also, most umbrella liability policies require that your central policy (vehicle or homeowner’s insurance) already cover you for at least \$300,000.
   
   
4. Your assets don’t have to be significant. You don’t need to have $1 million worth of assets to obtain such coverage – or to be sued for such an amount. After all, you could, for example, get sued for a million dollars and only have assets totaling $200,000. Without an umbrella policy, your future income and assets are also at risk!
   
   
5. Your family and pets are covered. An umbrella policy covers everyone in your family living in your household, including your pets. So you’re covered even if your pets get loose and cause some damage. Many policies even extend coverage to others, such as when you let someone else drive your car somewhere, and they get in an accident.
   
   
6. An umbrella liability policy covers your legal fees. Umbrella liability coverage will pay your legal fees if a lawsuit is brought against you.
   
   
7. The cost of umbrella insurance is reasonable. The first $1 million coverage costs as little as $200-$400 per year. Each additional $1 million is only about $100. Raising your regular deductible might even provide enough savings to pay for an extra million dollars of coverage!
   
   
8. Obtain an umbrella policy from your current insurer. Ask your auto or home insurance agent about adding an umbrella liability policy to your coverage. You might even get discounts on all your liability policies when you bundle them with the same carrier.

Here’s an example of how your umbrella liability policy would work:

You’re on a car trip and have typical vehicle property liability coverage of $50,000. You’re involved in a significant car accident. You collide with an expensive recreational vehicle (RV). The RV is less than a year old. The insurance estimate to repair the RV is $90,000. 

Your standard car insurance policy would cover only \$50,000 toward repairing the RV’s damage. However, with an umbrella liability policy, the remaining $40,000 worth of damage would also be paid. You won’t have to pay anything out of pocket (other than your primary car insurance deductible amount).

It’s comforting to know that you can protect all your current and future assets, plus cover legal fees, with such a small investment. In the unfortunate event that someone brings a liability suit against you, you’ll be prepared.

Open your “umbrella” policy to protect you and your family!