How to Know How Much Umbrella Insurance You Need

June 18, 2019

Having too much insurance is always better than being under-covered. Umbrella insurance policies cover some important extras that aren’t found in your standard insurance.

It’s important to know how much umbrella insurance or personal liability coverage you need to make sure you and your family prepare for the worst.

To start, you’ll want to take a look at what you currently have and where you’re lacking in case of an emergency.

Flood insurance is an example of something you may never realize you need until it’s too late. It’s never a bad idea to prepare for emergencies like this with personal excess liability. Make sure you and your family are safe, protected and covered.

If you’re wondering how much umbrella insurance you need, read on to learn more about a few of your options.

Common Forms of Liability Insurance

Personal Umbrella Policies

Personal umbrella insurance policies are there to provide you with another layer of protection.

Policies will go above and beyond your standard home and auto insurance to cover you in a variety of situations. Every day accidents can sometimes end up costing you a lot of money. In a world where lawsuits happen for almost anything, you can never be too careful.

Accidents are bound to happen and it’s up to you to educate and prepare yourself.

An example of a harmless accident that isn’t typically covered under standard insurance policies could be a child’s friend getting hurt while playing at your house.

You could also borrow someone’s golf cart for a weekend and crash it. You may even say something on social media that gets taken the wrong way. Soon after, you are in a legal battle that you aren’t prepared to pay for.

Umbrella insurance ensures that you’re covered for situations like this.

You can also have coverage for legal fees which would save you thousands of dollars.

You can tailor umbrella insurance to fit you and your family. If you partake in certain actives often, use recreational vehicles, on a regular basis or live in an area prone to bad weather, customizing these plans is the best way to go.

Flood Insurance

In the case of severe weather such as a hurricane, it’s surprising how much damage a little water can do. Thousands of dollars are often spent on repairing damage from a few inches of water.

According to FEMA, $8,736,386 was spent in the United States on the loss of damages paid in 2017.

During Hurricane Irma for example, 80% of Florida residents didn’t have flood insurance. This could cripple many families financially, making it hard to repair your home and keep up with other financial obligations.

Depending on your properties flood risk, and how much insurance you’d like to buy, the costs may vary. Check out this list of signs that now might be a good time to get flood insurance. There are also plans for both low risk and higher risk homes. For homes in high-risk areas, you are federally required to buy a flood insurance policy for your home.

How Much Umbrella Insurance Do You Need?

If you’re overwhelmed by trying to calculate how much personal excess liability insurance you need on top of your traditional home and auto policies, you’re not alone. Although the insurance process can be daunting, with the right agent, information and coverage, it doesn’t have to be.

It’s always better to air on the side of caution instead of finding yourself underinsured and paying thousands of dollars you may not have out of pocket. The phrase better safe than sorry is never truer than in the case of an unforeseen accident or natural disaster.

To calculate the right amount of umbrella insurance for you, there are many factors you and your insurance agent will look at. You start by taking note of your net worth, your home’s equity, the value of your retirement plans, and the limit of your current liability coverage.

Taking these values into account will help your agent determine how much umbrella insurance you may need.

If you’re wondering how much an umbrella policy would set you back, they may cost less than you’d think for a lot of coverage.

According to the Insurance Information Institute, if you have an umbrella policy with one million dollars in coverage, you’re only looking at spending $150 to $300 per year. That’s $12.50-$25.00 a month.

Making The Right Choice For You

After using the formula above to get a starting figure, you’ll want to look at a few more factors to make the best choice for you and your family. To make sure you aren’t overpaying or underinsured, you’ll want to first look at what’s covered in your traditional policies.

Think about the activities you and your family do and where you may be lacking in coverage. If you’re very active, borrowing recreational vehicles often, traveling, having people over for water sports or activities that are higher risk, you’ll want more coverage than the average person.

If your home is in a high-risk flood zone, you don’t want to skimp on coverage here either. There’s bound to be water damage and it might even happen more than once. By spending a little more each month, it will save you thousands in the long run. Besides the extra coverage, there are some precautions you can take to cut your risk for flood damage discussed here.

Wrap-Up

Make sure you’re covered for everything you like to do and especially the forces that are out of your control. Having the peace of mind that you’re covered for your extracurricular activities, in case of an emergency or in a natural disaster is priceless.

Check out all of the personal excess liability options available and chat with an agent to calculate how much umbrella insurance you need.

Taking the time to prepare yourself will make sure you’re covered for anything life or mother nature throws your way.