Insurance is basically protection. We pay annual premiums for specific
amounts of protection for our cars, homes, and personal belongings. Auto and
homeowner policies also usually include liability coverage for damages to the
property of others and to cover you for injuries to yourself and others.
However, the liability coverage in many policies may not be sufficient if
there is a very large claim against you. Additional protection can be found
with an umbrella insurance policy.
Umbrella insurance policies are a special kind of "override" to
your other insurance coverage. The word "umbrella" is used because
of the special overall protection an umbrella gives you when it is raining!
Usually offered at $1, 3, and 5 million or greater face value, they protect
your assets and your future earnings if an unusually catastrophic event
happens. In these times, increased litigation and the high costs of advanced
medical techniques demand that most people carry umbrella insurance
protection. They cannot afford not to.
Nearly everyone has a story about someone losing his or her home or prized
possessions due to the ramifications of some accident. As your net worth
grows, so does your exposure to larger and larger claims against your
finances, both net worth and future earning power.
The good news is that additional liability coverage is available. And, the
cost of an umbrella policy is relatively low, often about $125 annually for
$1 million policy and less than $500 for $5 million protection by the same
company that carries your other auto and home protections.
As always, have a competent insurance professional review your needs,
risks and exposure to determine what is best for your specific situation.
