Is this good insurance coverage or should I add umbrella too ?

Question

Property Purchase Price - $365k

Dwelling ( Coverage A) - $432k

Increased Dwelling (Coverage D) - $108k

Dwelling Extension - $43k

Personal Property ( Coverage B) - $324k

Personal Liability eash occurance ( Coverage L) - $100k

Loss of Use - $130k

Total annual premium $1400.

I’m a bit worried about the personal liability being $100k as it seems a bit low. Is personal liability the coverage if I get sued ? Is that part the one that increases to $1M with an umbrella policy ?

Any info is appreciated

John Morgan · Answer

@Elton John

I get a mil in liability on all of mine.

John Mocker · Answer

Elton,

$500,000 is a much better choice than the $100,000 limit for the Liability.  Unfortunately, you can never be sure if that is enough coverage.  We see lawsuit ending up costing more and more.  You should discuss with your Attorney what they recommend based on the lawsuits they see in your area.

A personal Umbrella policy would offer more Liability coverage.  Generally the policy is issued in increments of $1mm.  It provides coverage if the underlying Liability coverage on your home or auto is exhausted in a claim.

Bill B. · Answer

I mean this liability insurance is in regards to the property and someone being injured/killed. Again, this all assume you are worth more than the $500k because primary home liability MIGHT protect you.

What I mean about personally being sued is you’re driving home and a little kid darts out in front of your car and you are sued. Rental property liability wouldn’t help at all, I don’t know if this liability would help because it’s your primary home, it MIGHT. Is your auto liability 300k or 500k? (The default is only 50/100k).

Again, this probably only matters if your net worth is north of $1M. Most lawyers will settle for your insurance caps if it’s close to the max they can get.

Bill B. · Answer

It total insurance is still expensive but the $400k for $60 is about right. Again, you are 10x more likely to be sued personally than your property is, in which case this won’t protect you. Make sure your primary home also has 500k as that may extend out to protect you.

The “fear” is a car accident where you hurt or kill someone. Or an unqualified person is doing repairs for you and gets hurt/killed. It’s basically a success tax.

Elton John · Answer

Thank you for your info- I called them and increased my personal liability up to $500K for only $60 more annually. Does that seem like a good deal now ?

Bill B. · Answer

If you are worth more than $100k, that’s not enough. If this is all you have and you have less than $100k in equity you’re fine.

It does seem like VERY expensive insurance. My average property is worth $500k give or take, and with 300/300k limits it costs under $800/yr. Maybe check your deductibles? I usually run $2,500 as you shouldn’t make a claim under $7,500-$10k anyway.

Yes, that is the part that’s covered by an umbrella which should also be very cheap. It’s advantage is is covers you, the person who’s much more likely to get sued than your property.

Ps. Many/most umbrellas require your base insurance to be $300k these days.