I already have $400,000 in liability coverage on my auto-insurance policy. How do I determine whether I need to add an umbrella liability insurance policy to my coverage? How much would an umbrella policy cost?
Umbrella liability insurance is an inexpensive way to protect you and your property from lawsuits. You don’t need it if you have relatively little at stake, but “if you’ve accumulated some assets and have a home, it makes sense to have the policy,” says Rob Seltzer, a CPA in Los Angeles. He recommends that you add an umbrella policy, which starts at $1 million of coverage, to protect against lawsuits even if your net worth is far less than that. The policies protect future income as well as assets and also cover legal fees.
CALCULATOR: How Much Umbrella Insurance Do I Need?
Insurers generally require that you have at least $300,000 in liability coverage on your home and automobile before you can buy umbrella coverage, which picks up after you’ve exhausted your homeowners and auto liability limits. The first $1 million of coverage generally costs $200 to $400 a year; the next $1 million runs an additional $75 to $100.
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
Raising your auto and homeowners deductibles from, say, $250 to $1,000 would offset the cost of $1 million in umbrella coverage, says Seltzer. “If you are in a car accident and have to come up with an extra $750 for the deductible, that’s not going to kill you. But if something really bad happens, that $1 million umbrella policy is a savior.”
To buy the coverage, start with your auto- or homeowners-insurance company, which may give you a discount for keeping your business in-house. If your company doesn’t offer affordable umbrella coverage, ask an independent insurance agent for quotes.
-
Stock Market Today: Stocks Are Mixed Before Liberation DayMarkets are getting into the freewheeling rhythm of a second Trump administration.
-
How to Invest in SportsIf it's springtime, Forbes is out with its annual list of baseball franchise values. The billions involved might make you wonder how to invest in sports.
-
Credit Report Error? They All Mattercredit & debt Don't dismiss a minor error. It could be the sign of something more serious.
-
Insurance for a Learning Driverinsurance Adding a teen driver to your plan will raise premiums, but there are things you can do to help reduce them.
-
529 Plans Aren’t Just for Kids529 Plans You don’t have to be college-age to use the money tax-free, but there are stipulations.
-
When to Transfer Ownership of a Custodial Accountsavings Before your child turns 18, you should check with your broker about the account's age of majority and termination.
-
Borrowers Get More Time to Repay 401(k) Loans
retirement If you leave your job while you have an outstanding 401(k) loan, Uncle Sam now gives you extra time to repay it -- thanks to the new tax law.
-
When It Pays to Buy Travel Insurance
Travel Investing in travel insurance can help recover some costs when your vacation gets ruined by a natural disaster, medical emergency or other catastrophe.
-
What Travel Insurance Covers When Planes Are Grounded
Travel Your travel insurance might help with some costs if your trip was delayed because of the recent grounding of Boeing 737 Max planes.
-
Ways to Spend Your Flexible Spending Account Money by March 15 Deadline
spending Many workers will be hitting the drugstore in the next few days to use up leftover flexible spending account money from 2018 so they don’t lose it.
