How to calculate Umbrella Liability Insurance Requirements

Umbrella liability insurance coverage is becoming more and more common because people feel they must protect themselves and their assets in the event they are sued. This type of insurance protects against catastrophic or “at fault” accidents and other events. The insurer is protected from damages or injuries to others.

An umbrella liability insurance will pay for liability damages above and beyond your car insurance or homeowner’s insurance policy and can really help to provide some peace of mind when try to protect your assets and future income. While umbrella liability insurance can provide valuable coverage, it is only effective if you make sure that you have adequate amounts of coverage.

 How Much Coverage You Need

There is no set method to determining how much coverage you will need with an umbrella policy. In fact, you may not need the coverage at all. If you don’t have a large income, or have many assets or much property, you probably don’t need to rush into purchasing an umbrella policy.

However, if you do have significant assets, income and property you want to protect, you should purchase coverage that at least provides coverage in an amount that will cover the sum of the following:

  • The worth of your home and any other real property
  • The worth of any vehicles that you own (to include boats and planes)
  • Any other expensive personal possessions that you own
  • Your average income for five years
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