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
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
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.