Hope for the best; plan for the worst.
About half of my clients who could benefit from having an umbrella liability policy don't have it when we first start working together. Should you? The answer depends on your individual circumstance (surprise, surprise), but the majority of homeowners and/or people with even moderate wealth are good candidates for umbrella coverage.
What is umbrella insurance?
Umbrella insurance is additional liability coverage, and works as an added layer on top of the liability protection in your existing home and auto policies. We don't like to think in terms of worst-case scenarios, but accidents happen. Umbrella insurance provides additional asset protection in the event that you're found liable for something that happens in a home, rental property, or vehicle you own.
Why such a plug for it?
As a fee-only financial planner, I don't sell umbrella coverage, nor do I receive any incentives for recommending it.
It's low-hanging financial-wellness fruit: a simple thing you can do that's generally pretty inexpensive for a significant amount of coverage. ($1 million worth of coverage averages $150-$300 per year, according to the Insurance Information Institute.) Hopefully, you never have to use it and it's comparatively little out of your pocket each year. But if you do end up filing a claim, the return on those premium costs could be well worth it.
If you think you might benefit from umbrella coverage, a first step might be calling your home and/or auto insurance companies to see if you're eligible for a bundled discount through existing coverage. Alternatively, you could shop policies with an independent broker to see what's out there.
What's an independent insurance broker?
Check out these articles for details on how independent brokers differ from 'captive' agents: