Assessing Your Coverage Needs: How to Determine the Right Umbrella Insurance Limit

It’s astonishing how most people disregard Umbrella insurance or are unaware of it. Let’s just put it this way: if a dog is a man’s best friend, then Umbrella Insurance is your money’s best friend! It is much cheaper than other insurances and is a great risk management tool, especially for people with a high net worth and potential income.

Umbrella Insurance picks up beyond the limits of the rest of the insurance. Simply put, you need Umbrella Insurance if your net worth is over $500000. However, if you are still confused about how much you need and the proper limits, don’t worry. This article will help you understand the complexities of Umbrella Insurance, including how to calculate the coverage you need. So, let’s dive right into it.

How Much Umbrella Insurance Do You Need?

The biggest question is how much of this insurance you need. While many people recommend getting Umbrella Insurance for the same amount as your net worth, it is a mistake. When getting Umbrella Insurance, one must consider their current income, future earning potential, and net worth. For instance, your child is doing their residency and while they might be paying their student loans with their current income, their potential income is much higher. Hence, when getting Umbrella Insurance, this should also be considered. 

Once you have decided that you need Umbrella Insurance, you have to decide how much you need. To simplify this, we have designed a calculator for you. 

Umbrella Insurance Calculator

  • Start by calculating your net worth. You can easily do this by deducting your debts from your assets.
  • Now find out your home equity. This is the amount of financial interest you have in your house. Simply put, this is the current market value of the house minus any mortgage. Your home equity will not always be the same as you gradually pay a mortgage, and the market prices will shift.
  • Calculate the value of your retirement plans. Generally, retirement accounts are shielded against lawsuits. However, the value of these accounts still factors as they are considered part of your assets.
  • Determine the current limits of your other insurance. The higher these limits are, the less the value of your Umbrella Insurance will be. For instance, if your home, boat and motor insurance does not have greater coverage, you will need a high-value Umbrella Insurance that does so.

Once you are done with all these calculations, start comparing the total value of your assets with the existing policy’s built-in liability coverage limits. With that, you can easily determine how much additional coverage you need.

It’s simple, if you want to secure your wealth, you need to get an Umbrella Insurance. It stacks on top of your existing policies and extends your coverage limits. If you are still having a hard time figuring out the limits of your insurance, contact our professionals at Stuttgart Insurance Solutions. They will help you determine how much Umbrella Insurance you need and design the perfect insurance plan for you that covers all possible future risks. So, get in touch with us and get assisted today.


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