What Umbrella Insurance Coverage Amount is Right for You?
Deciding on the right Umbrella Insurance limits
One million dollars is the minimum amount of coverage for an umbrella insurance policy. However, insurance companies usually umbrella insurance policies in one million dollar increments and often go up to five or ten million. Some insurance companies that target high net worth individuals may offer up to fifty million or more in coverage. Most people who purchase an umbrella insurance policy choose the one million dollar amount, but many choose two million dollars or more. A rough estimate of what it costs for the first million is about $200 to $250 per year, but can be higher if you have more than two cars, young drivers or points on your record. While each incremental amount above the first million is slightly less, increments exceeding ten million can be higher.
The more insurance coverage you have, the more bullet resistant you will be if you become liable for a catastrophic incident. One of the best aspects of this coverage is that it’s very inexpensive. It’s important for those considering umbrella insurance to avoid cutting corners. Shortcuts cannot be afforded when all accumulated assets from an entire lifetime are in question. Some believe that all they need is insurance coverage for whatever their net worth is, but settlements and judgments can go beyond someone’s assets because damages are never limited to someone’s net worth.
And some folks believe that since they do not own a home or have any significant assets, that they do not need an umbrella insurance policy. But i strongly believe that it’ also important to protect future wages from garnishment. Your future income could be at risk if you do not have the proper insurance coverage. Can you afford to lose 30% of you income to a wage garnishment for the rest of your life? I know I couldn’t. There are many attorney advertisement telling folks to call them first should an accident happen and they are getting paid to get the most money for their clients.
You don’t have to be liable to someone making hundreds of thousands of dollars to get a million dollar judgement against you. Think about it, say you are involved in an auto accident that is your fault and you seriously injure or even cause the death of a 30 year old who makes $30,000 per year (which is not uncommon in our area). ow that person can no longer work and had an expectation of working for another 35 years to reach 65. Just taking today’s dollars of $30,000 for 35 years, would be a lifetime income loss of $1,050,000.
Although one million may appear to be more than enough coverage, the total cost of liability claims can multiply quickly. In today’s world, a million isn’t much. It’s not unusual to read in the news of settlements over well over five million. Losing the ability to earn an income and facing a lifetime of injuries or medical care can easily total beyond several million dollars over the span of an individual’s lifetime, not to mention situations where multiple people are injured, which would multiply the total damages. It’s important to consider what amount would be acceptable for various conditions. For example, ask yourself how much you would settle for if you were paralyzed and unable to work the rest of your life.
Anyone who has something to lose should have an umbrella insurance policy, but if you really have a lot to lose and don’t want to gamble with your life’s wealth, your option should be a multi-million dollar policy. . The insurance coverage you get should be discussed with your Trusted Choice ® Insurance Agent.