Twice a week, our CEO and resident money guru Jean Chatzky tackles your burning questions in the HerMoney newsletter. We’ve pulled some of the best to feature on our website — and this one made the cut! Got a question for Jean? Send it her way right here.
Q: “I’m hoping you can offer advice about when someone should get an umbrella insurance policy and which insurance companies you recommend buying a policy from. Thanks!”
A: Somewhere along the way, you’ve probably heard someone comment that “we live in a litigious society.” That’s the argument for buying an umbrella liability policy. But first, let’s talk about what it is. Your basic property/casualty policies — homeowner’s insurance, renter’s insurance, auto insurance — all come with a certain amount of liability coverage. Typically, a standard homeowner’s policy provides $300,000, a renter’s policy provides $100,000 and auto insurance liability levels (per person and per accident) vary by state. But what if your net worth is significantly higher than that? If someone is injured on your property, sues you and wins, your personal wealth could take a hit.
An umbrella liability policy, which provides a layer of coverage that sits atop your standard policies, can provide a solution. It kicks in when your other coverages are tapped out. It can also provide insurance for liabilities that aren’t covered by your other policies — like libel, slander and false arrest. And, the nice thing about umbrella policies is that they’re pretty inexpensive. You can typically purchase around $1 million of coverage for just a few hundred dollars. Talk to the company where you already purchase home or auto insurance. This is one of the coverages that you can bundle.
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