Umbrella Insurance Calculator: Estimate Your Costs
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Christine Lacagnina has written thousands of insurance-based articles for TrustedChoice.com by authoring consumable, understandable content.
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True to its name, umbrella insurance stacks on top of an existing policy to extend your coverage limits in the liability category. Umbrella insurance can be paired with homeowners insurance, car insurance, and even boat insurance. These policies can extend your liability coverage to limits of $1 million or even more. Coverage is also highly affordable, as our umbrella policy calculator shows.
You can work with an independent insurance agent to add an umbrella policy today. Umbrella insurance is an easy way to ensure that you'll have enough liability coverage in case you get hit with a hefty lawsuit that would otherwise exhaust your existing policy's limits. If you're wondering how much the extra coverage will cost you, just check out our umbrella insurance calculator below.
Umbrella Insurance Cost Calculator
How will this quote help me?
Your quote is based on several common factors to give you a clear picture of the cost you can expect, though an independent agent can shop around and maybe even improve your rate!
NOTE: This quote is not final, though we did work with professional actuaries to help get you a ballpark figure to get started.
Factors That May Affect Your Umbrella Insurance Estimate
Various factors impact the cost of an umbrella insurance policy. To help calculate your umbrella policy estimate, review the following factors and how they apply to you.
Consider these factors before getting an umbrella insurance quote:
- Where you live: Your location influences the cost of the underlying policy that your umbrella insurance will be paired with, such as home insurance or auto insurance. Where you live can cause insurance costs to be higher due to crime rates, property values, etc.
- What you're insuring: What you're insuring, such as your car, home, boat, etc., also impacts the cost of umbrella insurance. You might need more umbrella insurance for your home than you need for your car, or your home might carry more risks than your car does, so the cost of umbrella insurance for your home would be higher.
- How much coverage you need: Often you can purchase umbrella insurance in increments of $1 million, up to $5 million and beyond. The more umbrella coverage you need, the higher your premium will be. For more information on how much coverage to get, use our "How much umbrella insurance do I need" calculator on this page.
- Required home or auto policy with a minimum amount of liability coverage: Before getting umbrella insurance, you'll need to first have a policy it can stack on top of, like home or auto insurance. How much coverage your underlying policy has already built in will also affect your umbrella insurance costs.
The more existing coverage your underlying policy has, the less chance there is of you needing to use your umbrella coverage. This can result in a lower umbrella insurance coverage limit needed, as well as a lower premium.
Calculating How Much Umbrella Insurance You Need
How to calculate how much umbrella insurance you need starts with considering how much potential risk you have in several areas. Consider these factors as they apply to you personally when determining how to calculate umbrella insurance coverage:
- Net worth: Net worth can be translated as the value of all your assets minus the total value of all your debts. Your net worth can influence lawsuit amounts, which can create the need for a higher umbrella coverage limit.
- Home equity: Your home's current equity amount, not exceeding your state's exemption limit, can also impact your umbrella coverage needs. The more equity you have, the more umbrella insurance you may need to fully cover it.
- Retirement accounts: Generally, your retirement accounts, if they're a traditional or Roth IRA, are shielded against lawsuits. However, the value of these accounts can still factor into how much umbrella insurance you need, as they're considered part of your assets.
- Existing limits of your liability coverage: The higher your existing liability coverage under your boat, home, auto, etc. policy is, the less likely that you'll need umbrella insurance. However, the lower your existing liability coverage is, the more likely that you'll need your umbrella insurance, meaning you'll want a higher limit.
FAQ About Calculating Umbrella Insurance
To calculate your umbrella insurance policy, you'll need to do the following:
- Calculate the total value of your retirement accounts, savings accounts, home equity, and other assets.
- Evaluate your existing policy's built-in liability coverage limits.
- Determine how much additional liability coverage you need in any specific area, such as for homeowners insurance.
Once you have this information, you can then calculate how much coverage you need, as well as the cost of your umbrella insurance policy. An independent insurance agent can also provide you with umbrella insurance quotes for your area.
To determine how much umbrella insurance you should get, first consider the total value of all your assets, which includes your retirement accounts, savings accounts, home equity, etc. Next, review your existing liability insurance limits as well as your personal liability risk in those categories. You'll need more umbrella insurance if your existing policy has a lower liability coverage limit.
An independent insurance agent can also easily help you determine how much umbrella insurance you need. They can help you evaluate your liability risks in every category and even review your existing liability coverage limits for any policies you already have.
Umbrella insurance coverage is calculated by considering your current coverage and its limits. The cost of umbrella insurance depends on how much liability coverage your existing policy, like home insurance, already provides. You'll also need to factor in how much total liability coverage you want. So if you have an existing policy that provides $500,000 of liability coverage and you want to increase this limit to $2,500,000, you'll need a $2 million umbrella insurance policy.
The more coverage you need, the higher your premium will be. An independent insurance agent can also help provide umbrella insurance quotes for you from multiple carriers so you can get the best rate.
You can get as many umbrella policies as you like. If you want two umbrella policies because you have two existing policies that you want to increase your liability coverage under, that's possible. So, you could get an umbrella policy for your homeowners insurance and another one for your auto insurance. Your umbrella coverage from one policy will not carry over to another, which might create the need for two or more umbrella policies.
Personal umbrella insurance, such as coverage that pairs with home insurance, auto insurance, boat insurance, etc., is generally not tax-deductible. However, many business insurance policies are tax-deductible. So if you purchase commercial umbrella insurance to help protect your business, you're likely to be able to write off the premiums for your coverage. Make sure to ask your independent insurance agent and CPA for more information.
Umbrella insurance doesn't cover the costs of treatment for your own injuries. It also doesn't cover property damage to your car, business, home, etc. Also, like liability insurance, umbrella insurance doesn't cover intentional or malicious acts against others. Keep in mind that a regular umbrella insurance policy won't cover your business, you'll need a commercial umbrella insurance policy for that.
If you have a high probability of getting hit by a lawsuit and exceeding an existing policy's liability coverage limits, you might want to purchase an umbrella insurance policy. If it's likely that you could get sued by a third party for an injury at your home's swimming pool and you regularly host pool parties, you might want to add umbrella insurance to your homeowners insurance. Basically, someone would want to purchase an umbrella insurance policy if they feel that their existing liability coverage under any policy they already have is not sufficient in case of a lawsuit.
Why Use an Independent Insurance Agent for Umbrella Insurance?
It’s simple. Independent insurance agents simplify the process by shopping and comparing insurance quotes for you. Not only that, but they’ll also cut the jargon and clarify the fine print, so you know exactly what you’re getting.
Independent insurance agents also have access to multiple insurance companies, ultimately finding you the best umbrella insurance coverage, accessibility, and competitive pricing while working for you.
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