If you already have auto or home insurance, then you may feel protected from just about any situation. However, with liability claims in which you are personally sued, the process can be unpredictable. Medical expenses can add up, and there isn’t a predetermined value on someone’s damages. With the addition of an umbrella policy, you get an extra layer of protection on top of the liability coverage on your pre-existing policies. Often umbrella policies are relatively inexpensive for this additional liability coverage. Policies typically start at one million dollars in coverage and only cost hundreds of dollars.
How Does Umbrella Insurance Protect Your Assets?
With an umbrella policy, you will get extra liability coverage for your home, auto, or other products where you have personal insurance in place. For example, If you have been found legally liable for an accident on your home or auto policy, your current policy’s insurance company will pay the policy limit. Any expenses above that limit would typically have to be paid by you; If you don’t have that money set aside, this can threaten your home and vehicles, as well as your savings, investment accounts, and future wages. In addition, if you have a multi-car accident, the cost can quickly add up between injuries and damages – often over the amount set in your auto policy. Even injuries that happen right in your backyard can be costly. Umbrella insurance helps protect you from the unexpected since you never know when an accident can happen.
Umbrella Insurance – Frequently Asked Questions
- What is umbrella insurance and what does it cover?
Umbrella insurance is extra liability coverage that extends beyond the limits of your auto, home, or other underlying policies. It helps protect your assets if you’re sued for a large amount due to an accident or personal liability claim. - Who needs personal umbrella insurance?
Anyone with assets to protect—like a home, retirement savings, or future income—can benefit. It’s especially important if you have teen drivers, a pool, rental property, pets, or host guests often. - How much umbrella insurance should I carry?
Most people start with $1 million in coverage, but limits can go up to $5 million or more. The right amount depends on your net worth and potential risk exposure. - What does umbrella insurance not cover?
It doesn’t cover personal property, business liability, intentional harm, or damages from contractual agreements. It’s strictly liability coverage for bodily injury, property damage, and personal injury. - Does umbrella insurance cover legal fees?
Yes. It typically pays for your legal defense costs in addition to covering any settlement or judgment up to the policy limit. - Can I buy umbrella insurance without having home or auto insurance?
No. Umbrella insurance requires that you carry certain minimum liability limits on your auto and homeowners policies, as it is designed to go “over” those policies. - Does umbrella insurance cover incidents that happen outside the U.S.?
Yes, in many cases. Umbrella policies often include worldwide coverage, though some restrictions may apply depending on the insurer. - Is umbrella insurance expensive?
Not at all. Most $1 million policies start around $150–$300 per year, offering significant protection for a relatively small cost. - Does umbrella insurance cover defamation or slander?
Yes. Umbrella policies often include personal injury coverage, which may include libel, slander, false arrest, or invasion of privacy. - How does an umbrella policy work with other insurance?
It acts as excess coverage, kicking in after your home or auto insurance limits are exhausted. For example, if you’re liable for $1.5 million in an accident and your auto insurance covers $500,000, your umbrella would cover the remaining $1 million.
