Ask Kim

Kiplinger

Protect Your Assets With an Umbrella Insurance Policy

Kiplinger.com

Who should think about getting an umbrella liability insurance policy, and how much does it cost? --J.S., Phoenix

See Also: Does Insurance Cover That?

Most people with income, property and some savings should consider getting an umbrella policy of at least $1 million, which can protect your assets and future earnings from lawsuits. "An umbrella liability policy is one of the most overlooked but important ways to limit your financial risk," says Mari Adam, a certified financial planner in Boca Raton, Fla. The coverage kicks in if you injure someone or cause property damage and are sued for more than the liability limits on your homeowners or car insurance.

A $1 million policy can cost as little as $150 per year if you have a home, two cars and no other major risks, says Sarah Brown, an independent insurance agent in Shrewsbury, Pa. "The more exposures you have--more cars, a motorcycle, a boat, young drivers, etc.--the higher your premium," says Brown. Before you can add an umbrella, you must usually have at least $500,000 in liability coverage on your home and car insurance, which will pay out first.

If you have more than $1 million in assets, consider a larger policy. Doubling the coverage generally won't double the premiums, says Brown.

EDITOR'S PICKS

Copyright 2017 The Kiplinger Washington Editors

More from Kiplinger.com

See more stories in this category

Back to Previous Page

Ask Kim

What You Need to Know About Homeowners...

[Question]I'm thinking of buying a house on the water in Florida, but know that homeowners insurance...

Claiming the Saver's Credit on Your Tax Return

[Question]I'm about to start a new job that finally has a 401(k) and am trying to decide how much I...

Deducting Mortgage Interest on a Vacation Home

[Question]I'm about to buy a lake house as a second home. I plan to go there a few times a month but...

Tax Breaks When Moving to Take Your First Job

[Question]I just graduated from college and will be starting my first job in September. Are my moving...

How to Ensure Your IRA Donation to Charity Is...

[Question]I want to give my required minimum distribution from my IRA to several charities. What steps...

Next Page >
Provided by Kiplinger