Insurance foolishness: Umbrella insurance

7 ways you're being foolish with insurance
Umbrella insurance © Nelosa/

Another bit of foolery is to assume that the liability coverage in your homeowners insurance and your car insurance will be enough for every eventuality.

"I think umbrella insurance should be sold along with every swimming pool," says Tim Dodge, director of research for the Independent Insurance Agents & Brokers of New York in Syracuse. "You can be sued if someone is hurt around the pool, and the liability for an accidental death would be huge."

Tom Bigoski, owner of the Thomas Bigoski Insurance Agency in Gainesville, Va., says umbrella insurance, which is relatively inexpensive, provides $1 million or more in additional liability coverage. The coverage can protect your current assets and future earnings in case of a lawsuit.

"Many people believe they don't have enough assets to need an umbrella policy, when the reality is if they or a family member cause a serious car accident, their auto insurance may not cover all of the other person's injuries," says Ron Moore, senior product manager for MetLife Auto & Home in Minneapolis.

An umbrella policy also can provide protection against your liability in a case of slander or libel.

"If you get sued for something you or your teenager wrote on Facebook about someone else, your personal injury coverage on your home insurance may not be enough," says Dodge. "The chances are low that someone would win, but your umbrella insurance will also pay the legal fees to defend yourself."


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