Umbrella Policies Protect You Against Large Lawsuits

It is true that most people have liability insurance for their homes and their cars. Those policies do provide some protection against lawsuits, but typically not large lawsuits such as those from a severe accident on your property or from a serious car crash.

But when you have assets exceeding the liability coverage on your vehicle or property, you should consider an umbrella policy. Those assets can include a second home, stocks, bonds and retirement savings, according to libertymutual.com.

Insurance is especially important to those who have what is referred to as an “attractive nuisance” such as a trampoline on the lawn or a swimming pool — items that can attract curious children, who then hurt themselves.

Insurance expert Jack Hungelmann at Bankrate.com notes that an umbrella policy includes lawsuit coverage of $1 million to start and coverage for defense costs, which can be $100,000 or more.

Typically, coverage costs $150 to $200 a year for the first $1 million in coverage, and about $100 for each additional $1 million.

Hungelmann calls it the best buy in the insurance business and recommends getting $1 million more in coverage than you think you need, because if you are sued you can’t go back and buy more.

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