How Much Umbrella Insurance Do I Need?

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By RobertBass

It is better to have too much liability insurance than too little. Use our calculator to determine how much umbrella coverage is right for you.

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An umbrella policy covers you for the same things as your auto and home policies. It also covers lawsuits arising from driving abroad, operating rented watercraft or alleged libel or defamation.

Umbrella coverage covers the gaps between your homeowner and auto policies. It is usually sold in increments up to $1 million. For the first $1,000,000 of coverage, umbrella insurance will cost approximately $150-$350 per year and for each additional million it will cost about $100. The actual cost of your insurance depends on where you live. Rates can vary depending on the state you live in and the experience of the insurer. This calculator will help you determine how much umbrella coverage you require.

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A Umbrella Insurance Policy

You must purchase your homeowners and auto policies from them before they will sell you umbrella insurance. They also require that you have minimum liability coverage. This is typically $300,000. On your homeowners policy, it’s $300,000. On your auto insurance, it’s $250,000 for bodily injuries to one person and $500,000 per incident. Insurers will limit the amount of home and auto liability coverage that they sell at $500,000 to $1 million. An umbrella policy is usually cheaper than buying additional liability coverage beyond what your insurer requires.

You may be eligible for a 10% to 15% discount on your auto and home insurance premiums if you purchase them from the same insurer. By increasing your deductibles on auto and home insurance policies, you can offset some of the umbrella premium.

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Your coverage will be more secure if you have one insurer. If you are sued, you will have one set of lawyers to defend you throughout the case. Agents recommend that you purchase the umbrella policy through your auto insurance because large lawsuits often involve auto accidents.

Your current auto or home insurer may not sell you an umbrella policy if your dog breed has a history of bad claims, or because your family has been through too many car accidents. Ask an independent agent to help you find an umbrella policy that is “stand-alone”.

Consider adding an endorsement to an umbrella policy for excess uninsured/underinsured motorist coverage, which covers you not only as a driver but as a passenger, bicyclist or pedestrian if you’re hit and the at-fault driver doesn’t carry enough insurance. The policy costs between $100 and $200.

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Volunteering on a non-profit board can mean that your homeowners and umbrella policies will cover you for property damage and bodily injury, but not all possible lawsuits. For coverage of $1 million to $2,000,000, an endorsement for your umbrella insurance for directors and officers typically costs less that $1,000 per year.