In extraordinary circumstances, your existing coverage simply may not be enough.
As a person of means, you’ll have purchased a considerable amount of liability insurance in your homeowners and auto policy. Just as likely, you will have a significant amount of liability coverage if you own a boat, ATV, collector or antique automobile, motorcycle, or similar item. Even so, these amounts may not be sufficient to protect your assets should a major loss or accident occur. Considering that many personal injury awards today exceed $1 million, whereas an auto or homeowners policy limit may max out at $500,000, it’s clear that umbrella insurance is a must for affluent clients.
An umbrella policy kicks in where your homeowners and/or auto policy limits have been exhausted, typically offering $1 million to $5 million in protection. Certain clients whose assets warrant even higher levels of coverage can obtain a high-value umbrella policy from certain insurers, with limits that stretch to $50 or even $100 million. Besides the greater policy limits, the umbrella policy also provides broader coverage, including risks not protected under standard insurance. Despite the high amount of protection, the cost per million dollars in coverage is quite reasonable, and may amount to just a few hundred dollars.