How Much Coverage is “Enough?”
An umbrella policy provides an extra layer of liability protection above your home and auto insurance coverage. Umbrellas kick in after the liability insurance in your homeowner and auto policy is exhausted.
Liability insurance pays for expenses related to legal fees, medical expenses and lost wages as the result of the negligence of an at-fault person. Imagine one of your neighbors falls and injures himself on your property. Your standard homeowner insurance coverage may not be enough should he require surgery and miss months of work. Without proper coverage, you could lose much more than a friendly neighbor.
Typically, a personal liability umbrella policy is inexpensive compared to the amount of protection it provides. For as little as $100 per year, you can get $1 million additional coverage under an umbrella policy. Be aware, there are some restrictions on what an umbrella policy may cover such as claims related to a business and intentional acts. Minimum amounts of coverage should be met on home and auto policies before an umbrella policy is issued, but the extra coverage is important if you have assets you need to protect.