It’s Simple Math:
1) Add up the total value of all of your assets: Your Home, Cars, Bank Accounts, Stocks, Bonds, and even your 401(k) Balance.
2) Now add in the future salary that you will receive until retirement.
3) Compare this total to the Liability Coverage Limits that you have on your Homeowners Policy and your Car Insurance Policy.
If the value of your Assets and future earnings exceeds your liability limits, then you should consider a Personal Umbrella Policy!
Everyone hopes that they won’t be involved in a big accident, but if you are, and you are held responsible, the courts can go after all of your assets, including your future income.
Basically, an Umbrella offers protection over and above your Car and Homeowners Policies. Think of an umbrella policy as added protection. You get into a car accident, you’re sued, and your Car Policy only covers you up to a certain amount. Then what? Well, your umbrella policy then kicks in and covers you for an additional amount…up to the limit you choose on your umbrella policy. It’s added protection, plain and simple.
Coverage limits on an umbrella policy start at $1 million and can go as high as $10 million, and the premium is a lot less than you would think.