How Much Umbrella Insurance Do I Need?

Umbrella insurance is a one-of-a-kind personal liability coverage that protects your savings, income, and assets from large claims and lawsuits that are above the policy limit of your auto, homeowners, boat, landlords, renters, and boat insurance. Many Flowood, MS residents contact us at Insurance Protection Specialists to find out how much umbrella insurance they need. Here’s what to know:

How Does Umbrella Insurance Work? 

Umbrella coverage picks up liability where your homeowners, auto, and any other liability insurance you have leaves off. This policy is sold in $1 million coverage increments and can go as high as $100 million. The cost for the first $1 million umbrella coverage ranges from $150 to $350.

For example, you own a car and have auto insurance coverage with a limit of $300,000. Suppose you get into an accident that involves 10 vehicles and several people get injured and you are the at-fault driver. In that case, your liability in property damage and injuries can amount to more than $800,000. Your auto insurance will pay the $300,000 part of your liability, but you will still be left with $500,000 in liability.

If you have umbrella insurance, it will kick in and settle the remaining $500,000 in liability. If you didn’t have umbrella coverage in such a situation, you would have had to pay the $500,000 remaining liability using your savings, assets, and even future income. The remaining $500,000 of your umbrella policy would be used to settle your legal fees if there was a lawsuit.

How Much Umbrella Coverage Is Enough? 

For most people, a $1 million umbrella coverage is enough. However, if you own multiple cars, boats, rental properties, savings, and other assets adding up to more than $1 million in value, you will need more umbrella insurance. Generally, you need umbrella coverage that’s at least half of your net worth up to $100 million.

Contact Insurance Protection Specialists for more info on umbrella insurance in Flowood, MS.