Umbrella Insurance Coverage Can Be an Important Protection

Depending on an individual's insurance circumstances and other factors, such as business activities, it may make sense to consider investing in an umbrella policy.

An umbrella insurance policy basically provides extra liability protection to insurance customers beyond that offered by their existing policies. These policies are typically offered for both home and auto insurance, and can be particularly useful under certain circumstances.

For example, the Insurance Information Institute advises people planning to rent out their home to consider an umbrella policy.

According to the organization, property owners can get between $1 million and $5 million in added liability protection, which can be especially helpful in the event of a tenant injury or some other unforeseen circumstance that results in a legal situation.

Along with investing in umbrella coverage, the III also reminds property owners to consult with an insurance agent about the financial implications of renting out their home. For example, not every insurance policy will cover vehicles that are accessible to tenants.

Also, landlords can further protect themselves by requiring prospective tenants to show proof of renter's insurance. By doing so, landlords may be able to reduce the chance of having a lawsuit filed against them in the event of a fire or other incident.

People who regularly transport other people's children to school or other events, such as soccer practice, may also consider an umbrella policy for their vehicle, since the insurance implications of an accident could quickly become expensive and difficult. Those who use their vehicles for business in general may also consider umbrella coverage as an extra layer of financial protection.

For homeowners, umbrella coverage may also be desirable for those who like to frequently entertain guests in their swimming pool, or who have one or more dogs that could be considered prone to biting neighbors or damaging property.