How well off are you going to be if someone sues you for more then you are worth financially? If they win you are officially up-side down financially and may be a good candidate for bankruptcy. What are the chances of being sued? I don’t know the answer to that last question but, I do know the United States has more lawyers
Most people carry home owners insurance, auto insurance, life insurance and maybe short term disability insurance. These insurances are mainly to cover if something happens to an item, your person and some liability. If someone else gets injured or hurt on / by your property you can be sued.
What happens if you are sued? If you are sued for more then the main policy coverage you would have to pay the difference if you lose the lawsuit against you. This is where having a umbrella policy comes in handy.
An umbrella policy covers additionally after the limit of your initial policy is reached. I know of personally a case where a driver was driving on a snowy road and came over a hill to see another car spinning doing 360s. The driver swerved the car enough to avoid t-boning the spinning car but, tipped the bumper. The driver of the spinning car sued the driver who tipped the bumper. The amount sued for was excess of the policy of the second driver. The second driver had an umbrella policy that covered the excess of the law suit.
The umbrella policy fills the gaps from your other policies and covers them all. The umbrella policy gives piece of mind and puts the insurance company lawyer in front of your case should you be sued. (It is in their best interest to win when more of their money is on the table.)
If someone sues you for loss of wages and the average person makes $40K a year the 20 years of lost wages can be $800K dollars. When you weigh the risks and costs with real life values you may be risking your whole financial future which is the foundation of your families’ financial future if you have kids.
The cost of a umbrella policy usually runs from around $400-$1000 a year for 1 -10 million dollar coverage. The can be from $33-$83 per month. This is a bargain compared to the initial coverage needed and it should keep any rain from hitting your wallet should something happen.