Umbrella coverage is a surprisingly affordable add-on to several insurance policies that helps you safeguard the financial health of your family or your company in the event of a serious lawsuit. This “insurance for your insurance” kicks in when your other policies reach their financial limits.

Auto and home insurance

Let’s start with your car and house. Even if you carry auto or home insurance with recommended coverage levels (smart move, by the way), you may still not have “full” coverage if your legal costs spin out of control. A significant enough accident could put you at risk for losing personal assets which may include your:

• Savings
• Home, car(s) and valuables
• Current earnings
• Future earnings (yes, these can be garnished)

With an umbrella policy, you can be prepared for unfortunate situations that won’t be fully covered by your home or auto insurance policies. Real-life examples include:

• You hit a driver in her 30s who has a long career ahead of her. If she sues you and claims her injuries prevent her from continuing to earn her current income, you might end up with the bill for lost wages as well as her potential loss of income

• You host a paintball party in your backyard for your kids and their friends. One participant removes her headgear afterwards and is injured with a paintball. Your legal and medical bills could be huge – even if you advised everybody on proper safety procedures

• You own a rental property, and a tenant claims he suffered lung damage from black mold found in his apartment. He successfully sues you for losing his track scholarship to a four-year college

In addition, there are some specific legal situations where an umbrella may even be the exclusive remedy, such as:

• A non-family member without a driver’s license takes your car for a joyride and injures others on the road. Many auto policies won’t cover this, but an umbrella often will

Business insurance

Do you own your own business? (Nice work!) An umbrella policy can do the same thing for your company’s financial health. An affordable commercial umbrella can be added to these important policies:

• General liability
• Worker’s comp
• Commercial auto (owned and non-owned)

Just like a personal umbrella, a commercial umbrella kicks in when you hit the limits of these policies because you have to make a huge legal payout. Some real-life examples include:

• Your employee is driving his own car to make a deposit for you at the bank and gets into an accident. Several passengers in another car are injured and sue your company

• The name or slogan of your company accidentally infringes on the copyright of a business with deep pockets. They lawyer up, and you exceed your general liability limits on legal defense costs alone

• A customer sues you after slipping on a spilled drink in your store and suffers a concussion and other injuries that run up significant medical bills

A few things to keep in mind:

You can’t purchase an umbrella by itself – you need the auto, home or business policies first. And an umbrella only covers you if you’re sued for injury or damages. If your business or home are flooded, an umbrella won’t help pay for your property damage.

Most commercial and personal umbrella policies start at a payout of $1M and go up to $10M. That could make all the difference in keeping you in business – or safeguarding your financial future. Ask a licensed Mylo agent if an umbrella is right for your rainy day.

Want to check out your options for top-rated umbrella policies ... save by bundling your home and auto insurance in one place … and get a custom consultation on the right coverage for your unique company? Call a licensed Mylo advisor for a custom consultation on the right coverage for you.