When it rains, you need an umbrella for protection. You also need umbrella insurance to protect you from above policy limits litigation. Find out more in this episode of the Finance Flash Go podcast!

Umbrella insurance is insurance that covers any and every claim that could go against you and exceed your policy limits. It’s like an umbrella in that way.

So, let’s say that your car insurance has a bodily damage limit of $250,000 like mine. And you get in an accident and someone sues you for injuries for $500,000. If there was a successful judgement against me, my umbrella insurance would cover the extra $250,000. Same with a malpractice or home-based suit that exceeds your limits. It’s actually kind of rare to have a suit against you, even a malpractice suit as a physician, that exceeds your policy limits. But umbrella insurance is so cheap that I recommend getting it. For instance, I have a $5 million umbrella policy for $395/year.

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