Umbrella insurance offers additional protection for your assets

(Feb. 6, 2012) — Umbrella Day, on Feb. 10, honors the practical invention that dates back to ancient Greece. The primary use for an umbrella, of course, is protection, whether from the sun or the rain. One great way to acknowledge this unique holiday is to consider how umbrella insurance can protect you and your wallet from different types of liability.

Umbrella liability insurance, sometimes called excess liability insurance, arches over your existing car and homeowners policies to provide you an added layer of protection against liability that exceeds the limits of those policies. An umbrella policy provides you financial protection for occurrences for which you are held legally responsible.

For instance, you might have a standard minimum $100,000 in liability coverage as part of your home insurance. If a serious accident were to happen on your property and you were sued for $1 million, you'd be responsible for the $900,000 gap in your coverage. That would put your assets – such as wages, savings, home and personal property – at risk. The same gap can happen if someone in your family is at fault in a car accident, and damages and medical expenses exceed your auto liability limits. Umbrella liability insurance covers those gaps.

“It's not uncommon for judges and juries to award large personal injury judgments,” says Dan Pitcher, General Manager, Farm Bureau Property & Casualty Insurance Company and Western Agricultural Insurance Company. “These unfortunate situations happen in the blink of an eye, but the cost of resolving them can last a lifetime.

“Umbrella insurance can give you millions of dollars of protection at a reasonable price,” adds Pitcher. “In addition to adequate limits on auto, farm, homeowners and life insurance policies, umbrella insurance is an important – and affordable – way for people to protect their financial future.”

Typically, personal umbrella policies are written in $1 million increments, and can include additional coverages, such as for libel, slander, false imprisonment, eviction or invasion of privacy.