Umbrella Policy

Mike, A friend recently told me she purchased an umbrella policy, which covers both her home and cars. Should I purchase an umbrella policy? -Jennifer

Jennifer, An umbrella policy doesn’t replace your home and auto insurance, but rather adds additional coverage on top of your home and auto to protect you from a catastrophic claim. Umbrella policies were first offered in 1949 to protect the assets of the wealthiest consumers. Due to inflation, umbrella policies are now a necessity with the middle class. Umbrella policies are necessary because most auto and home policies only offer liability limits up to $500,000. If you injure somebody, you’re responsible for their medical bills, pain and suffering as well as lost wages. You should always carry more liability coverage than your net worth and your limits should be reviewed as you earn more income. Umbrella policies start at $1 million in coverage and can go as high as you need. In Colorado, if you cause an accident and you have inadequate liability coverage, not only can your assets be seized, but 30% of your earnings can also be garnished. An umbrella policy can help prevent a car accident from ruining you financially. You can expect to pay $150-$400 a year for a $1 million umbrella.


Mike Schmisek has been in the insurance industry for over 11 years. He is the owner of Premier Mountain Insurance. He can be reached at 303.922.1002 or