It’s a question we get a lot: how much liability coverage do I need? Unfortunately, it’s a tough thing to pin down. There’s no algebraic formula, no one size fits all solution. But we can provide some basic guidance. Please note, we do recommend you consult with your independent insurance agent, your attorney, and your financial planner when making financial decisions.
Why have an umbrella policy?
The purpose of the umbrella is to protect assets and future income that are at risk in a liability suit. The liability suit could come from a car accident, or a slip and fall, or a dog bite, or many other ways.
How much coverage do I need?
We’ve issued personal umbrellas from $1,000,000 in coverage to $20,000,000 in coverage.
As mentioned, we’re trying to protect your current assets (cars, houses, cash, non-qualified investments, etc) and future income. If you have a judgement against you and you don’t have the cash to pay it your income can be garnished up to 25% and they can garnish it for 10 years and renew that 10 year period 10 times! I’ll save you the math, that’s 100 years!
No really, how much do I need?
Even if we take a simplistic route, the amount needed can be huge. Try it out: add up all of your stuff like cars and houses, and add in your non qualified investments like stocks and bonds and Roth IRAs, and then add in 25% of your income for the rest of your life.
As you can see, even if you’re a young person who still has a lifetime of work ahead of them or someone who might not have as long to work, but has amassed a lifetime of assets the number is a big one. And further, could you live without 25% of your income? Most can’t!
Start the conversation today. For many folks $1,000,000 in coverage can be had for $150/year – less than you spend on cable in a month.