Policy Types

Is There Room In Your Household Budget for an Umbrella Policy?

An added layer of liability protection to help protect you financially in the event of a major auto accident or catastrophic home event is more affordable than you might think.

An Umbrella Policy Can Be Additional Layer of Protection

Do you have enough savings and assets to cover an unexpected liability claim followed by a costly lawsuit? To better protect yourself, you may want to consider a personal liability umbrella policy.

What is an umbrella policy?

An umbrella policy can serve as an additional layer of liability insurance that's designed to help protect you financially in the event of a major claim - such as a serious auto accident or someone getting injured when visiting your home. Simply put, an umbrella policy can go beyond existing liability limits on your home and auto policies, as well as any rental properties that you may own. It essentially becomes a safety net, providing you with extended liability limits.

For example, you may feel well protected with an auto liability limit of $300,000 per accident. But what if one day your car is involved in a six-car accident where many people are injured, or worse, have died as a result? If you're at fault, you could not only be responsible for property damage, but the medical expenses for every person involved. And while we can't possibly predict what the costs associated with such a horrific accident may be, chances are that it could exceed the $300,000 limit. If your current liability limits aren't enough to cover a costly claim, you could potentially be sued for the remainder of the expenses.

Now, if you think you can't be sued for money that you don't have, think again. It's not always what's in your bank account. Lawsuits can claim more than just damages, and can put things such as your retirement savings and house at risk. A court settlement can even garnish your wages for as long as it takes to satisfy the judgment against you.

Umbrella requirements

If you're considering a personal liability umbrella, you should know that insurance companies typically require that you maintain a certain level of underlying coverage on your existing home and auto policies in order to qualify. For example, an insurer may insist that you keep a liability limit on your auto policy of at least $250,000 per person and $500,000 per accident in order to qualify for a $1 million dollar umbrella, or a $300,000 per occurrence limit on your home.

What does an umbrella policy cost?

Chances are good that you have some wiggle room in your household budget for a personal liability umbrella policy because they are typically very affordable. In fact, policies can be less than $200 a year for $1 million in coverage. That's a small price to pay for a lot of insurance protection.

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All Learning Center articles are general summaries that can be used when considering your financial future at various life stages. The information presented is for educational purposes and is meant to supplement other information specific to your situation. It is not intended as investment advice and does not necessarily represent the opinion of Protective Life or its subsidiaries.

Learning Center articles may describe services and financial products not offered by Protective Life or its subsidiaries. Descriptions of financial products contained in Learning Center articles are not intended to represent those offered by Protective Life or its subsidiaries.

Neither Protective Life nor its representatives offer legal or tax advice. We encourage you to consult with your financial adviser and legal or tax adviser regarding your individual situations before making investment, social security, retirement planning, and tax‐related decisions. For information about Protective Life and its products and services, visit www.protective.com.

Companies and organizations linked from Learning Center articles have no affiliation with Protective Life or its subsidiaries.

Household Budget

What is an umbrella policy? If you're brought into serious claim situation and don't have enough insurance to cover the claim, your financial future may be at risk. For just a few dollars out of your household budget per month, you could have the protection of a personal liability umbrella policy. Protective Life explains in this article what umbrella insurance policy is. But how much does an umbrella policy cost? They can be very inexpensive. For more information, visit the Protective Life Learning Center.

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