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How Much Umbrella Coverage Do You Need? A Beginner's Guide


There is always a chance that you could lose a case for more than your current insurance covers, and you might lose all of your savings if that does happen. That’s why having umbrella insurance will ensure that you never have to face that tragedy.


Indeed, umbrella policies are for expensive situations where bills, repairs, or liability exceed your “base” policies. But the question is, how much coverage do you need?

How Does Umbrella Insurance Work?

When your "base" liability limitations are reached, umbrella insurance kicks in. Here’s an example:


You cause an accident that results in numerous individuals suffering serious injuries. The medical expenses total $400,000, which exceeds your insurance policy limitations of $300,000. Thus, the remaining $100,000 will be covered by your umbrella insurance.


What Does Umbrella Insurance Cover?

Another benefit of an umbrella policy is that it often offers coverage not included in the base policy. These are some examples:

  • Invasion of privacy

  • Malicious prosecution

  • Wrongful eviction or entry

  • Slander, defamation, or libel

  • Inappropriate eviction or entrance


How Much Umbrella Protection Do You Need?

There are a few factors to consider while determining the appropriate coverage you need.


The Worth of Your Assets

The worth of your assets is what you stand to lose in the event of a lawsuit. That is why your Umbrella insurance should cover at least the value of these.


Potential Income Loss

A lawsuit might put your existing assets and future income in jeopardy. Furthermore, a lengthy legal procedure is unpleasant and may harm a reputation, regardless of whether the action was baseless or not.


Having umbrella insurance covering your regular income will not entirely relieve your tension, but it may safeguard all you've worked so hard for.


How Much Does Umbrella Insurance Usually cost?

Umbrella insurance is quite inexpensive since it only begins when the expenses go over the liability limitations of your homeowners and car policies.


Typically marketed in $1 million increments, it costs between $150 and $350 per year for the first $1 million of coverage and $100 for each additional $1 million.


Conclusion

In today's contentious environment, having liability insurance provides more than simple peace of mind. So, how much coverage do you need? One thing is for sure. It should be enough to cover your assets.


At Second Western Insurance Services, we do our best in making sure that our clients are well-protected with affordable and comprehensive policies. We make sure to go the extra mile to help you with your needs. To learn more about how we can help you, please contact our agency at (818) 952-5203 or CLICK HERE to request a free quote.



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