Advertisement
insurance

Why You Should Have Umbrella Liability Insurance

This inexpensive coverage can protect property owners from lawsuits.

I already have $400,000 in liability coverage on my auto-insurance policy. How do I determine whether I need to add an umbrella liability insurance policy to my coverage? How much would an umbrella policy cost?

Umbrella liability insurance is an inexpensive way to protect you and your property from lawsuits. You don’t need it if you have relatively little at stake, but “if you’ve accumulated some assets and have a home, it makes sense to have the policy,” says Rob Seltzer, a CPA in Los Angeles. He recommends that you add an umbrella policy, which starts at $1 million of coverage, to protect against lawsuits even if your net worth is far less than that. The policies protect future income as well as assets and also cover legal fees.

CALCULATOR: How Much Umbrella Insurance Do I Need?

Insurers generally require that you have at least $300,000 in liability coverage on your home and automobile before you can buy umbrella coverage, which picks up after you’ve exhausted your homeowners and auto liability limits. The first $1 million of coverage generally costs $200 to $400 a year; the next $1 million runs an additional $75 to $100.

Advertisement - Article continues below

Raising your auto and homeowners deductibles from, say, $250 to $1,000 would offset the cost of $1 million in umbrella coverage, says Seltzer. “If you are in a car accident and have to come up with an extra $750 for the deductible, that’s not going to kill you. But if something really bad happens, that $1 million umbrella policy is a savior.”

Advertisement
Advertisement - Article continues below

To buy the coverage, start with your auto- or homeowners-insurance company, which may give you a discount for keeping your business in-house. If your company doesn’t offer affordable umbrella coverage, ask an independent insurance agent for quotes.

Advertisement

Most Popular

65 Best Dividend Stocks You Can Count On
stocks

65 Best Dividend Stocks You Can Count On

These 65 Dividend Aristocrats are an elite group of dividend stocks that have reliably increased their annual payouts every year for at least a quarte…
July 8, 2020
8 Ways You Might Be Cheating on Your Taxes
taxes

8 Ways You Might Be Cheating on Your Taxes

Don't fall into these common traps that can get you in hot water with the IRS.
July 8, 2020
Find a Great Place to Retire
happy retirement

Find a Great Place to Retire

Our cities provide plenty of space to spread out without skimping on health care or other amenities.
July 2, 2020

Recommended

Applying for Disability Benefits During a Global Pandemic
insurance

Applying for Disability Benefits During a Global Pandemic

It can take months or even years to get approved for Social Security Disability Insurance (SSDI) benefits in the best of times. Needless to say, now i…
June 24, 2020
13 Reasons You Will Regret an RV in Retirement
retirement

13 Reasons You Will Regret an RV in Retirement

RV-loving retirees talk about the downsides of spending retirement in a motorhome, travel trailer, fifth wheel or other recreational vehicle.
June 8, 2020
Finding Affordable Health Care Now
insurance

Finding Affordable Health Care Now

The pandemic has caused millions of people to lose their jobs — and their health coverage. Here’s a guide to finding affordable insurance.
June 4, 2020
9 Things You'll Regret Keeping in a Safe Deposit Box
savings

9 Things You'll Regret Keeping in a Safe Deposit Box

Locking up certain important documents and valuables in a bank vault could turn into a headache for you or your heirs.
June 1, 2020