Should You Buy an Umbrella Policy? A person who is found legally responsible for causing an injury to someone else could be ordered to liquidate a home or other personal property and turn over his or her assets — including future earnings — to satisfy a judgment. The liability coverage in standard homeowners and auto policies typically starts at about $100,000 and rarely exceeds $500,000. Liability policy benefits can be used to pay jury awards, plaintiff medical expenses, and legal fees, up to the policy limits. An umbrella liability policy offers an extra layer of financial protection. To obtain umbrella liability insurance, you generally must purchase the maximum liability coverage available on your auto and homeowners policies, which act as a deductible for the umbrella policy. A general guideline is to have coverage in place that, at a minimum, matches your net worth. An umbrella policy often includes coverage for situations that are excluded from standard homeowners policies, such as for libel, slander, invasion of privacy, defamation of character, and some types of personal injuries. A home could be the single largest investment you make in your lifetime, and it’s likely that a vehicle is one of your most valuable assets. Therefore, it might be worth the time and effort to review your coverage periodically and evaluate whether it is still adequate for your family’s situation.
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