Umbrella Insurance
We have talked before in other articles about what umbrella insurance is and to recap: Umbrella insurance is an insurance policy that gives you an extra layer of liability protection if you are involved in a lawsuit due to bodily injury or property damage.
Every personal insurance policy will have liability coverage, whether it is your automobile, homeowners, or recreational vehicle. But, sometimes that is just not enough coverage and that is where an umbrella policy kicks in.
Do I need an Umbrella Policy
Umbrella policies in today’s day in age are a must.
We live in a litigious society and in the event of a major accident or incident that happens you want to make sure you have enough liability protection to protect your assets.
What happens if you do not have an umbrella policy and your other policies do not have enough liability coverage to pay for the judgment.
You would be on the hook for the rest.
A good example is an accident that causes some permanent injuries to a young adult. A judge awards the child $500,000 but you only have coverage of up to $100,000. This is where umbrella insurance would come in handy.
How much umbrella coverage do I need?
Before we go through how much coverage you need, you need to understand what is at risk.
In the event you do not have $400,000 laying around for the example above, things that could be at risk are:
- Checking and Savings Accounts
- Home or Property Equity
- Personal Property
- Investments
- Future Wages
Now that you know what is at risk, a good tool to use is to add these up, subtract how much liability coverage you have, and see what Gap you have. See charts below:
| Equity in your Home / Property | $ |
| Personal Property | $ |
| Investments | $ |
| Savings / Checking | $ |
| Future Wages | $ |
| Total Assets at Risk | $ |
| Auto or Home Liability Limit | $ |
| Personal Umbrella Limit (if any) | $ |
| – Total Assets at Risk | $ |
| Negative number = Gap | $ |
Do you have enough coverage?
My guess is the answer is no, after adding up your assets and subtracting your liability coverage, most likely you do not have enough protection.
This is why we recommend that everyone should have an umbrella policy, even if it is only $1,000,000.
A 1 Million Dollar umbrella policy costs around $200 a year. Very inexpensive for the coverage that you are getting.
Reach out to your insurance agent to have this conversation and to run actual quote options for your household.
If you don’t have a relationship with an agent or want a review of your insurance then click the button below to schedule a review with one of our trusted insurance advisors.
