Umbrella insurance is hard for most people. why? The concept of a fatal event that can be a game changer for your life and comfort is because most people do not stay. In addition, the concept is more abstract than covering specific assets such as home, cars, boats, etc.
Nonetheless, if you have assets worth protecting or substantial income, you must seriously consider buying a substantial amount of umbrellas. Many people think around as thinking that it is a waste of money, others think that too much is good as everyone else is true if you really need it There is nothing to be done. However, no one else thinks that devastating things will happen.
In fact, a very smart and successful entrepreneur told me, "If you can not calculate the risk of my umbrella, how can I ask, how can I resist it?
He is partially correct. For other insurance, there is a way to calculate the final loss. You can quantify everything from car damage, loss of life (you can monetize the risk of income through actuarial table), home, personal supplies etc. So it makes sense to make sure of it.
But how do you quantify catastrophe?
But I saw people's lives turned upside down by catastrophic events. So here is how to guarantee such kind of risk.
First, let's clarify something. The umbrella risk is not guaranteed for things like medical bills, unemployment, loss of life, tax obligations or penalties or obstacles. It covers you for the following types of responsibilities:
- Personal injury
- Legal defense cost
- Automotive related responsibility
- Property damage
- Personal responsibility such as defamation or slander remuneration
In other words, umbrella insurance is located above other specific risk insurance. So if a dog bites someone while on top of your wealth and causes a lawsuit, that damage will be covered.
How do you rate risk? Well, the general rule of thumb is 10 years plus the normal inflation rate on your asset's income and market value. If you have $ 5,000,000 and you expect to get $ 2,000,000 you guarantee about $ 1,000,000.
There is certain exclusion in most umbrella policies. Go them very carefully. Common exclusion items are self-inflicted damage and damage resulting from damage of own property (subject to housing insurance), certain heterogeneous vehicles.
As I said, the reason for exclusion is very carefully and why policies are canceled.
