In some ways, personal insurance is about layers.
How so? Consider this - your life insurance is your base, protecting your loved ones in the event of your demise. Your homeowner's insurance protects the instrument that protects you and your family - your home. Same for your auto insurance, which adds another layer of insurance protection, and so it goes, with health, business and disability insurance.
Maybe the most undervalued - and under-rated - form of personal insurance is umbrella insurance. By and large, umbrella insurance guards you in the event of significant claims and lawsuits, -- and does so in two primary ways:
- Umbrella insurance gives you liability protection above and beyond the limits of some of your major personal insurance policies, like homeowners and auto insurance.
- Umbrella insurance covers for claims that are often excluded by liability insurance policies, such as false arrest, libel, slander - even liability coverage on real estate investment properties in your name.
Do you need umbrella insurance? Maybe more than you might think.
"I was lucky," says Brett Anderson, a money manager at St. Croix Advisors, LLC, in Hudson, Wis., who owns an umbrella policy. "I had a dog, Josie, a beautiful Alaskan Malamute, who weighed about 110 pounds. I never worried about having to lock my front door. She'd stand guard quietly even if you knocked or rang the doorbell."
One day, Anderson's dog engaged physically with a neighbor's dog - a smaller five-poodle, that was injured in the confrontation, but did survive the incident. "I was liable for my dog, and at the time, I couldn't wait to see that vet bill," he says. "But after my deductible, the insurance company paid the rest."