Installing a backyard swimming pool can make those hot summers a lot more fun and relaxing, but could it get you into a lot of financial trouble too? The short answer is: yes.

If you're not properly insured, and someone gets hurt in your pool, you are inviting law suits. I know what you're thinking: my friends and family are the only ones who use my pool... they're not going to sue me if anything happens.

Guess again.

It's not necessarily that people love to sue or even want to. They may have to. With the high costs of medical expenses today, a family that suffers a serious injury (or--god forbid--a death) probably can't afford not to sue. And if a person was injured at your pool in your backyard, guess who's technically at fault?

If someone gets hurt, don't be surprised by a lawsuit: expect it. And don't think you can watch the pool every moment to make sure nothing happens. Accidents will occur no matter how relentless you are in trying to prevent them. Risks of accidents are statistically proven to be very high around backyard pools and hot tubs.

This isn't to say you should pour dirt into your pool, plant a nice safe flower bed, and post "keep out of yard" signs all over your backyard. You just need to make sure you are adequately covered when it comes to insurance.

Okay, you're sold. Now how do you make sure you're covered?

If you own a swimming pool or hot tub, you should carry very high liability insurance, i.e. in the range of a million dollars or more.

This can be tricky since many homeowner's insurance policies limit the maximum exposure of the insurer to $100,000. Sometimes you can get this raised to $300,000, but getting covered beyond that, from your homeowner's plan alone, will likely prove difficult.

This is why you want to look into an umbrella plan. This is a separate liability policy in addition to your homeowner's coverage. It generally picks up where your homeowner's insurance leaves off, and you can get coverage of several million dollars.

The cost for this additional coverage is usually minimal, in the neighborhood of $500 per year. This may seem pricey, but considering the millions of dollars of coverage it affords you, it's worth the money, especially if you entertain and have a hot tub or pool.

One last thing to note is that you may have to buy all your insurance from the same place, which would include home and auto. If you have a pool or spa, it's probably worth changing insurers to find one who offers an umbrella plan.