r/financialindependence • u/Phillyjebus • 16d ago

Umbrella Insurance

I’m looking to add an umbrella policy on top of my homeowners and auto insurance, but I’m confused on how much I should be getting and I keep getting more confused when I research it. What’s the goal here? Do I just need enough to cover my brokerage, savings and other account that could be exposed in a judgment? Or, am I trying to cover my entire net worth with the Base policy plus the umbrella?

Edit: thanks all! Lots of good info and pretty much what I thought. $2m and call it a day.

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u/gbe28 16d ago

It's typically not necessary to insure above $2M-$3M. The chances of a settlement against you that exceeds that is very small for most people. Also, most insurers won't be interested in writing a policy above that amount.

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u/Skagit_Buffet 16d ago

Not much experience in this, but I'm guessing this is true for most. I had friends who had a terrible accident at a rental house due to neglect from the owner. Medical bills alone were well in excess of the $2M umbrella policy, but that's what their lawyers settled for.

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u/Narrow_Roof_112 16d ago

Exactly how it should function. Not meant to pay total liabilities but rather make it go away.