Do you own an Umbrella Insurance policy? Do you need one?

April 26, 2016 9:37 am

Daniel R. Legault, CFP®

Senior Financial Advisor

Most of us are familiar with our homeowner’s policy and our auto insurance policy. (For some great tips on car insurance I invite you to view my colleague Chrissy Canapari’s blog post).

We typically pay the premiums monthly, and if we’re lucky, do not have to put in a claim. However, when was the last time you looked at your coverage amounts? Do you know how much protection you actually have? What happens if you are sued? Take some time to review these documents, and if you are still unsure, I would suggest you call your agent to review in greater detail- better to call now before an incident occurs.  However, this blog is about Umbrella Insurance: read on for some very important tips on how this inexpensive coverage could save you millions.

What is Umbrella Insurance?
Think of umbrella insurance as a way to super-size your current liability protection. It is known as excess liability insurance. (Excess in the sense that this coverage is in addition to what your current homeowners or auto insurance policy will pay.) In this litigious society, owning an umbrella insurance policy can help to protect your hard earned assets, and/ or protection against future wage garnishments in the event you are sued.

This excess liability insurance is usually purchased in increments of $1,000,000 up to $5,000,000. This coverage will kick in after your homeowners or automobile policy limits are reached. The typical cost for $1,000,000 of coverage is about $250/ year.

An example
Let’s assume you are at fault in an automobile accident, and the judgement is for $800,000. Your auto insurance personal liability coverage pays an assumed $250,000. How will you pay for the remaining $550,000? This is where the personal umbrella policy can be the most effective. If you own a policy, the coverage would be extended to cover the remaining amount of $550,000.

Your next step
Excess liability insurance should be an essential part of your overall financial plan, especially if you are concerned about getting sued and have assets depleted or wages garnished. To obtain insurance I would recommend you call your current homeowners agent, and ask about coverage amounts, cost, and exclusions that could apply.

Do not delay, this could be one insurance premium check you actually enjoy writing out each year!


Dan Legault, CFP® serves as Senior Financial Advisor at StrategicPoint Investment Advisors in Providence and East Greenwich. You can e-mail him at


The information contained in this post is not intended as investment, tax or legal advice. StrategicPoint Investment Advisors assumes no responsibility for any action or inaction resulting from the contents herein. Dan’s opinions and comments expressed on this site are his own and may not accurately reflect those of the firm. Third party content does not reflect the view of the firm and is not reviewed for completeness or accuracy. It is provided for ease of reference.