How to Insure Your Income: Personal Umbrella Liability Insurance Introduction

Disability isn't the only threat to your ability to earn an income. Even if you work throughout a healthy, long life, legal or financial crises can encumber the money you make. We considered these kinds of risks a little in the chapter on long-term care insurance. But there's an even more devastating financial loss that some people suffer: personal liability.

We live in a very litigious society. Much of society now believes that an injured party should sue anyone and everyone he or she can and collect as much money as possible -- whether or not the payment is justified by the actual damages incurred or by the other party's actual liability for the loss.

This environment can be a major risk to any sources of income you might build during your lifetime.

Personal umbrella policies play a vital role in protecting your financial security by providing broad coverage and high limits of coverage against liabilities. Many of the most commonly sold personal liability coverages, known as underlying policies, do not provide enough coverage and do not cover all losses.

In this chapter, we'll consider the ways in which an umbrella policy can protect your income.