Today every other person is involved in lawsuits either because they are genuinely a part of it or they may be dragged into them for no fault of theirs. Whatever the reason may be one has to be prepared to defend himself. Most often the common man does not have enough knowledge to protect himself and his assets from these lawsuits. The umbrella insurance is just the right kind of insurance policy that will give you ample protection against frivolous lawsuits. The term ‘excess liability’ that the umbrella insurance grants helps covers the auto and home insurance policies when they have come to an end. Your auto and home insurance will only cover the risks that are related to your house and your car. Most insurance companies give umbrella insurance policies that range from one to five million dollars and even up to ten million dollars.

Each policy holder may choose the extent of coverage depending on the value of assets he holds. The assets that you possess must be equal to the amount the umbrella policy covers. The cover is not very expensive to purchase and this is one reason most often buyers end up buying a cover of five to ten million dollar umbrella policy even if he may not possess assets of the same value.

Insurance companies grant umbrella insurance to already existing clients with home and auto insurance. Clients who have a liability on home and auto insurance policies are eligible for the umbrella insurance policy. $250,000 of any kind of bodily injury, $500,000 on every accident, around $100,000 on auto damage and about $500,000 liability for your home must be maintained in order to qualify for umbrella insurance.$120 dollars can buy you coverage of one million dollars as this policy is not very expensive. If the value of your assets is more than the insurance will cost you more, this insurance is still cheaper when compared to the other policies. This insurance covers motorcycles, boats and other vehicles used for recreation, you can check with your insurance company to see what they have to offer.

Here is an example of an umbrella policy that will help you understand its usefulness. If while driving a car you have knocked off a pedestrian on the road that has resulted in excess medical expenditure that your auto policy covers,  the umbrella policy will be the just the right policy that will help in case the pedestrian takes you to the court of law and claims damages. You can meet your legal expenses and pay fines and other compensations if the judgment is not in your favor.

The excess liability helps in covering areas that your home and car policy do not include. With umbrella insurance you will be able to protect yourself from any kind of personal injury, eviction, if you have been arrested and imprisoned for no mistake of yours, if there has been an intervention of privacy, defamation or malicious prosecution. Umbrella policies also give relief when a client is involved in legal matters related to charitable boards or organizations. The insurance company charges an extra premium for covering such risks.

In all likelihood, you have heard the term umbrella insurance mentioned in relation to auto insurance but maybe you never really asked around to find out what exactly it was. An umbrella policy is designed to shield you from almost everything that your home and auto insurance policy does not, as well as fill in gaps in coverage when the limits of your regular policies are exhausted.

Look around and you’ll find that so many regular citizens have lawsuits filed against them with the reasons ranging from the frivolous to the justified and have no extra protection to block the plaintiff from going after their personal assets. To protect yourself, you should invest in umbrella insurance.

What exactly is an umbrella policy? It is, plain and simple, excess liability. What this ensures is that when the limits of your other insurance are exhausted, this comes into play. This could be your home or your auto insurance. Depending on the company you hire, you can purchase anywhere from 1 to 5 million dollars worth of excess coverage, sometimes even as high as 10 million.

The amount of coverage you select really depends on your net worth. You might find people buying a policy that is well above what they are worth because the coverage is cheaper to buy.

An insurance company will give you this only if you have home and auto insurance with them already and you will be required to maintain a certain level of liability on the home and auto policies in order to qualify for the excess coverage. There is a minimum amount of $250,000 that you need to have for each one as bodily injury liability, $500,000 per accident, and $100,000 for property damage for your autos, and $500,000 of liability in and around your home.

The coverage is cheap – and you’ll find that maybe $120 every month will provide you with excess liability of $1 million. Obviously if you own more, you pay more but overall, the price you pay is minimal. It’s not just your house or your car, you could have other vehicles including recreational ones like planes or boats and all these could come under one umbrella.

Umbrella coverage works in the following way. Say you ran into someone walking along the road, and the treatment for that injury exceeded what your auto insurance could bear, the umbrella would be used. Say the person concerned decided that he wants to be compensated for the damages and sued you, that’s when the umbrella insurance can be of great use in paying all the fees and the damages in case things do not go your way.

Besides this, you’ll find that it also covers you for many things that have nothing to do with your cars or homes, such as personal injury protection. This includes false arrest, false imprisonment, and malicious prosecution, and wrongful entry or eviction, defamation or even invasion of privacy.

On fact, you might even have a policy that covers you in the event you are a member of an organization and you are sued by the board or any member. You may have to contact your insurance company to see if you have to pay an extra premium for this type of coverage.