How Much Umbrella Insurance Do I Need?
Regardless of your circumstances, whether you’re young or old, rent or own your home, ordinary events can have unexpected and serious consequences. Personal umbrella insurance is an important and affordable extra layer of protection that shields your assets from potential liabilities.
What is umbrella insurance?
Umbrella insurance gives you extended liability coverage for claims resulting in bodily injury, property damage, and/or personal injury. In addition to the extended liability limit, umbrella insurance also provides coverage for defense costs for claims or a suit brought against you for bodily injury, property damage, and/or personal injury. Because umbrella insurance supplements your existing policies, it doesn’t apply until the liability limits on those policies are exhausted.
Let’s look at an example where umbrella insurance would come into play. A serious accident happens at your home where an invited guest suffers significant bodily injuries. You’re sued, found liable and a $1 million judgement is made against you. Your insurance provider informs you that your homeowners policy only covers $500,000 in liability. That means you’re on the hook for the remaining $500,000. Without umbrella insurance, you’d be responsible for paying this money out of pocket. If you carry at least $500,000 in umbrella insurance, this could provide coverage up to the additional $500,000 judgement in the event the incident is covered.
In addition to providing extra liability coverage to supplement your auto and home insurance policies, umbrella insurance also can protect you against claims of personal injury – which can include libel, slander and defamation of character.
Who needs umbrella insurance?
Umbrella insurance is a prudent financial decision for individuals and families of all income levels to consider, as it offers an affordable way to increase your overall liability coverage and provide you with additional protection.
Homeowners: Property owners who have swimming pools, trampolines, or dogs, for example, can be at greater risk of being found liable for accidents that occur on their property. Therefore they should consider adding higher homeowners liability coverage limits to their policy and adding an umbrella policy for extra peace of mind.
Car owners: Your auto insurance policy will have liability coverage, but the limits may not be sufficient to cover all potential damages in the event of a severe accident. Umbrella insurance kicks in once the liability limits of your auto policy are exhausted, providing additional coverage up to the umbrella policy's limit.
How much umbrella insurance do I need?
With the increasing cost of vehicles, labor and materials, and severity of injury claims, it’s prudent to ensure you have as much protection as possible with an umbrella policy.
Insurance carriers typically offer flexible limits between $1 million and $5 million, depending on your needs. Your carrier will likely require you to have an existing policy with certain minimum liability limits to be eligible for an umbrella policy.
How much does umbrella insurance cost?
Typically, you can expect an umbrella policy to cost approximately $380 per year for $1 million to $2 million in coverage.[1] When determining if umbrella insurance can fit into your budget, here are some factors that influence pricing:
- Coverage amount: The amount of coverage you choose will have an impact on the cost of your premium. You can expect to pay more if you select an umbrella policy with a higher coverage limit
- Personal risk profile: The higher the risk, the greater an impact on the cost of your policy. Multiple cars or properties may result in a higher premium.
- Other factors: Your location, family members and claim history can also affect the cost of umbrella insurance.
Is umbrella insurance worth it?
It may seem unlikely, but you never know when you may be faced with an unexpected liability situation. You deserve the peace of mind of having as much financial protection as possible. Umbrella insurance does just that – providing an extended layer of liability coverage to you and your family beyond your underlying policy limits.
Learn more about what sets Amica’s umbrella insurance apart. With insurance tailored for you, Amica offers coverages that align with your lifestyle.
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1 Umbrella Insurance Cost, Trusted Choice
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