Umbrella Insurance Policies

Insurance is basically protection. Policyholders pay periodic premiums for specified amounts of protection for cars, homes and personal belongings. Auto and homeowner policies often include liability coverage for damages to the property of others and to cover you for injuries to yourself and others.

However, the liability coverage in many policies may not be sufficient to cover a very large claim against you. Additional protection can be found with an umbrella insurance policy.

Umbrella insurance policies are a special kind of insurance coverage. The word "umbrella" is used because of the special overall protection an umbrella gives you when it is raining. Usually offered at $1 million, $3 million, and $5 million or greater face value, umbrella policies protect assets and future earnings if an unusually catastrophic event happens. In such times, increased litigation and the high costs of advanced medical techniques make umbrella insurance protection a strong consideration. Many people need the added protection provided by this type of insurance.

Nearly everyone has a story about someone losing his or her home or prized possessions due to the ramifications of an accident. As your net worth grows, so does your exposure to larger and larger claims against your finances — both net worth and future earning power.

As always, have a competent insurance professional review your needs, risks and exposure to determine what is best for your specific situation.

This content has been provided by Financial Wisdom and is intended to serve as a general guideline.