Your standard auto insurance or homeowners insurance will provide you with some liability coverage. If you are sued, those policies pay up to your policy limits for legal judgments against you. They may also pay the related attorney’s fees. However, when a lawsuit settlement could very well wipe out your financial assets, you may want the extra protection. A personal umbrella liability policy provides this protection for your assets.
An umbrella policy kicks in when you reach the limit on the underlying liability coverage in an auto, homeowners, renters or co-op / condo policy. It will also cover you for additional types of claims, such as libel and slander.
You can buy a $1 million liability policy for about $150 to $300 per year. The amount you pay decreases for each million dollars of coverage beyond that. $250,000 of liability insuraBecause the personal umbrella policy pays out after the underlying coverage is exhausted, most insurers will want you to have about $250,000 of liability insurance on your auto policy and $300,000 of liability insurance on your homeowners policy before they will sell you an umbrella policy.