A so-called umbrella policy can provide substantial insurance coverage at a modest cost.

There are many reasons you need to protect your assets.  We often focus on business and professional risks, economic problems, divorce and other catastrophic events.  But disaster frequently strikes from much more routine events — like an auto accident.

Let’s say you accidentally injure one or more people in an auto accident.  You have $300,000 in liability insurance coverage.  But the medical bills of the injured parties are closer to $1 million.  It is quite possible that you could eventually lose your house or other assets in such a situation.

An umbrella policy provides excess insurance over your auto and home owners policies.   Generally, claims settle at lower amounts.  So the additional protection does not cost as much as the first level protection.  Also, an umbrella policy covers multiple risks (such as auto accidents and accidents in your home).

I advise clients with respect to some rather sophisticated asset protection techniques.  But you should not overlook the basic protections provided by some very simple, reasonable and relatively inexpensive alternatives — like an umbrella insurance policy.