What does umbrella insurance cover? The short answer is that it covers almost anything not covered (or not fully covered) by your other policies.

A simple example would be someone slipping on your front step or a handyman falling off your roof.

Your homeowner's policy would cover to a certain limit, but the claim may exceed that. Alternately, the claim may be completely outside the coverage of your policy.

In addition, an umbrella policy can also pay for legal defense costs if needed.

Do I need umbrella insurance? As a physician, the answer is almost certainly "yes." Even without owning land, a townhome or condominium conveys liability. Additionally, an accident may occur in a vehicle that you own, even if you are not the driver. In either case, umbrella coverage would cover above or outside the limits of your baseline insurance policies.

Any property owners are at risk for claims, but this is a unique vulnerability for physicians as this profession is known (not always accurately) for high net worth. There are many cases which can famously exceed policy limits where an umbrella policy is required for adequate coverage.

Finally, there are special circumstances involving pools, trampolines, dogs or activities such as coaching or volunteering which may increase liability. You will need to discuss your own specifics with an insurance agent to make sure your individual items and activities are sufficiently covered.

How much will it cost? The good news is most incidents fall below the coverage cap of your existing insurance, meaning that umbrella coverage is truly catastrophic coverage. Just as with a higher deductible policy, less likely to be needed means less expensive.

The specific cost would be partly related to your current coverage, but one million in coverage should be obtainable for less than a few hundred dollars per year. Additionally, by utilizing your existing insurer you can obtain a multi-policy discount.