Who Needs an Umbrella Policy?

“Do I really need an umbrella policy?” is a question I encounter when discussing insurance coverage with my clients.  The argument can be made that everyone needs an umbrella policy regardless of what your assets are today as the court system can impose a judgment on not only your current assets but also your future earnings, a VERY scary thought.

My starting point is the question: “What are your assets?” While most people aren’t very comfortable with this question it certainly is imperative that at a bare minimum you are carrying enough liability coverage to protect what you own.  Umbrella policies are written over your auto and home policies and are usually written in increments of one million.  The least expensive way to purchase an Umbrella insurance policy is to have all the underlying policies (home, auto, boat and tenant occupied homes etc.) written with one carrier.  You can also have a stand alone Umbrella policy, which is covered by a carrier that will write just the Umbrella policy when the auto and home insurance are covered by other insurance companies.

One of the requirements that you will encounter on both a stand alone and direct policy is that you will need to meet minimum limits of liability, usually $500,000 CSL on the auto insurance and $300,000 personal liability on the homeowner’s insurance.  Although having an umbrella policy is a personal choice and not a requirement, I encourage all of my clients to review their assets to determine if an Umbrella policy is right for them.