Retirement — and the shift to relying on retirement income — marks a crucial change in your financial life. Sure, you can now stop spending so much on new suits and long commutes. However, retirement is when you transition from having a regular paycheck to relying on your investments for income. While this shift may be easy to grasp conceptually, it can be far more challenging to implement as you develop a retirement plan.

"If this isn't done with care, retirees can deplete their savings, particularly if they live longer than expected, which can lead to the risk of running out of money before running out of life," says Anthony Saccaro, president at Providence Financial & Insurance Services.

So, how do you create what amounts to a paycheck in retirement that will last as long as you do? Here are five of the top ways to generate a reliable income in retirement for the long haul.

1. Retirement income by the bucket strategy

One of the most common strategies experts recommend for a reliable income in retirement is the bucket rule. The idea is to allocate your savings among three buckets: a now bucket, a soon bucket and a later bucket.

"The now bucket holds the money you need for your monthly bills and any 'big ticket' items you intend to purchase over the next two years, like a new car or kitchen remodel," says James Comblo, president and CEO of FSC Wealth Advisors, LLC. "This money is kept safe in a place like a bank where we know it’s reliable and liquid."

You should have enough liquid funds in this bucket to cover three years' worth of expenses after accounting for reliable income sources like Social Security or annuity payments, says Chris Boyd, senior vice president and financial advisor at Wealth Enhancement Group.

For example, if you spend $100,000 per year and get $50,000 from Social Security, you should have three times $50,000, or $150,000, in your "now bucket."

"This should be enough to weather most financial storms before tapping other assets, which are more prone to fluctuation in price," Boyd says.

The "soon bucket" is for money you'll need in the next two to 10 years. This bucket is invested conservatively with the goal of earning more than a bank offers, while minimizing exposure to volatile assets. Think primarily bonds with minimal — or no — stock exposure.

Finally, the "later bucket" is where you invest for the long term. With retirements lasting upwards of 30 years today, it's essential to have some growth components to your savings.

"With these funds, we expect fluctuations in value but in keeping with our ultimate tolerance for risk," Boyd says. "From this bucket, we will expect more capital appreciation than from our other locations."

Over time, you'll replenish your now bucket from your soon bucket, and your soon bucket from your later bucket. But keeping all three in place helps ensure your income needs are covered for today, tomorrow and decades into the future.

2. Dividend stocks and bonds

For reliable income in retirement, you want to lean on income-producing investments, such as dividend stocks and bonds.

"Interest and dividends are renewable resources that can provide a steady income without the risk of depleting the principal," Saccaro says. Living off of dividends and interest lets you avoid needing to sell shares to generate income, "which significantly reduces the risk of running out of money."

You can do this by owning individual dividend stocks and bonds, or through retirement income funds. The latter has the advantage of better diversification, which can be especially important when you rely on dividends because these are not guaranteed.

A company can reduce or cut its dividend at any time. By using a fund with many different dividend stocks, you're less at risk of a single company's dividend cut greatly impacting your retirement income.

If you choose to use individual stocks, Boyd cautions against yield chasing. The highest-yielding companies, whether in dividends or bond interest, tend to be at the highest risk of not getting paid. Instead, look for more moderate and reliable yields.

3. Diversified income streams and taxes

The impact of taxes during retirement, both at the state and local as well as federal levels, is something that isn't addressed enough, Comblo says. Moreover, are you sitting down? "It’s our belief that tax rates may be double their current levels in 10 years," according to Comblo.

This makes it crucial to have methods for managing taxes from retirement income. The best way to do this is to give yourself options.

Not all retirement income sources are taxed the same. Most interest income and withdrawals from pre-tax retirement accounts are taxed at your ordinary income rate.

Capital gains from selling an investment at a profit are taxed at lower capital gains tax rates. Some dividends also qualify for capital gains tax rates. Meanwhile, some interest, such as that from municipal or government bonds, may be exempt from federal and/or state taxes.

Then there is the holy grail of retirement income: Roth accounts, which provide tax-free income.

The more diversified your income streams, the more strings you'll have to pull in managing your taxes in retirement.

4. Use annuities for guaranteed income

You can also think of diversifying your income streams between guaranteed and variable income sources. Interest and dividends are variable income streams because these rates can change. This makes them less than ideal for covering necessary living expenses.

A better strategy is to create enough guaranteed income streams to cover your necessary expenses, then let variable income sources provide for your other costs, like an annual vacation.

Social Security is one source of guaranteed income, but it's often not enough to cover all of a retiree's expenses. This is where annuities come into play.

Annuities often receive a bad rap for their high fees, but they can also provide a guaranteed income for life. "The key advantage of annuities is that they often provide more guaranteed income per dollar invested than most other financial vehicles," Saccaro says. "This makes them an appealing choice for retirees who value security and want predictable, lifelong income."

There are many different types of annuities, each providing a distinct level of control and income. Given their complexity, it's often best to work with a financial adviser who can guide you in choosing the right option for you.

"The drawback of annuities is that they are generally illiquid, so they are better suited for those seeking certainty in income over flexibility in withdrawals," says Justin Haywood, president and co-founder of Haywood Wealth Management.

5. Part-time job

This may not be the answer you were hoping for, but sometimes, the best way to generate reliable income in retirement is to work for it.

Older Americans are increasingly choosing to work in their golden years. Nearly 20% of Americans aged 65 and older worked in 2023, according to the Pew Research Center. This is almost double the number of people who worked 35 years ago.

A part-time job in retirement or a side gig can provide that reliable income stream you're after. It can also help you avoid withdrawing too much from your investment portfolio early in retirement. Your portfolio may not be able to recover from a large withdrawal too early into retirement (a lamentable occurrence known as the sequence of returns risk), making it more likely that you'll run out of money later on.

As an added bonus, a part-time job may provide health insurance, which can be particularly helpful for early retirees who are too young for Medicare.

"For many, if they were not at work, they would likely be out spending more, so the benefits of continued work, to whatever extent appeals to them, helps reduce spending, increase income and delay drawdown of their investments," Boyd says.

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Insurance is supposed to shield you from significant financial losses in the event of a disaster. But sometimes, your insurance doesn’t go far enough or cover all of life’s misfortunes. For the rest of what life throws at you, you may need umbrella insurance.

Umbrella insurance provides additional liability coverage outside the limits of other policies you have, along with certain expenses not typically included in your existing insurance policies.

For example, umbrella insurance protects you if a guest in your vacation rental falls and sues you for damages, if you’re sued for libel or slander, or if you’re involved in a catastrophic car accident that seriously injures another person.

The odds of facing a lawsuit in your lifetime might be higher than you think, and your personal assets are at risk if you end up being sued for more than your existing liability insurance will cover. Here's what you need to know to figure out whether or not you need umbrella insurance.

Who needs umbrella insurance?

According to a survey by the American Bar Association in 2021, about two-thirds of Americans had faced some kind of legal problem in the four years prior to the survey. That statistic included criminal cases, not just civil lawsuits. But, for Americans earning $100,000 or more per year, the most common legal issues faced were personal injury or property damage lawsuits.

It's hard to estimate how likely you, personally, are to be sued at some point in your life. But there are some factors that can increase your exposure to a situation that could result in a lawsuit.

Peter Piotrowski, chief claims officer at insurance provider Hippo Insurance, says people who own potentially aggressive dogs or high-risk possessions, such as a swimming pool, should consider adding an umbrella policy.

He also recommends purchasing umbrella insurance if you have teenage drivers, since they’re more likely to get involved in an accident that exceeds coverage provided by your existing car insurance.

Additionally, umbrella insurance is a good idea if you have a high net worth — say, $500,000 or more — because individuals with a lot of assets are more likely to get sued, he says.

Here are a list of situations where it's worth exploring umbrella insurance:

• You have a pool, dog or trampoline at home and regularly invite guests over.
• You have a teenage driver on your car insurance.
• You host often at your home. Even if you trust your friends and family not to sue you over a slip and fall, those "friends of a friend" might not be so trustworthy.
• You're a landlord or own a vacation rental property.
• You have a second home.
• You hire house cleaners, landscapers or other domestic services regularly.
• You coach youth's sports and the league's liability coverage is limited.
• You're on a nonprofit board and the organization's liability limits are low.

Who does not need umbrella insurance?

While umbrella insurance can benefit almost anyone, it might be something you can skip in certain circumstances. That's because standard home and car insurance policies already provide some liability coverage.

So, how do you know if the liability coverage in your existing policies is enough for you? The biggest sign is that the coverage limit is higher than your current net worth (or that you can raise the coverage above your net worth).

Beyond that, review the list of scenarios and situations above that increase your risk of being sued. If none of those apply to you, that's another sign you may be able to skip umbrella insurance.

However, even if you might not need umbrella insurance right now, your situation might change in the future. Whether that's your net worth increasing as you near retirement or moving into a home with a pool, you'll need reevaluate your insurance needs periodically.

Cost of umbrella insurance

Umbrella policies are usually sold in increments of $1 million of coverage, up to $5 million. Premiums range from $150 to $1,000 per year depending on the amount of coverage, Sangameshwar says.

To figure out how much coverage you need, start by estimating how much you additional liability coverage you might need. Add up the value of all your assets, including the amount of equity in your home and the value of your investment and retirement accounts. Kiplinger provides a calculator you can use to estimate the amount of coverage you need.

As is the case with other types of insurance, rising labor costs and an increase in catastrophic weather events have led insurers to raise umbrella insurance premiums. The number of umbrella insurance claims more than doubled between 2010 and 2020, and the size of payouts increased by 67%, according to Safeco Insurance, a division of Liberty Mutual.

How to get umbrella insurance coverage 

To qualify for an umbrella insurance policy, you must already have homeowners and auto coverage. In addition, you’ll usually need to have at least $250,000 of liability coverage on your car insurance policy and $300,000 of liability coverage on your homeowners policy, according to the Insurance Information Institute.

To help offset the cost of the umbrella insurance policy, make sure to lower your liability coverage on your other policies to the minimum required to qualify for the umbrella insurance you want.

You may be able to get a discount on your policy if you bundle it with your car or home insurance, depending on the amount of umbrella insurance you purchase and your state of residence. If you’re shopping around for a stand-alone umbrella policy with a new insurer, you can comparison shop on websites such as ValuePenguin and The Zebra.

The application process for umbrella insurance is similar to that for other types of coverage. You’ll need to submit info about your income, assets and existing insurance policy limits before gaining approval.

The amount of insurance you need will vary depending on your location, age, credit history and other factors, says Divya Sangameshwar, insurance expert with ValuePenguin, a consumer website that provides insurance research and analysis.

Where you buy it will depend on when you think you'll need the most coverage. If you're getting it because you host a lot of gatherings at your home or rent out your vacation home, start by getting a quote from your existing home insurance provider.

On the other hand, if you're getting umbrella insurance because you travel a lot and are more worried about, say, the risk of being sued after a car accident, look into bundling the extra coverage with your car insurance instead.

Note: This item first appeared in Kiplinger Personal Finance Magazine, a monthly, trustworthy source of advice and guidance. Subscribe to help you make more money and keep more of the money you make here.

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State Farm plans to stop renewing home and apartment insurance policies in California beginning July 3.

The move, which will affect a total of 72,000 policyholders, will be done on a rolling basis and affect homeowners, rental dwelling, residential community association and business owners policies, the insurer said in a March 20 statement. On August 20, the withdrawal will start for commercial apartment policies.

Those affected by the decision will be notified before their policies expire and will be given information on other coverage options, the company said. It added that independent agents in California will continue to service policies not affected by the changes.

State Farm, which stopped offering new homeowner policies in the state last May, cited issues related to inflation, natural disasters, reinsurance rates and “the limitation of working within decades-old insurance regulations.”

Renters insurance will not be affected, the insurer said, adding that the “difficult but necessary” decision will affect a portion of State Farm's California policyholders as follows:

• Non-renew about 30,000 homeowners, rental dwelling and other property insurance policies (residential community association and business owners). (A rental dwelling policy insures rental home owners.)
• Withdraw from offering commercial apartment policies with the non-renewal of all of those approximately 42,000 policies. (A commercial apartment policy insures apartment owners.)

“We will evaluate the need for any additional business actions as market conditions change,” State Farm said. Combined, the policies represent just over 2% of State Farm General’s policy count in the state.

The move follows those of other insurance companies leaving California, including four Kemper subsidiaries as well as Farmers Direct Property and Casualty Insurance — both of which said last November that they would withdraw from certain homeowner policy markets.

Like Florida, California has seen a number of insurers leave the market, often citing the region's growing climate-related risks and reinsurance rates. Last month, two home insurers said they were eyeing rate hikes in Florida.

In October 2023, a S&P Global Market Intelligence study found a national average spike of about 8.8% in homeowner premiums last year.

In response to the state's uptick in non-renewal notices, the California Department of Insurance recently released 10 tips for finding residential insurance. This includes a help page with links for filing consumer complaints.

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An umbrella insurance policy provides additional coverage outside the existing limits of other policies, such as car insurance and home insurance.

If you get sued after a car accident or that "friend of a friend" slips and falls at your pool party, the liability coverage included in your home or car insurance will cover the legal fees and any money the court orders you to pay to the injured party, up to a limit. That limit is typically around $250,000 to $300,000.

In a lawsuit in which the fees and damages you must pay exceed that limit, you'd be on the hook for everything above that coverage limit. Umbrella insurance kicks in when the underlying liability limit of an insurance policy is reached.

Whether you need this supplemental coverage depends mainly on your net worth and your risk of being sued (you might be more at risk than you think).

Here's what you need to know about umbrella insurance and how to determine how much you need.

How much does umbrella insurance cost?

Umbrella insurance is usually sold in increments of $1 million, up to $5 million. To buy it, you'll need to already have a minimum level of home and auto liability coverage, typically, $250,000 for auto insurance and $300,000 for homeowners insurance.

The cost of umbrella insurance can range anywhere from $200 per year on the low end to more than $1,000, according to Trusted Choice, with an average cost of about $380 per year to get $1 million to $2 million of protection. However, the amount you'll pay for umbrella insurance depends on several factors, such as where you live, how much coverage you buy and your risk profile.

To determine how much your umbrella policy will cost, Trusted Choice advises individuals to assess their net worth, review their risk of becoming the target of a lawsuit and choose an appropriate amount of coverage, which should be at least equal to your net worth.

You can also use this calculator to assess how much coverage you need.

What does umbrella insurance cover?

Most umbrella insurance policies offer coverage for the following:

• Bodily injury: Umbrella insurance can help cover the cost of medical bills and/or liability claims for injuries to another person, whether it's from an at-fault auto accident or an accident in your home (guest falling, dog bite, etc.).
• Property damage: Umbrella insurance can help cover loss or damage you cause to another's property if the damage exceeds your underlying policy limits.
• Lawsuits: If you are involved in a lawsuit for slander, libel, defamation of character and/or other personal attacks, umbrella insurance can provide coverage for legal expenses.
• Landlord liability: If you own a rental unit, umbrella insurance can help cover liability claims you might experience as a landlord, such as if a tenant trips on the property, gets injured and sues. If your landlord policy reaches its limit, umbrella insurance can provide additional coverage.

How to buy umbrella insurance

If you buy your home and auto insurance from the same insurer, you'll typically get a discount of 10% to 15% on your annual premiums, and you might get an additional discount on the umbrella policy, as well. You can offset at least some of the umbrella premium by taking larger deductibles on your auto and home insurance policies.

With a single insurer, your coverage is less likely to fall through the cracks if the requirements for the umbrella policy change. If you're sued, you'll have one set of defense lawyers for the entire case. Otherwise, agents advise you to buy the umbrella policy from your auto insurer, because most large lawsuits involve auto accidents.

If your current home or auto insurer won’t sell you an umbrella policy — because your dog's breed is classified as potentially dangerous, for example — ask an independent agent who represents multiple insurers to help you find a stand-alone umbrella policy.

Do I need umbrella insurance? 

One quick way to tell if you need umbrella insurance is to calculate your net worth. If the total value of your savings, investments, home equity and other assets is higher than the maximum amount of liability coverage your home or car insurance will offer, you want to look into supplementing that with additional liability coverage.

Progressive advises individuals whose net worth exceeds their maximum liability coverage via their standard insurance policies to open an umbrella policy to avoid any negative financial repercussions.

You might also want to look into umbrella insurance if you're at higher risk of being sued. Never thought of yourself as a target for a lawsuit? You might be surprised at the activities and lifestyle factors that can put you at higher risk of being sued.

According to the Insurance Information Institute (III), those risk factors include things such as:

• Owning a swimming pool and having pool parties
• Renting out a property you own
• Having a dog or a teenage driver in the house

You should also consider opening an umbrella policy if you:

• Are a landlord
• Own property
• Have significant savings or other assets
• Want protection for liability claims against you when traveling outside the U.S.
• Coach kids’ sports
• Often host parties in your home
• Take part in sports in which you could easily injure others — hunting, skiing or surfing
• Are a public figure
• Own watercraft or recreational vehicles

Choosing the right umbrella insurance coverage

Umbrella insurance can help protect your assets if claims exceed your insurance policy limits. This extra coverage can give you peace of mind and often makes sense if your income exceeds your liability coverage, or if you have high-risk situations, such as owning a dog or a swimming pool.

You can buy a liability insurance policy through your home insurer or an independent agent, and you can choose the amount of coverage you want.

Purchasing an umbrella insurance policy can be a helpful way to ensure you’re fully protected if the unexpected happens.

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Homeowners insurance, car insurance, health insurance, life and disability insurance … if you already have all these policies in place as part of a strategic protection plan for yourself and your assets, you might find it hard to believe that there could possibly be yet another type of insurance that you need.

But the reality is, the more complex your financial situation gets — and the more your net worth grows — the more pressing it becomes to consider umbrella insurance on top of your current policies.

Here's why (and when) you should think about an umbrella insurance policy, and what you need to know before applying for coverage.

Kiplinger's Adviser Intel, formerly known as Building Wealth, is a curated network of trusted financial professionals who share expert insights on wealth building and preservation. Contributors, including fiduciary financial planners, wealth managers, CEOs and attorneys, provide actionable advice about retirement planning, estate planning, tax strategies and more. Experts are invited to contribute and do not pay to be included, so you can trust their advice is honest and valuable.

What is umbrella insurance?

Umbrella insurance (also known as excess liability insurance) is a type of coverage designed to cover potential gaps left by other insurance policies you may already have in place.

If you needed to pay for expenses relating to claims that exceeded the coverage provided by existing insurance, umbrella insurance could help cover those costs.

A good way to think about umbrella insurance is as an extra layer of protection in order to help you avoid financial hardship should a major accident or unexpected event happen. It's like a fail-safe to completely protect your personal savings and assets.

What umbrella insurance covers and how it works

If you're sued for damages that exceed the liability limits of your car insurance, homeowners insurance or other coverages, an umbrella policy would step in to help you pay what you owe.

While this might sound like something that would never happen, it's more common than you might think. We can take a look at a real-life example to see how an umbrella insurance policy works to protect you in the case of an unforeseen circumstance.

You might have heard of Georgia's infamous 2014 Snowmageddon event, where forecasts that called for unusually significant snowfall midweek were largely ignored. When snow began to fall fast and thick around lunchtime, there was a mass exodus of folks trying to commute home from work and school.

Combine Atlanta's existing traffic and congestion problems with untreated roads, bad winter weather and residents with no experience navigating such conditions, and it quickly turned chaotic on the roads.

Now, imagine you were one of those drivers that day. As you tried to get home, your car spun out of control on a snowy hill. You totaled the car next to you — and even worse, several people were badly injured.

The totaled car cost $80,000 to replace. The treatment of injuries costs a combined $800,000. In this situation, you'd be responsible for $880,000 in damages … and you carry $300,000 in liability coverage through your car insurance.

The remaining $580,000 would have to come out of your pocket. That's a major hit — and a good reason to think carefully about purchasing umbrella coverage, which in this case would have stepped in and paid what your car insurance did not cover.

How much umbrella insurance costs

Coverage limits on umbrella policies typically start at $1 million, and in most cases, go as high as $5 million. Basic policies at the lower end of that coverage range can cost $150 to $300 per year.

Keep in mind that your umbrella insurance may only cover a claim if you maintain the minimum coverage amounts required by your other insurance companies (for things like home and auto).

If the umbrella insurance provider feels you are not maintaining appropriate levels of insurance on your other policies, they may not extend a policy offer to you.

This rule protects the insurance carrier from individuals who are trying to carry minimum state liability coverages (to drive down their auto and home policy premiums) and supplement those coverages with the extremely low cost of an umbrella policy.

Who needs umbrella insurance coverage, and how much is enough?

Umbrella insurance is an optional insurance policy, not required by most state laws. Even so, there are specific reasons you might want to seriously consider obtaining umbrella coverage:

1. You have significant savings or assets to safeguard.

Protecting your assets is just as important as growing them, especially when umbrella insurance costs relatively little to carry.

2. Visitors could injure themselves on property you own.

Do you own, rent or borrow things that can lead to injury? If you have a pool, tree house, ATV, trampoline or dog, you could be liable for major expenses if somebody gets hurt on your property.

3. You're responsible for others — and thus at risk of being sued.

If you're a landlord, a kids' sports coach or someone who serves on the board of a nonprofit, your responsibilities might put you in a vulnerable position. Umbrella coverage can help offset any major expenses you might incur through this work.

4. You walk on the wild side or travel abroad.

Do you participate in sports where you can easily injure others, such as skiing, surfing, hunting or — my personal favorite — mixed martial arts? If you were to accidentally cause someone else injury and they sued, umbrella insurance would likely cover you.

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Your policy can also protect against liability claims against you while traveling outside of the United States.

5. You're kind of a big deal.

If you need to protect yourself from defamation lawsuits, like libel and slander, consider umbrella coverage. Those proceedings can get costly quickly.

Once you know you need a policy, determining the right amount is fairly simple: Subtract your respective liability coverage limit from all assets at risk, including home equity, personal property, investments and savings.

A negative result indicates a gap in coverage, which umbrella insurance can help fill. And finding funds to pay for the policy can be simple, too.

Consider increasing the annual deductibles on your auto and home policies from $500 and $1,000 to something more in line with the $1,500 to $2,500 range (ensure you have adequate cash reserves).

This change should help reduce the cost of monthly premiums and give you the cash flow savings needed to afford this new policy without any additional outlay.

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This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

Insurance is made for the unexpected in life, but you may not realize you don’t have enough liability coverage until it's too late, especially the situations you never thought to anticipate.

The neighbor’s child falls from your trampoline and breaks his arm, requiring extensive surgery. Your Airbnb guest slips on your stairs. Your nonprofit gets sued, or that restaurant you didn’t like hires a lawyer.

People are often surprised by circumstances that can lead to their personal liability exposure. And they sometimes also wrongly assume that the liability coverage on their home insurance or auto insurance would be enough to cover their expenses if accidents happen or they get sued.

If you're retired or close to it, shielding your assets from these risks is more important than ever. These are the assets that are supposed to sustain you throughout your golden years, so you don't want to risk losing them in a lawsuits.

Umbrella insurance is one of the easiest and most affordable tools available to make sure your dream retirement isn't spoiled by a single accident. Here's what it is, how it works and everything else retirees should know about the often overlooked type of insurance.

What is umbrella insurance?

One option for liability worries is umbrella insurance, which is extra liability coverage on top of what's already included in your home or car insurance policy.

Umbrella policies are relatively cheap, with a typical annual cost of about $150 to $300 for each $1 million of coverage. The coverage kicks in after home or auto liability limits are exhausted.

You typically buy a separate umbrella policy from your current insurance carrier. Standalone umbrella policies are not common, but you may find one by shopping around.

Umbrella insurance protects your financial wellbeing

People tend to understand insurance when it comes to something tangible, such as their car, but your financial wellbeing is just as important to protect.

If you were found at fault in an accident where the damage and injuries exceeded the maximum payout your car insurance's liability coverage will pay, you're on the hook for the rest.

If an Airbnb guest sues you after getting injured in your home and the lawsuit is worth more than your home insurance's liability limit, you'll have to pay up.

That could mean wiping out your emergency savings, tapping into your home equity or other drastic financial moves to cover the difference in what's owed. That's where umbrella insurance comes in.

How to get the right amount of umbrella insurance

As mentioned earlier, umbrella insurance is rarely sold as a standalone policy. You'll typically add it on to your home or car insurance. But, how much umbrella insurance do you need?

Aim for total coverage (including your existing liability coverage) worth at least as much as your net worth. That includes your home equity, retirement accounts and any other savings or assets you own. If it could be taken in a lawsuit, you want to include it in your calculations here.

If the liability limits on your existing home and car insurance are enough to cover that or could be bumped a little higher to make up the difference, you probably don't need umbrella insurance. But, if your net worth is higher than those policies are able to cover, look into adding on this important coverage.

To see if you can save by just raising the liability coverage limit on your insurance, use the Bankrate-powered tool below to compare quotes on car insurance with higher liability limits:

Usually bundling an umbrella policy with your other coverage will save you money on premiums, but be sure you coordinate all your coverage correctly.

Insurers often ask you to max out your existing liability coverage, or at least bump it up to a specified amount before your umbrella insurance kicks in.

Say your insurer recommends you have $300,000 worth of liability coverage on your home and auto, but your current policies only have a $100,000 limit.

If you then purchase a $1 million umbrella policy on top of that, your insurer might only pay out a maximum of $700,000, because the other $300,000 was supposed to be covered by your home or auto policy.

If you had the recommended $300,000 coverage on your other policies, you wouldn’t have come up short.

Umbrella insurance is especially important for retirees

At the start of the career, your net worth is probably low enough to fall within the range of standard liability coverage. But, as you near retirement, you've likely paid off your home (or are close to it) and amassed a healthy retirement fund.

Umbrella insurance might seem like an unnecessary added expense. But, a single lawsuit could take a significant chunk out of the net worth you've worked so hard to build over the last couple of decades.

So, if you haven't looked into it yet, reach out to your insurer to see about adding it on. For a few bucks a month, you can make sure your golden years stay golden.

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