Umbrella insurance, also known as an excess liability policy, provides additional protection above and beyond the normal liability limits of a standard policy. In today’s litigious society, a growing number of people would benefit from the ability to protect their hard-earned assets as well as future income via the inclusion of a properly established umbrella policy.
Many people erroneously believe an umbrella policy is only for the wealthy, but research demonstrates that average Americans might benefit more from additional liability coverage then the rich. Rather than risk your home, investments and other personal assets – including future earned income – an umbrella policy provides the protection you need in the event of a lawsuit or other claim.
Although rates vary depending on your personal assets and the amount of additional liability coverage purchased, most umbrella policies are very affordable with average annual rates less than $500 for up to $1 million in total coverage. Perhaps more importantly, it’s simple to purchase an umbrella policy; your agent is often able to add an additional layer of protection at the time you purchase your annual car or homeowners policy.
Deciding how much additional insurance to purchase isn’t easy, so it is a good idea to speak with you agent. At the bare minimum, it is wise to purchase enough to cover your total assets, including future earned income. This is especially important for people just starting out since lawsuits often include a claim on future earnings.