Why Everyone Needs a $1 Million Umbrella Policy (or More)

This article is original content written by Manchester, CT Financial Advisor Thomas Scanlon, CFP®, CPA


What Is an Umbrella Policy?


Personal umbrella insurance is the insurance that is designed to give you liability protection beyond the protection provided by your other insurance policies. While your existing homeowners and automobile policies will cover some liability, they come with caps that limit how much money they will cover for their stated purpose. Personal umbrella insurance is an excess liability policy. Think of this as a backstop.



How Does an Umbrella Insurance Policy Protect You?


In the event you are sued for liability in an auto accident and the judgment is declared against you for $500,000 but you only have $200,000 worth of liability coverage. The rest of the money would have to come out of your own pocket unless you had the umbrella coverage to fall back on. Without the additional umbrella insurance protection, you are susceptible to losing your assets to pay off the outstanding debts, including your home.

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