Personal Umbrella Insurance - Consider It If You Can | Coyote Blog
I agree with this and have carried an Umbrella liability policy for nearly my entire adult married life. Back in the olden days, there wasn't much emphasis on high auto liability limits, but today you will probably need to carry $250,000/500,000 auto liability limits plus or minus. As one of the commentators says, this is a mandatory coverage level for anyone with assets/deep pockets.
My rule of thumb is to mirror the Umbrella policy to your assets rounded up to the million, so if you have less than $1,000,000 in assets you will need $1,000,000 policy limits, when your assets reach $1,500,000 or so round it up to $2,000,000. Lather, rinse, repeat.
Many people misunderstand liability insurance; it does not protect someone else from your mistake, it protects you from the cost of your mistake. Real insurance always protects your wallet, income, and wealth from your mistakes or misfortunes. On the other hand, insurance like Obamacare is mostly not insurance at all but is prepaid medical care.
The "free" stuff in Obamacare is not free. There is no free lunch. You pay for these freebies, and they cost a lot more than if you shop for the service in the market. So, the annual free exams are calculated into the premium for the policy, if you do not use them too bad, you still paid for them, same for the colonoscopy exam. The insurer charges you their high average price to make sure that they cover the actual costs of the people receiving these procedures each year, amortized over time. Plus, they have to add in a factor for their overhead costs for maintaining an account with this money. The same for drug counseling, psych counseling, and all the other "free" stuff.
Insure against events you cannot plan for and which could be so costly that you either cannot afford them or are unwilling to pay for them out-of-pocket. So, don't buy low deductible comprehensive insurance to protect against a cracked windshield. Instead put a few hundred away in your household savings for when this happens and pay it out-of-pocket. Then pocket the $10 per month savings for the next five years (60 months) or more.
Anyway, Coyote is right, a personal Umbrella is a necessary policy for adults especially married adults with assets to protect.