Umbrella

Umbrella or excess liability insurance provides you with an extra layer of liability protection should you be found liable for causing bodily injury to someone else or damaging their property. Because the average size of jury awards has increased dramatically in the last few years, umbrella insurance has become more important, particularly for people who have numerous assets. The following are a few examples of situations where umbrella insurance is needed.

• One evening while on the way home, a driver doesn't see a stop sign and broadsides a city bus. Several of the occupants are injured, resulting in a large lawsuit.
• A family dog bites a child. Although the child is not seriously injured physically, there are some resulting psychological problems. The dog's owner is sued for a substantial sum.
  
• A man on vacation rents a boat. He runs into a water-skier, severely injuring the skier's legs. A lawsuit ensues.
• A homeowner is responsible for a fire that sweeps through his condominium complex, causing millions of dollars in damage and resulting in several lawsuits.

If any of these happened to you, there's a good chance your liability limits in your Auto or Home policy would not be adequate. You could be sued for all your possessions, and most of your future earnings.

Umbrella insurance also helps you with your legal fees. Even if the verdict is in your favor, your legal fees may be extremely high. If you have a personal umbrella policy, you won't need to pay thousands of dollars out-of-pocket for legal fees.

The best part of Umbrella insurance may be this – although your protection is substantially increased, the cost is very reasonable. Your cost will depend on limits selected, number of autos, residences, boats, etc., and the area of the where you live. The average cost is under $200 a year. Your agent can give you an exact quote.

Although umbrella policies are relatively inexpensive, the question remains as to whether you really need one. As with any type of insurance, you don't want to buy unnecessary coverage. Start by analyzing your risk of being sued.

Perhaps your family has a swimming pool, trampoline, or swings in the backyard that pose a danger. If you have frequent visitors to your property, there's a risk of accidental falls. Maybe you're a golfer who narrowly misses hitting someone during every round.

On the other hand, your personal situation may make lawsuits extremely unlikely. Maybe you don't own a breed of dog that's a threat to anyone, unless it manages to lick someone to death.

Before making your decision, compare the umbrella premium with the cost of raising the liability limits in your homeowners and auto policies. For less than the cost of the umbrella policy, you usually can raise your liability limits by several hundred thousand dollars. In fact, if you raise the deductibles on your auto and homeowners policies, you might be able to increase your liability coverage for less premium than you're paying now.