Umbrella coverage can be used to protect your personal finances and assets in the event of a catastrophic loss. Without umbrella coverage, you may have to pay out-of-pocket for any of the costs below that are beyond your homeowners or auto insurance limit:

• Your standard auto insurance liability limit may be exhausted if you are at fault in an auto accident where you destroy another vehicle and/or other property.
• Your homeowners insurance liability limit may be insufficient to cover medical and other costs related to a guest suffering from a serious fall at your home, or being bitten by your pet.
• A tenant files an expensive suit over an injury sustained while renting your property.
• You file a suit against someone and in turn are sued for wrongfully, or maliciously, prosecuting that individual.

Umbrella coverage is a cost-effective way to protect your finances from expensive litigation. It is recommended that everyone have at least a $1 million umbrella policy to provide liability coverage beyond the limits of their auto and homeowners insurance policies, even if they have less than $1 million in assets. In the rare event you are sued, you could be forced to pay a legal judgment or settlement based on your current assets and future earnings. An umbrella policy can also pay for legal defense costs, which can quickly add up during litigation.