Money Crashers: What Is Umbrella Insurance?

My final Money Crashers post for this week is about umbrella insurance. I've talked about insurance here before, as in this post about my quest for lower rates on our auto and homeowners' insurance policies, but never about umbrella insurance specifically. In fact, this was a topic I knew very little about until my editor at Money Crashers asked me if I'd like to do a post on it—which, apparently, puts me in good company, since the sources I consulted say this is the least-understood type of insurance on the market. What it does, basically, is protect you against a large lawsuit, covering any expenses that either aren't covered on your other insurance policies or are over the maximum those policies will cover. So it makes sense to have it if (1) you have a lot of assets to protect, and (2) there's any reasonable chance you could be sued.

I'm glad I ended up getting this assignment, because I'd never given serious thought to this type of insurance before. Now that I know more about it, I'm thinking that it will probably be a good idea to pick up a policy in a year or two. I don't think we need it yet, because our assets haven't hit the point where we can't cover them under our auto and homeowners' policies—but in another year or so, they'll be above the limit on those policies, and tacking on an extra million (usually the minimum you can get) in umbrella insurance coverage will provide a nice safety net.

If you're in a similar situation, or think you might be, you can find out more in the article: What Is Umbrella Insurance - Do I Need a Policy?