If you live in the greater Willoughby, OH area, then you know that umbrella coverage is very important. After all, we get a lot of rainfall here! But how do you know how much umbrella coverage you need? Keep reading to find out how The Merhar Agency LLC recommends calculating the amount of umbrella coverage you need.
How To Calculate Umbrella Coverage?
Find Your Net Worth
To calculate how much umbrella coverage you need, you need to determine how much coverage you need to protect your assets. To do this, you need to calculate how much your personal assets are worth. Then subtract any debt you hold against the assets. Now you know your net worth. The purpose of umbrella insurance is to protect your net worth if your other insurance policies do not cover any claims against you.
You have $300,000 worth of assets and you are sued for $500,000. Your homeowner’s insurance will cover $300,000 of the lawsuit, leaving you with $200,000 in uncovered expenses. If you have a $1 million umbrella policy, then your insurer will pay the remaining $200,000, leaving you with no out-of-pocket expenses.
Now let’s say that the same scenario happened, but this time your homeowner’s insurance only covers $250,000 of the lawsuit. This would leave you with $250,000 in uncovered expenses. However, since your umbrella policy has a limit of $1 million, your insurer would still pay the remaining $250,000, leaving you with no out-of-pocket expenses.
Contact Us Today
As you can see from the examples above, it is very important to have umbrella coverage if you own property in Willoughby, OH. If you have questions, call The Merhar Agency LLC. We are here to help.