A Good and Cheap Way to Lower Risk? Umbrella Insurance (2024)

FAQs

What is the alternative to the umbrella policy? ›

Annuities and irrevocable trusts. Annuities and irrevocable trusts may also be used as a supplement to or even a replacement for umbrella insurance to provide protection from creditors in some cases.

The cost of an umbrella liability policy depends on how much coverage you purchase, the state where you live (insurance rates vary by state) and the risk that insuring you presents to the insurance company. The more homes or cars you own, and the more household members your policy must cover, the more it will cost.

The amount of your umbrella insurance policy should match your entire net worth. Umbrella insurance policies begin at $1 million and go up from there in $1 million increments. This might seem like a lot, but when it comes to lawsuits and insurance claims, things can add up fast.

A $2 million umbrella policy costs around $225 to $375 per year, on average. Every policyholder's umbrella insurance premium will vary based on their personal risk factors, so individuals who own more cars or properties will be more expensive to insure, as will people who are particularly likely to be sued.

There's no law requiring you to buy umbrella insurance. But if you have a lot of assets or a high chance of being sued, you might want an umbrella policy. It might be worth buying umbrella insurance coverage if you: Own property.

After spending years building up your retirement savings, the last thing you want is for an unexpected catastrophic accident to wipe it all out with one lawsuit. The umbrella liability policy is your key instrument for helping to protect your assets.

Once the liability limits are exhausted on your home, auto, or other policy, your umbrella policy takes over and provides a second layer of protection of at least $1,000,000. Higher limits may also be available. Talk with Golden Insurance to determine the right amount of coverage for your needs.

While excess insurance does not affect the terms of your underlying policy, it provides increased coverage limits. Umbrella insurance is a broader type of excess insurance that does expand policy scope to cover situations outside the terms outlined in the underlying policy.

State Farm's umbrella policies are a good choice for customers with a high net worth who want extra coverage for property damage, injuries, and possible lawsuits that could result from various types of incidents. To be eligible, you will also need an auto policy from State Farm.