For Mark Roberts’ Use: We all know that the purpose of auto and homeowner’s insurance (and certain types of business insurance) is to cover financial losses in the event of an accident or natural disaster. When your personal assets are damaged, your insurance policy kicks in to cover the loss, up to the limits stated within the policy.

Unfortunately, there is another type of loss that can occur, even though we don’t think about it as often. In a litigious society, we all must consider what would happen if a lawsuit occurred. Even if we are generally mindful, cautious, and law-abiding people, sometimes accidents can happen which are simply beyond our control. Beyond your control or not, you can still be sued for financial damages to the other party.

We often rely upon our auto, homeowners, and other types of insurance policies to cover our liability in the event that these situations occur. But when was the last time you checked your liability limits on those policies? In most cases, the limits are relatively low. In the event of a lawsuit, courts often award settlements far above the typical limits of most insurance policies.

That’s why many people are turning to umbrella insurance, to cover that gap (which can often be enormous). For a comparatively low annual premium, you can obtain an umbrella liability policy of a substantial size (say, one million dollars). That policy will extend to cover damages beyond those covered by an auto or homeowner’s policy (and often, a business insurance policy).

Umbrella insurance isn’t just for the wealthy, either. Middle class families who have accumulated retirement savings, significant equity in a home, or other assets are also at risk of substantial loss through litigation. Even future earnings can be garnished for an indefinite period of time.

Considering the low cost of umbrella insurance, it would be worth your time to evaluate your risk and investigate policies. While the odds of a lawsuit are still fairly low, the risk to your livelihood is great in the event that something does happen.

As with all insurance and financial matters, please call us if you need more information on protecting yourself. We can help you decide if an umbrella insurance policy fits into your overall, long-term financial plan.