Are Umbrella Policies Necessary?

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When shopping for home or auto insurance, you’ll likely be offered an umbrella policy, a policy that provides additional coverage beyond your basic policy. Your personal net worth and assets should determine your need for an umbrella policy, because the more net worth and assets you have, the greater risk you carry. In these cases, an umbrella policy can provide you added protection and is considered a worthy investment.

Once you determine your need for an umbrella policy, you’ll decide what level of coverage makes the most sense for you. The value of your home, and even your profession, can help determine the coverage of your umbrella policy. For example, if you’re a physician, a higher umbrella policy would be recommended because lawsuits filed against physicians tend to be at higher amounts. When determining the right amount for your umbrella policy, keep in mind the cost for additional layers beyond the first million are less expensive, making higher limits a better value. Unless you’ve accumulated significant wealth, a limit within $1-3 million would be an adequate amount of coverage. Depending on your personal financial situation, a lower limit may make more sense. Zander Insurance can help you determine the right umbrella policy for your needs and your budget.