Home

Don’t Forget Your Umbrella!

Essential for a rainy day

In the course of taking a quiz on my level of financial savvy today, I realized that one topic I don’t know much about is umbrella insurance. This is not insurance to protect valuable umbrellas.

Rather, it is something that can really save your butt (and your family’s butt) if you ever get sued. Let’s face it, we live in a litigious society, and you never know what can happen. You could be driving along, minding your own business, and accidentally crash into a cranky business executive’s car. Then, he could sue you for $1 million for damages to his career, etc. It’s not just that $1 million you would have to worry about–though I’m guessing none of us have that kind of change hidden under our couches-it’s also the massive legal fees. You could lose your home, everything.

The New York Times has a good article that explains what umbrella insurance is all about. According to the article, $1 million in umbrella insurance can cost between $150-$300 per year. Plan on spending an extra $125 per year for each additional million bucks in coverage. I spent twice that amount on restaurants and groceries just last month, so I think it’s a pretty good deal for the peace of mind.

As we build our wealth through investing, we also need to invest in ways to protect all that we’ve worked so hard to grow and acquire. Hopefully, you’ll never have to use umbrella insurance, but it can keep your life from being ruined in case of a rainy day.