Imagine this scenario: your car, your pet, or your child has damaged someone else’s property, and now you’ve been sued. If something like this happens to you, your baseline home or auto insurance policy might not be enough to cover legal fees and judgments.Luckily, umbrella insurance can guarantee your liability is covered – but only if you purchase the right amount. To help residents determine how much they need, Muller Insurance explains how to weigh your personal risks with the costs of umbrella insurance coverage so you can always be protected.What Does Umbrella Insurance Cover?If it is determined that you are responsible for harm to another person, you may be called upon to compensate them financially for physical injuries, property damage, tarnished reputation, or mental health struggles. In these cases, umbrella insurance provides additional coverage after other policies have been exhausted. Umbrella insurance could help you pay for:Bodily injury liability: You may be held liable for a range of personal injuries, whether they resulted from a car accident that was your fault, a pet bite, or a fall in your home.Property damage liability: When you or your children are at fault for damaging one’s physical property, like a car or school building, you may be liable.Landlord liability: If you rent a property, you may be sued for any damage that is your fault, from a kitchen fire to a malfunctioning washing machine.Other personal liability: You may also be sued for the mental health consequences someone may experience due to your damage, as well as reputation damages from slander, libel, or wrongful or malicious lawsuits.While the court may prove you innocent, the lawsuit can still be expensive. In any case, it’s worth having umbrella insurance to cover your legal fees and judgments when your other policies can’t.Weighing Your RisksIf you’re unsure whether you need umbrella insurance, consider the risks your lifestyle poses to you and your family. For example, if someone becomes injured in your swimming pool, you may be faced with a lawsuit and their medical bills. If you own or participate in any of the following, umbrella insurance is a wise investment:Vacant land, especially if leased for huntingSwimming pools and hot tubsRental properties with tenantsRecreational vehiclesLarge parties regularly hosted at your homeDetermining Your Coverage AmountThe primary purpose of umbrella insurance is to cover the cost of lawsuits. Umbrella insurance policies should be based on the worst-case scenario – how much can you lose if you lose the lawsuit? That’s why most people base their umbrella insurance policies on their net worth. We recommend using the following formula to see how much coverage is right for you:Calculate your net worth. This is equal to your assets (what you own) minus your liabilities (what you owe).Account for future income. Multiply your current income by five and add it to the total to ensure your coverage can protect against wage garnishing.Consider collateral damage. If you have family and dependents, they may be hurt if you lose everything. A little extra coverage can ensure they are covered.Purchase Umbrella Insurance TodayIf your lifestyle puts you at risk for lawsuits related to personal damages, consider purchasing umbrella insurance coverage. Located in Hoboken, New Jersey, Muller Insurance offers umbrella insurance to families, businesses, and individuals throughout New Jersey, New York, Connecticut, Pennsylvania, and 26 other states. To find out more, contact us today and ask us about receiving a free quote.