Living in Crystal Lake, IL, you know that insurance is important, but with so many policies and options, it can feel like a lot. For instance, how much umbrella coverage do you actually need? How much is too much?
That’s a fair question, and that’s why we made yet another August Vincent Insurance Agency quick guide.
Is It Too Much?
Let’s start with the easy answer. In most cases, you do not need an umbrella plan covering more than your total net worth. That’s too much coverage.
Putting that in perspective, the average umbrella policy nationwide costs around $400 per year to provide $1 to $2 million in coverage. Thus, it is easy to get large amounts of umbrella coverage for relatively small premiums.
Another important point to note is that you will not be held liable for damages beyond your net worth unless extenuating circumstances exist (such as fraud). So, there’s little reason to extend an umbrella plan beyond your total net worth.
Is It Not Enough?
That said, there is such a thing as too little umbrella insurance. In most cases, you can’t even get an umbrella policy until your auto and home insurance provides at least $250,000 in total liability coverage (there are exceptions), so if your net worth is less than $250,000, you don’t usually need an umbrella plan.
That said, if your net worth is greater than the coverage you get from your other policies, you are exposed to risk.
The general recommendation is to have an umbrella policy that covers your total net worth minus what is covered by your other policies. It’s an easy rule, and it means you have good protection with one of the most cost-effective liability coverages you can get.
These guidelines can help you consider coverage, but umbrella policies are personal. So, talk to a person. Talk to your August Vincent Insurance Agency representative and get into the details. You want all of your assets in Crystal Lake, IL, covered.
