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You need enough umbrella insurance to make up the difference between your liability insurance limits and your net worth, in order to protect your assets if you are faced with a major liability claim or lawsuit. Umbrella insurance limits usually start at $1 million and can go as high as $10 million, depending on the insurer.
A basic $1 million umbrella policy typically costs between $150 and $300 annually, with each additional $1 million in coverage adding up to $75 to the price. Since the cost is relatively inexpensive, it’s usually best to err on the side of getting too much umbrella insurance rather than too little.
Recommended Umbrella Insurance Coverage
It’s generally recommended that you buy enough umbrella insurance to cover your assets, including your home equity, personal savings, and retirement accounts. For instance, if your assets equal about $700,000, it’s a good idea to buy $1 million in umbrella insurance, since this is usually the lowest amount available.
Besides your own finances, you should also consider things that could increase your odds of being liable for someone’s injuries at some point, including owning a dog or having a teenage driver in your household.
Ultimately, it’s important to remember that if you don’t have enough insurance to cover your net worth, your assets could be seized to cover damages that exceed your liability insurance limits. Because of this, umbrella insurance is usually a wise investment for individuals with a particularly high net worth.
To learn more, check out WalletHub’s guide to umbrella insurance.
People also ask
What does a Geico umbrella policy cover?
Geico’s umbrella insurance policy will cover claims that are beyond the financial limits or scope of your existing policies. It can add up to $1 million in additional liability coverage to car, boat, homeowners or professional insurance policies.
The average cost of a $1 million policy is less than $300 per year. If you can take advantage of Geico’s multi-policy discount, or other discounts that you might be eligible for, you could bring the...
read full answerWhat is not covered by an umbrella policy?
An umbrella insurance policy does not cover your own injuries or damage to your personal property. In addition, personal umbrella insurance will not cover intentional acts, criminal behavior, damage caused while you’re performing business activities, or damage from certain dogs or vehicle types. If you need umbrella insurance for business purposes, you can purchase a commercial umbrella policy.
What Umbrella Insurance Does Not Cover
- Your own injuries or property damage
- Property damage or...
Does umbrella insurance cover lawsuits?
Yes, umbrella insurance does cover lawsuits. This is because umbrella insurance provides coverage beyond the limits of your other insurance policies, and things like certain types of lawsuits are generally covered by home or auto insurance then extended by umbrella coverage.
For example, if your child is caught vandalizing someone else’s property and you are sued for it, your umbrella insurance will help cover your legal fees.
Other Situations Covered by Umbrella Insurance
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