YOU ASK:

If a million in umbrella insurance will cost me only $100 per year, how much umbrella insurance should I buy?

WE ANSWER:

Yes, indeed one of the good things about umbrella insurance is that it costs around $100 per annum and an extra million in umbrella insurance will most likely cost you only less than $100 per year.

To determine how many millions in umbrella insurance to purchase, you need to assess your personal liability risk, and consider a number of very important factors.

Think about how much a severe bodily injury, for instance, will cost the victim of a tort - including medical expenses, lost wages, and other noneconomic losses, such as pain and suffering. In a liability lawsuit, judges usually take all these factors into account when determining the compensation amounts for each case.

The rule with umbrella insurance is "Buy a million more than you think you need!" Cheap as umbrella insurance is, better be safe than sorry. Experienced insurance advisers usually recommend that you buy a million in umbrella insurance if you think you don't need umbrella coverage. If you assess your umbrella coverage needs at $1 million, buy an extra million, if you feel you need $2 million, buy $3 million and so on.

If you feel that you are very suable, you should purchase a minimum of $2 million, and if you are very affluent, don't go for anything less than $5 million (or $10 million if you insurance provide offers that limit).

Your suability is determined by a number of personal factors that need to be taken into account: for example, a person is considered very suable if they have a high current income and assets, or their income is expected to improve if they have good career prospects. Likewise, people owning dogs, or those with hazardous hobbies, such as hunting, run the risk of being sued for negligence.

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