While most people think of their insurance policy mainly as a company that will pay to repair their vehicle or home if they are in an accident or storm, the largest threat that this policy protects you against is being sued. On average, insurance policies cover up to $300,000 of liability. This means the insurance company will pay up to $300,000 of legal fees and damages if you are at fault in an accident or someone is injured in your home.
While $300,000 sounds like a lot of money, it is only a few days in the hospital. This amount could easily be too little if you are the at fault driver in a serious accident. One easy and very affordable solution to protect your assets and your peace of mind is to add an umbrella policy to your coverage. Umbrellas will cover your liability at home and in the car. This policy adds an additional $1M or more of coverage to your home and auto liability coverage and most companies give a discount to add this coverage to your policies.
The average cost to add $1M of liability coverage to your home and auto policies is about $160. Since most companies give a discount for your home and auto coverage to add an umbrella, the net cost is about $100/year. This is a small price to pay to ensure you won’t be dipping into your personal bank accounts to pay for any liability your insurance doesn’t cover. It is why I call the umbrella policy the best value in insurance.