Most everyone has heard of an umbrella, the thing that keeps you dry and covers you in a rainstorm. You have also most likely heard the same term mentioned concerning insurance protection for your home and auto or business. Like the one that keeps you dry on a rainy day, the insurance umbrella protects what is underneath it. It is usually the best buy in insurance for the protection it gives versus the premium paid.
Umbrellas are sold in one million dollar bands and in most cases are less expensive per million dollar layer purchased. In personal lines (home, auto, boat, atv's, RV's) this one million, or the selected limit, gives the extra protection above and beyond the underlying limits offered on each of these items you may own. In business, it usually goes over the general liability, business auto and workers compensation employer liability. In some cases the umbrella may also drop down and cover an uncovered loss that might not otherwise be covered with a self insured retention or deductible applying.
The price you pay for an umbrella is based on the underlying factors that exist in personal insurance. If you have just auto and homeowners liability, it is very reasonable and often less than $200 per year for an extra one million in coverage. If you have a lot of toy's like watercraft's, atv's and RV's the price goes up with each exposure, but it is still in most cases a real bargain for the protection it gives. It gives you that extra peace of mind of knowing that you have done your best on protecting your hard earned assets.
Unlike property insurance in which you can get a some what accurate amount of what limit to carry, the amount of liability you need is a big unknown. What amount you should carry is really the most you can afford. In liability claims, the amount is often determined by a group of people you have never met that decide what amount to award the injured party. Awards in excess of a million dollars, while not an everyday occurrence, are paid out more often than one would think. Jury awards are certainly increasing and after an accident occurs it is to late to go out and purchase that extra coverage.
Just like in a rainstorm, when faced with a lawsuit it can be very comforting to know you have an umbrella to protect you. Don't wait to be caught out with out this added protection for your family's assets or business's protection.