Umbrella Insurance - Do's and Don'ts

A friend once asked me why would one be so foolish as to spend money on an umbrella insurance policy. I told him one would be foolish not to. This surprised him. Truth is, it is not surprising that most people never consider buying umbrella insurance and are content with single asset policies like home, auto and art.
So what is an Umbrella insurance policy?
An umbrella insurance policy is simply a policy that overlays on top of all other single asset insurance coverages you have. It is usually in $1 million increments. It can pay for any medical, litigation and malfeasance claims you may be required either by law or contract to pay.
Individuals who need umbrella insurance generally meet most of the following criteria.
Level of risk for yourself or your assets.
Are you in a profession that is vulnerable to excessive litigation--e.g. are you a doctor, emergency care giver, physio-therapist, psychologist? Then you definitely need one.
Do you have assets to protect?
Generally people with tangible assets (home, valuables) in excess of $1 million need such a protection.
Do you have a history of claims settlement?
If you or your liability insurance company has been prone to settle litigation, you definitely need one. The next litigant may not be in a mood to settle and may force a trial.
Shopping Tips for Buying Umbrella Insurance:
Comparison Shop: Go to a site like Cheapinsurance or Esurance. You can put in the information asked for and Most insurance companies require policyholders to have their car and home insurance with them in order to get umbrella coverage. A policyholder can save around 20% on premiums by sticking with one company for both basic policies. The National Association of Realtors' estimator helps homeowners determine how much coverage they'll need.
Include all of the assets: People sometimes forget they may have a partial ownership (e.g. fractional ownership of a boat or plane)
Do it right the first time: It is expensive and can affect your credit if you let insurance companies keep checking your credit because you are writing, canceling and re-writing policies. So shop till you drop but do not make a decision to buy any insurance till you are sure and have compared all aspects of the policy and issuer.
Be conservative: When insuring for umbrella protection, while going overboard relative to coverage is not advised, skimping is even more dangerous so get the facts behind what you intend to cover.