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Umbrella insurance is the term for a broad category of insurance that can help protect against very large losses. An accident or lawsuit can affect someone’s property, including their car, business, savings, and home. This complex form of coverage is commonly used to cover people exposed to excess risk. It covers people who may experience losses related to things like a wrongful arrest or slander case that fall outside of the terms of traditional forms of insurance.
The typical person who needs umbrella insurance usually has a high net worth or is someone engaged in high risk activities who may need additional coverage beyond what many normal policies provide. This is especially true for business owners, who may experience things like contract issues or large scale losses in business equipment or properties.
When someone either has an accident not covered by typical auto or home insurance, or they have to pay out high amounts of damages beyond what their basic policies cover, umbrella insurance is activated. Umbrella insurance will pay to cover lawsuits and related attorney’s fees, medical bills, and other expenses for the affected party. Keep in mind that much of a person’s real and personal property as well as things like wages, bank accounts, and investments are considered assets that are subject to garnishment or other measures to pay the winner of a lawsuit or settlement.
Ultimately, the decision to get umbrella insurance should be made after careful consideration of your assets and the possibility of lawsuits based on your line of work. There is plenty of information available from the companies who offer this kind of coverage, and insurance agents will usually talk about specific costs and forms of coverage based on your personal situation after they have some basic info.
Coverage usually starts around a couple of hundred dollars a month for at least $1 million worth of coverage, so if you can afford a policy it may end up being an investment that results in huge savings in the event of an emergency. However, for many people who work in common occupations without any kind of additional risk based on their employment or other activities, umbrella insurance would be money down the drain.