Umbrella Insurance

GOT MONEY IN a regular taxable account? If you lose a lawsuit, the plaintiff won’t have much trouble claiming that money—which is why you might want umbrella liability insurance, sometimes known as excess liability insurance.

With homeowner’s and auto policies, a big chunk of your premium payment goes toward buying liability coverage. If somebody sues you because they’re hurt at your home or because you cause an auto accident, your homeowner’s and auto policies will cover your attorney’s fees and any judgment against you. But the liability coverage may be capped at $250,000 or $300,000, and it could be significantly lower.

Plaintiffs might settle for that, rather than coming after your personal assets. But what if they demand more? That’s where umbrella liability insurance comes in. It provides additional protection, perhaps $1 million or more, that’s over and above what your homeowner’s and auto policies provide. Umbrella liability insurance is typically purchased from the same insurer that covers your home and car.

In addition to providing protection if you’re sued for damaging property or causing bodily injury, an umbrella policy can also cover other situations, such as if you’re sued for slander or libel. Pay attention to the exclusions. For instance, the policies typically won’t protect you if there’s a legal claim resulting from your business or professional life, or if you deliberately damage somebody else’s property.

Premiums seem to have increased a fair amount in recent years, but the policies remain relatively inexpensive compared to the potential payout. Got assets you’re aiming to protect? It’s worth looking into an umbrella policy.

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