How To Get Umbrella Insurance

Now that we understand what umbrella insurance is and its importance, the question arises – do you need it? Evaluating your need for umbrella insurance involves assessing personal risk factors, your assets, and existing liability limits. This evaluation is essential to determine if additional coverage is necessary to protect your financial well-being.

Assessing Assets and Risks

The first step in evaluating your need for umbrella insurance is taking inventory of your assets. This includes:

Home equity

Savings

Investments

Future income potential

It’s important to note that not all assets need to be included in your assessment. For instance, assets in employer-sponsored retirement accounts and up to $1 million in IRAs are generally protected from civil liability. Also, depending on the state, a portion of your home equity might be protected under the homestead exemption.

Your lifestyle also plays a significant role in assessing your need for umbrella insurance. Risk factors such as owning or renting property, having certain breeds of dogs, or having a teenage driver can elevate your potential liability risks.

Individuals earning $250,000 or more annually or having significant property ownership should consider at least a minimal umbrella policy due to higher potential liability costs and the associated umbrella insurance cost.

Reviewing Current Liability Limits

The next step in the evaluation process is reviewing your current liability limits on your auto and home insurance policies, as well as determining how much umbrella insurance you may need. Most umbrella insurance providers require existing policies to have minimum liability limits, commonly set at $250,000 for auto insurance and $300,000 for homeowners insurance. It’s crucial to align the coverage limits of your existing insurance policies with the umbrella policy’s requirements to prevent coverage gaps. One important question to ask is how much does umbrella insurance cost, as this will help you make an informed decision.

In some cases, you may need to review and increase your existing liability coverage on auto and homeowners policies to meet the minimum qualifications for obtaining umbrella insurance. When considering total insurance costs, factor in the potential increase in premiums from adjusting existing policies to meet the minimum requirements for umbrella insurance.