If you are interested in umbrella insurance, you may wonder how much coverage is enough. At Oak Ridge Insurance Services in Oak Ridge, NC, we offer umbrella insurance.
Umbrella Coverage Requirements
Firstly, it’s vital to ensure you meet the requirements to purchase umbrella insurance. Before purchasing an umbrella policy, you’ll typically need the maximum coverage amounts on your home and auto policies. This reduces the likelihood that you will need the umbrella policy.
Determining Net Worth
The simplest way to decide how much umbrella coverage you need is by adding all your assets. This includes savings, retirement accounts, property, and any other assets you have. Then, subtract your liabilities, including credit cards and loans. The result is your net worth.
You’ll want umbrella coverage equal to or higher than your net worth. If you are sued, your assets won’t be in jeopardy in most cases.
Considering Future Earnings
It is also critical to consider your future earnings. A judge can garnish your future wages or income if they rule against you. You may be paying for the claim for many years without umbrella insurance.
This is why umbrella insurance is a good idea, even if your assets total less than 1 million.
Consider Your Risk
Lastly, it would be best if you considered your risk. Do you own a dog or a swimming pool? If so, you are at a higher risk of being sued. Are you relatively well-known in your community? This also can increase your risk.
Umbrella Insurance Increments
Umbrella insurance is designed to protect you from catastrophes and is known as catastrophic insurance. Because of this, it is typically sold in increments of 1 million. Most policies will allow you to choose coverage between 1 million and 5 million, but some policies may go up to 10 million or more.
