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How much excess or umbrella do you need?

Andy Bassett here with Ellerbrock-Norris. Today, I’m getting back at you with our Client Questions series, where we review different questions we are getting from our clients on a regular basis.  

One that we get often is how much liability insurance do I need to carry? Specifically, how much umbrella or excess? When you think about it, it takes a pretty deep dive analysis to really clearly understand what we are trying to protect and how much we need to protect. Whether we're talking about businesses or we're talking about our personal situation individually, it's really about what are we actually protecting specifically. What are those assets?

A lot of times if we're talking to individuals, we'll dive down deep and figure out what are the assets that are there that we're trying to protect in a catastrophic situation. As those assets grow, we need to start thinking about potentially purchasing higher limits of liability to protect those assets. If we get into a scenario that would cause us to be in litigation, one of the first things that's likely going to happen is they're going to be looking for what's available and what somebody is worth, and that's where they're going to start to value a lot of the litigation. We tell people a lot of times, "let's grow that protection as we grow our assets over time."

There are some other things, too, that we dive into. How do we own these assets? How accessible are they in litigation? Some of those things play a factor. So, it's more than just throwing the dart at the dart board and guessing. There is some thought that needs to go around it to really understand deeply what we are protecting from an asset perspective.

The same goes for a business owner. As we grow our businesses, we have more stuff. We inherently have more risk and we've got more exposure to sizable litigation. And again, for a lot of the same reasons, we've got more things at the time of a lawsuit. The same concept starts to arise.

As we grow our business, as we grow that balance sheet and those assets, we need to start thinking about purchasing higher limits of liability to protect against a catastrophic situation.

In summary, it’s much more than just saying, “Oh, that number feels good. That seems about right.” Speak with a Risk Advisor today about your insurance needs, whether it be personal or on the business side. There are a lot of things to think about. Let’s find you a solution today and protect what matters most.

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