Question: Do I really need the extra Umbrella Coverage? What does it cover and why?
Answer: (Provided by Lynn Mathis)
The umbrella is simply providing an additional liability protection (umbrella coverage is usually an additional million or millions). The “rule of thumb” is to have enough liability to protect your assets. If you are working as a sole proprietor consider this additional layer of protection primarily because you do not have the corporate veil protection afforded by operating as a corporation.
The reasoning is if someone is suing you they are going to go for a amount at least equal to your personal assets (current and future earnings included). We suggest you have your insurance at a higher level so they will be willing to settle for the insurance payout and not continue after your assets. There is no guarantee that will work, but it is a good place to start. I don’t know what your personal assets are, so you will need to determine if 1 or 2 million (or higher) would be better.