Many clients often wonder what happens if a claim is more than the limit of liability on their home or auto policy. There is good news for them if they’ve purchased an umbrella policy. You can protect yourself from large claims by adding an additional layer of coverage at relatively low-cost.

An umbrella policy works with your current home- and auto- insurance carriers. They cover losses in addition to your home or auto policy and sometimes may broaden coverage. You can purchase umbrellas in various amounts – from one to five million dollars or more.

How Much Should You Carry?

The answer usually depends on your net worth and uniqueness of your situation. Calculate the value of your assets is the first step in determining the amount of coverage you should purchase in an umbrella policy.

Any claim exceeding the amount of your standard liability policy (home and auto) would be your responsibility to cover should you have a large insurance claim against you. The difference between your assets and your general liability should be the amount you carry on an umbrella.