The minimum amount of coverage offered for umbrella policies is $1 million, and some companies targeting individuals with a high net worth may offer policies that cover as much as $50 million or more. The majority of individuals who purchase umbrella policies pick standard amounts of $1 to $5 million. For a policy of just $1 million, the annual premium is typically between $200 to $300, depending if the insured has young drivers on the policy, more than two cars or points on a driving record, a second home or other increased liability risks. Each amount more than $1 millions costs slightly less to insure, but the increments become significantly more expensive after the $10 million threshold.
If a person is liable for a serious accident, a higher amount of coverage ensures much better protection and less likely you will have to pay a significant amount yourself. One of the biggest advantages of umbrella coverage is that it is very cheap in comparison with what it would cost to pay for medical bills and property damage out of pocket. Never take shortcuts when assets such as a home, investments and belongings are at stake. Some people mistakenly think they only need to be insured for their net worth, but this is far from true. Judgments and medical bills can easily reach into the millions in a short amount of time. Since damage awards are never capped off at a person’s net worth, they may exceed the value of a person’s entire assets and still leave the person owing money.
Because future wages can be garnished, a person who does not have adequate coverage can easily be jeopardized. If the injured person has a considerable income, that individual is more likely to gain the attention of personal injury attorneys. They are typically successful at helping injured parties receive maximum judgments. While $1 million may seem like adequate coverage, the total amount of a serious injury or death can be in the millions, and it is becoming more common to see settlements totaling over $5 million.
In a litigious society, $1 million is a risky choice for an umbrella coverage amount. Keep in mind that there are often multiple parties injured in an accident. If all of them are injured and need extensive medical care because of permanent injuries, the at-fault party will be in financial trouble. It is important for all people to think about how much they would seek if they were injured or paralyzed in an accident, and use that amount to consider how much umbrella coverage to buy.
Any person who has assets or even earning potential alone should consider buying umbrella coverage. Experts suggest a minimum of $2 million in coverage; however the more you get, the less likely you will have to pay out any out-of-pocket fortune. This type of insurance is essential for everyone, but the only issue at hand is to choose an optimal coverage amount. To learn more, discuss concerns with your agent.