The Umbrella Policy - A good thing!
Umbrella insurance is definitely a good thing to include in your budget. Most people can get by with a $1MM policy and ratchet up from there depending on your asset base and potential risks. Even if you only have $500k in assets, a $1MM policy would be the minimum you would want.
Typically, you get the best deal from your auto or home owner’s insurance company but Umbrella’s are available from Independent Insurance agents that may not be the same insurance company that issued your auto or home owner’s policy. I would always start with your regular insurance agent in pursuing an Umbrella policy. Do some research on the internet to learn more about the Umbrella policy so you can ask your agent pertinent questions.
Others have pointed out that you do have to raise the liability limits of your regular auto and home owner’s insurance policies to the levels specified by the level required by the insurance company issuing the Umbrella policy. This is true!
The other item to consider is the number of risks you will have to cover in addition to your home and auto. You should put every auto and motorcycle that you have insured on the Umbrella policy, any vacation properties you own, and any underage drivers that are still in your household. Each of these items when added to your Umbrella will raise the premium without raising the policy limits (i.e. $1MM of coverage) – you are simply covering more risks under the Umbrella policy limits.
This insurance is very cheap in relation to the coverage, protection, and peace of mind such a policy will give you. As always, READ THE POLICY and understand what you are covered for and what you aren’t.
Another insurance item to consider is that many of you have family collections of stamps, art, jewelry, furs, coins, baseball cards, guns, figurines, etc., that ARE NOT covered by your regular home owner’s policy above a certain amount. You need an ‘inland marine’ policy or rider to cover such items. So don’t be afraid to ask your insurance agent questions about your coverage, that’s what you are paying them for in addition to risk coverage – make them earn their commission!
Great discussion on this subject by the respondents on this board! RJS