Personal liability insurance, generally known as umbrella insurance, is one the best values in the industry. It costs only a few hundred dollars a year, and yet you get a policy that protects you from financial ruin in case of an expensive lawsuit.
Umbrella insurance is a large-scale form of liability coverage. It allows an individual to extend the liability benefits on a home or auto policy. A standard home insurance plan has $100,000 in per-person benefits and $300,000 in total accident coverage. However, the legal costs and judgment in a major lawsuit can easily exceed these amounts. A $1 million or higher umbrella plan is the saving grace in these situations. It picks up the slack when your liability exceeds what your home or auto policy covers.
In addition to offering greater protection in home and auto related accidents, typical umbrella insurance covers personal liability for accidents not covered by these other policies. It pays for accidents on your boat, for instance. Most umbrella plans also offer international protection, which means obligations you incur when traveling get covered as well.
Umbrella Insurance Premiums
The premiums for standard personal liability plan are quite low relative to other consumer insurance products. A December 2012 Bankrate article noted that it is often just $200 for $1 million of umbrella insurance benefits. Each additional million on top of that is just another $100 or so. For a homeowner with a swimming pool or a large acreage, paying for a higher dollar policy makes sense to guard against increased dangers on the property.
The protection gained from such a small premium investment in umbrella insurance makes it a no-brainer. For just a small price, you can get significant peace of mind, knowing that an accident does not have to ruin you financially.