Every policy has gaps... Here's how to protect your finances from falling into one.

I'm sure you understand the value of insuring your homes, cars, and other personal property. I'm sure you also understand that they could get lost, damaged, stolen, or destroyed, which would leave you in a bit of a pickle.

But what about things that you can't put a price on?

How about your peace of mind?

What happens if, in this litigious world we live in, someone sues you for more than your policy will cover? There is a reason that coffee cups now read "CAUTION: HOT." Our country is crazy in love with suing and the idea of easy money. You wouldn't think you'd need the additional protection that an umbrella insurance policy would provide - but if you were wrong, it could mean financial disaster.

It's a myth that umbrella policies are for the rich; these policies offer peace of mind for anyone who could be held liable for serious injury to another person-- whether that injury is caused by you, your pet, or your child. For as little as a few hundred dollars for a $1 million policy, umbrella insurance policies supplement the insurance that you already have through your home and auto coverage.

It may sound like overkill, but say you had $100,000 in liability coverage for your car. Now, say you get into an accident.

• There are four people in the other car, and one of them has been badly injured.
• These injuries prevent him from working, racks up enormous medical bills, and a great deal of pain and suffering.
• In an accident like this, if they decide to sue you, $100,00 in coverage hardly scratches the surface of what you could owe.
• That means that now you're having to liquidate your assets and who knows what else.
• Plus, you still have to pay your lawyer, and probably part of their lawyer fees, too.

In the blink of an eye, your life can go topsy-turvy if you don't have the right protection in place.

Moments like these are rare, but it's very important to have the protection in place for when they do. Because without it, your house, your car, your savings, your kids' college education... everything you've worked so hard to achieve can go up in smoke.

Umbrella Insurance Policies Typically Cover:

• Liability judgments that exceed the liability coverage limits on your home and auto policies.
• Umbrella insurance kicks in once the limits of your base policy (home insurance or auto insurance) are exhausted.
• Your umbrella covers any overages, up to the umbrella insurance policy limits.
• Instances when you, your child, or your pet cause bodily injury or property damage.
• Personal injuries, such as:
• Libel and slander (when you say or write things that defame someone's character)
• Invasion of privacy
• Wrongful entry
• False arrest
• False imprisonment
• Malicious prosecution
• Legal fees and defense costs

Umbrella Insurance Policies Don't Usually Cover:

• Punitive damages (punishment by fine for actions or behaviors deemed reckless or outlandish by the court)
• Intentional acts
• Liability claims related to a business you own (you will need a separate business insurance policy for that)

Details, Details...

• Make sure an umbrella insurance policy is right for your needs - sometimes it's better just to raise the limits on your home or auto insurance... But ask your agent. Usually umbrella insurance is the cheaper option.
• Most insurance companies require you to have particular liability limits (usually $100,000 per person for auto and $100,000 for home) on your homeowners or auto insurance policies in order to get umbrella insurance.
• Home insurance policies do not have any coverage for "personal injury" - you should take this into consideration when deciding whether to add umbrella insurance coverage to your financial protection arsenal.
• You'll usually get the best rate if you ensure your homeowners, auto, and umbrella insurance are all with the same insurance company.
• If you're sued because of work you've done on the board of a religious, civic, or charitable organization, some umbrella insurance policies will cover you. Ask your agent.

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