You should get umbrella insurance if your net worth is at least $1 million. Umbrella insurance supplements existing home and auto liability insurance, and it usually costs between $150 and $300 annually for the minimum $1 million in coverage.
You may also want to purchase an umbrella policy if your net worth is lower but still exceeds your home and auto liability insurance limits. After all, if you cause a multi-vehicle accident while driving, for example, you would be responsible for the accident victims’ medical bills. And if your personal liability limit is $300,000 while the total cost of the medical bills adds up to $400,000, then there would still be $100,000 left for an umbrella policy to cover.
Similarly, you should consider umbrella insurance if you are at a high risk for being sued because of your job, your hobbies, or because you own high-risk leisure items like a pool or trampoline.
When You Should Get Umbrella Insurance
- Your assets are greater than your home or car insurance policy limits.
- Your work puts you at high-risk for a lawsuit.
- You own a trampoline, hot tub, or swimming pool.
- You participate in a hobby where you could injure someone else.
- You own rental or investment properties.
- You have a dog with a bite history.
- You are a public figure.
- You own guns.
- You frequently host guests.
To learn more, check out WalletHub’s guide to umbrella insurance.
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