What is a personal umbrella policy?
Sometimes liability claims occur that may exceed the limits of your underlying insurance policies due to your family’s activities, use of your home, or more often than not, car accidents. Your umbrella policy is an additional layer of liability coverage that picks up where your underlying home, auto, boat or other underlying policy stops. The umbrella policy is generally issued in increments of $1 million. Most policies are written as “follow form” policies which simply means, what is covered on the underlying policy is also covered by your umbrella. No more. No less. However, in some cases, the umbrella can be broader than the underlying policy.
Do I have to be a millionaire to need an umbrella policy?
Absolutely not. You do not have to be a millionaire to be sued for millions. In fact, as long as you are employable, your future wages are always at risk of wage garnishment. Considering your other assets, you might be surprised just how much you have at risk.
Keep in mind, the liability coverage on your home or auto policy may simply be too low to cover a large claim. Adding an umbrella is the least costly way to increase your overall liability rather than the cost to increase the coverage on the underlying policies.