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Personal Umbrella Insurance - The One Policy Everyone Should Consider

One of the most certain things in life is uncertainty. Your dog could bite the neighbor’s kid. Your teen driver could hit a cyclist. A guest could fall down your stairs. A rainy morning commute on worn-out tires could result in a multi-car accident. And you could be held liable to others for the cost of damages – injuries, property destruction, emotional distress, lost wages and more.

Good thing you have insurance. But, wait, your policy covers $300,000 of liability, and, in a lawsuit, you’re judged liable for $1 million. That leaves $700,000 left to pay. How will you cover it?

If you have umbrella insurance and your policy covers the incident, the additional $700,000 will come from your policy. If not, it will come from the assets you have now, such as your home and savings, and from future assets, such as your wages or inheritance.

The fact is, it only takes one serious accident and a resulting lawsuit to put everything you own - and will own - at risk. And it only takes one umbrella policy to help protect it all.

A few things you should know about umbrella insurance:

  • Personal umbrella policies typically offer between one and five million dollars of liability coverage. Consider your net worth when choosing your coverage –you could be sued for everything you have.

  • An umbrella policy is not a stand-alone policy. Your insurance carrier will typically require you to meet certain qualifications, such as having an auto policy with a certain level of liability coverage, in order to purchase umbrella insurance.

  • Even when you have umbrella insurance, your car or home insurance is your first line of defense. For example, if you are liable for $2 million in a car accident and your auto insurance covers $500,000 of liability, your auto policy covers the first $500,000. Your umbrella policy covers the remaining $1.5 million, assuming your policy covers the incident and that you purchased that much coverage. If you are liable for $250,000 in an accident on your property and your homeowners insurance covers $300,000, your umbrella policy won’t be needed.

  • If you insure a motorcycle, ATV, golf cart, snowmobile, motorhome, or watercraft, your umbrella policy may provide additional liability coverage on top of those policies as well. Be sure to check with your agent to confirm your coverage on these types of vehicles.

Some of the things NOT typically covered under umbrella insurance:

Like most things with insurance, there are things a personal umbrella policy typically won't cover. To name a few:

  • Damage to your own property

  • Your own injuries

  • Business liability

  • Contract obligations

  • Criminal or intentional actions


Personal umbrella insurance is a critical coverage policy that everyone should consider adding to their insurance portfolio. While no one ever hopes to face a lawsuit, the reality is that it does happen, and the settlements can be astronomical. Umbrella insurance provides an added layer of protection and peace of mind. Talk to your insurance agent today to understand the policy limits, your coverage needs, and add umbrella insurance to your insurance plan. In the case of an unlikely event, you'll thank yourself for taking the precautions and preparing for the worst.


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