Umbrella Insurance: Coverage for a Rainy Day

by: Smith and Howard Wealth Management

Insurance is a critical part of protecting one’s wealth and minimizing risk.  While most people know they need basics like automobile insurance and homeowners’ coverage, fewer are familiar with umbrella insurance – coverage we think is equally as important and that we typically recommend for affluent individuals.

What Is Umbrella Insurance?

Just as an umbrella provides broad coverage from rain, umbrella insurance provides broad and increased coverage beyond the limits of other insurance policies. For example, suppose you are guilty of causing a car accident and a seriously injured person pursues a significant damages claim against you of $1 million.  Many auto insurance policies have surprisingly low coverage limits, often around $250,000.  In addition to covering related legal expenses, an umbrella policy can pick up where auto insurance limits leave off.  Umbrella coverage is not just for additional auto coverage, though. For example, in one recent story, a housekeeper fell in an individual’s home. The housekeeper pursued a costly lawsuit against the homeowner. Fortunately, the homeowner’s umbrella insurance covered the claim, which significantly exceeded the limit of her homeowners’ policy.

In addition to covering claims beyond the liability limits on your existing policies, umbrella insurance often covers claims not covered by other policies, such as claims of libel or slander and those arising from service on a nonprofit board. An umbrella policy can provide much needed coverage – and reassurance – in the event of such claims.

Why Do You Need Umbrella Insurance?

Simply put, your insurance policies may not be enough to protect you and your family.  According to the Insurance Information Institute (; 16 percent of personal injury jury verdicts in 2012 and 2013 involved awards of $1 million or more.  Affluent individuals are more likely to be targeted by people seeking high dollar awards.  Not only are existing assets targeted in such claims – increasingly verdicts and settlements also target projected future earnings.  The impact on you and/or your family could be substantial without appropriate coverage.

On the bright side, umbrella insurance is very affordable.  Often, you can obtain a million dollars in coverage for just a few hundred dollars a year, making it one of the best deals in the insurance world.

We strongly recommend everyone have umbrella coverage. Umbrella insurance is particularly important if you:

  • Have a swimming pool
  • Have a trampoline
  • Own a dog
  • Have a teen driver
  • Frequently entertain in your home
  • Employ domestic help or have others working on your property
  • Serve on the board of a nonprofit
  • Have a heavy social media presence

How Can Smith and Howard Wealth Management Help?

A Smith and Howard Wealth Management advisor can assess your overall financial situation, analyze your risk exposure, and examine your insurance policies to help you decide how much umbrella coverage you need.  As your financial advocate, we can ensure your insurance policies work in tandem to provide the coverage you need without any coverage gaps.  If you do not have an established umbrella policy, we can refer you to reliable providers.

While umbrella coverage is important, it is only one element of your overall financial picture. We believe that a one-on-one relationship with our clients is the best way to make sure we are helping them find the financial peace of mind that is our ultimate goal. Regular meetings and conversations with clients are standard at SHWM, and an insurance coverage review is part of our ongoing conversations.  If you have questions about umbrella insurance or any other aspect of your financial life, please call me or any one on our team at 404-874-6244.

Remember: The time to think about insurance is before the unexpected happens.