How Do I Know If I Need Excess Liability or Umbrella Insurance?
Since we have already covered several types of liability insurance in our “Did You Know” series, you probably have a decent understanding of how liability insurance works. What you might be wondering is: What happens when your insurance limit isn’t large enough to cover damages for which you are liable? For example, most homeowner’s policies have between $100,000 and $300,000 in liability coverage. What happens if someone is injured on your property and the cost of his or her injury exceeds your limit? How will you pay that additional amount?
If you have purchased an excess liability or umbrella policy you may be covered for the rest of the remaining amount (up to the limit of your excess liability/umbrella policy). An excess liability or umbrella policy basically serves as extra liability coverage over the coverage limits of your homeowner’s and auto liability limits and generally offers coverage between $1 million and $10 million (however, higher limits are available).
Are you a good candidate for excess liability/umbrella coverage? There is a very simple formula to help you determine if this type of policy is for you. First, determine your net worth, including the value of your home, stocks, money in the bank, and retirement fund assets. Then, review your personal insurance policy liability limits (for homeowner’s, automobile and any other personal items you insure). Do your assets exceed your liability coverage? If so, you should consider purchasing an excess liability/umbrella policy.
There are many other variables to consider when you are thinking about buying this type of coverage, so be sure to speak to your broker at Tegner-Miller Insurance Brokers to find out more. Please call us at 310-828-9662.