Umbrella policies are liability insurance policies. An umbrelly policy will protect you, your family, and your assets and it is affordable. It will protect you against lawsuits and claims. If you experience a tragedy and your vehicle or home insurance runs out, the extra coverage will kick in. Generally, people can buy umbrella policies that are worth $1-$5 million. How much you can purchase will depend on the insurance company.

If your money and assets amount to more than the limits of your homeowners or auto insurance, you should purchase an umbrella policy. If someone sues you, you can lose your savings, your home, vehicle, retirement or college fund, wages and such. If you purchase an umbrella policy, you will secure your lifestyle.

So what will an umbrella policy cover? It will cover lost wages, the victim's hospital and medical bills, damage to property, attorney fees, and legal fees. If someone sues you for slander, false arrest, imprisonment, mental distress and other liability situations, you would have the protection that you need. Keep in mind that if you get sued for $3 million and your insurance company only covers $2 million, you are responsible for paying the balance. If you are a homeowner, you should definitely consider purchasing the extra liability coverage. It is also important to note that some types of lawsuits aren't covered with a car or homeowners insurance policy, so umbrella insurance will keep you safe. 

An umbrella policy will cost you about $150 per year or more. The prices vary among insurance providers. If you want to find an affordable umbrella policy, you should compare rates with several insurance companies until you find the best deal. I strongly recommend that you obtain at least $1 million of liability coverage. If your home and vehicle is insured with one insurance company, you should definitely contact them about purchasing an umbrella policy because you might be able to get a discount on your monthly premiums.

Many people are at risk because they never purchased an umbrella policy. Others did not purchase enough coverage to secure their assets. If you have any questions and if you need advice about how much coverage is necessary for your lifestyle and financial situation, consult with your financial advisor.