☂️ What Is Umbrella Insurance?
Umbrella insurance provides extra liability coverage beyond your auto and home insurance limits. If you're sued for more than those policies cover, umbrella kicks in.
Cost per $1M
$150-300
per year
Each Additional $1M
$50-75
per year
Typical Coverage
$1-5M
available
Do You Need Umbrella Insurance?
✓ You Probably Need It If:
- • Your net worth exceeds your current liability limits
- • You have a pool, trampoline, or dog
- • You own rental properties
- • You have teen drivers
- • You're a landlord or business owner
- • You have significant assets to protect
- • You're active on social media (defamation risk)
You Can Likely Skip If:
- • Your assets are minimal
- • You don't own a home or car
- • Your existing liability limits are adequate
- • You have no special risk factors
What Does Umbrella Insurance Cover?
🚗 Auto Liability Excess
When a car accident lawsuit exceeds your auto policy limits.
🏠 Homeowners Liability Excess
When someone is injured on your property beyond your home policy limits.
📝 Defamation/Libel
If you're sued for slander, libel, or defamation (including social media posts).
⚖️ Legal Defense Costs
Attorney fees and court costs for covered claims.
NOT Covered:
Your own injuries, your own property damage, intentional acts, business liability, or professional malpractice.
How to Get Umbrella Insurance
-
1
Meet minimum underlying coverage
Most insurers require 250/500/100 on auto and $300K+ liability on home before selling umbrella.
-
2
Buy from your auto/home insurer
Most insurers require you to have auto and/or home with them to get umbrella. This also gives you a discount.
-
3
Choose your coverage amount
Start with $1M. Add more if your net worth is higher. Each additional $1M only costs $50-75/year.
FAQs
How much umbrella insurance do I need?
A common rule: coverage should equal your net worth. If you have $1M in assets, get $1M umbrella. Some recommend covering potential future earnings too, since wages can be garnished in a lawsuit.
Does umbrella insurance cover my rental properties?
Yes, if properly structured. Your landlord policy needs adequate liability, and you should inform your umbrella insurer about rental properties. Some policies cover rentals automatically; others require endorsement.
The Bottom Line
Umbrella insurance is one of the best values in insurance: $1 million in protection for $150-300/year. If you have assets worth protecting, a pool or dog, teen drivers, or rental properties, umbrella insurance is a no-brainer. The cost is minimal; the protection is massive.