It’s something that’s especially true for major accidents. Sometimes, normal homeowners or auto insurance may not be enough to protect you against seven-figure claims arising from a catastrophic incident on your property or a deadly crash involving your car or boat.
That’s where umbrella insurance kicks in.
Normally sold in increments of $1 million or more, umbrella insurance will protect you when basic auto or homeowners insurance policies have been exhausted. Umbrella insurance also has the added advantage of “dropping down” to cover any gaps in your existing policies.
This may sound like insurance for millionaires. But it isn’t. It’s for everyone: A $1 million policy on a one-house, two-car family will generally run between $200 and $250 in annual premiums.
So who needs umbrella insurance? Well, just about everybody who owns their home or car, but especially anyone who meets at least one of the following criteria:
- Own rental properties or multiple homes
- Have children or responsible for children of others (anything from babysitting to carpooling)
- Own several vehicles
- Involved in homeowners associations, civic activities, or a board of directors
- Own a pool, hot tub, or swing set
- Own an ATV, boat, or motorcycle
- Shared ownership or access to docks, lakes, or vacant land
- Use or allow your children to use social media sites like Facebook and Twitter
- Own animals or care for others’ animals
- Have retirement accounts, investments, or other assets worth protecting
- Travel overseas
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