What should I consider when acquiring or evaluating extended personal liability (umbrella) insurance?

Personal liability insurance, also called "umbrella" insurance, protects you from losing your assets or future earnings as the result of a liability suit arising out of your personal, but not job activities. It provides additional protection on top of homeowner's or renter's and automobile liability coverage and usually covers family members, including kids away at college (talk about frightening liability potential) and even pets.

Important matters to consider.

  • You should have at least $1 million umbrella liability insurance. If your estate is growing or you have a high income, you should probably have at least $2 million in coverage. It's quite affordable.
  • Your umbrella liability insurance policy will need to be coordinated with the liability coverage provided on your auto and homeowner's or renter's policies. Therefore, it's usually advisable to buy the umbrella policy from the same company.
  • If you perform regular or heavy volunteer work, find out from the organization or your attorney if you are indemnified against personal liability.