Everyone knows about homeowners and auto insurance. These are musts, and they protect policy-holders in the event of accidents and lawsuits. The trouble can arise in the event of a lawsuit. If someone is sued and the judgment ends up being more than the dollar value of their policy, that can put their personal assets at risk. This means that their home, money and even future wages can be at risk. What, if anything, can be done?

Buying an umbrella policy covers you over and above the limit on your home and auto insurance. This is important. Typical limits to homeowners and auto policies range between $250,000 t0 $500,000. But these days, judgments exceeding that amount are becoming more common. In fact, judgments over $1,000,000 are increasingly common, too. That’s why it’s so important to have this protection in place. Without it, a homeowner or driver’s world can be turned upside down.

Umbrella policies are particularly important for people who have extra risk factors in their lives. Insurance companies spent lots of time and money measuring risk. They know that statistically, people living with dogs and teenagers are more likely to be sued. Other risk factors can include lifestyle factors like hosting lots of parties or coaching sports.

Umbrella policies typically provide $1,000,000 in additional coverage. Coverage for an additional million dollars is also available, typically for an extra $100 per year. That’s not all the typical umbrella policy provides, though. Umbrella policies can also protect people if they have an accident on vacation, for example with rented watercraft. All in all, these policies are great at providing peace of mind for busy people.

If you’re interested in adding an umbrella policy to your insurance, be aware that many insurance companies will offer a discount. Typically, policyholders must have both their home and auto insurance with the company to receive a discount on the umbrella policy. Asking about a discount can be a great idea.