An umbrella policy is a type of insurance that provides liability coverage above and beyond the limits of your home, auto, or watercraft insurance policies. It can also provide coverage for certain claims that may be excluded by your other policies, such as libel and slander. An umbrella policy typically costs $200 to $300 per year for $1 million in additional protection.
For most people, an umbrella policy is a wise investment. If you have substantial assets, an umbrella policy can help protect them in the event that you are sued. Even if you don't have many assets, an umbrella policy can still be useful because it can cover expenses such as legal fees and court costs that would not be covered by your regular insurance policies.
There are some situations where an umbrella policy may not make sense. For example, if you live in a state with low liability limits and you don't have many assets, you might not need the extra coverage. Or if you already have a high limit on your auto insurance policy, you might not need the added protection of an umbrella policy since your auto insurer would likely pay any damages above your liability limit.
Ultimately, whether or not an umbrella policy makes sense for you depends on your individual circumstances. If you're unsure whether or not you need one, talk to your insurance agent or financial advisor to get their professional opinion.