Umbrella Insurance

Get huge increases in your auto and home/condo/ renter liability limits with umbrella insurance

If you become liable for more than your auto insurance or home/condo/renter insurance limits will cover, umbrella insurance is your solution. It stands in to protect your hard-earned assets if there is a car accident with multiple injured passengers or an injured guest at your home. It also protects you against additional risks, such as false arrest, libel, slander, your work with a charitable organization and more.

  • Umbrella insurance increases the liability protection you have on your auto and home, condo or renter policy.
  • It also gives you new coverages against libel, slander, invasion of privacy and more.
  • Coverage is available in limits of $1m, $2m, and up to $5m or $10m.
  • The cost runs $150-$300 for the first million in coverage, and less for each additional million.
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What is umbrella insurance?

Umbrella insurance is a relatively inexpensive insurance policy that gives you additional liability coverage when your auto liability home/condo/renter liability or other personal property insurance limits are exhausted. It also provides some coverages you wouldn’t have at all, such as false imprisonment, libel and slander, and charitable work.

How umbrella insurance works

One of the most common ways umbrella insurance works is to cover the “excess” of your auto, home, condo or renter insurance liability limits.

For example, someone in your household is at fault in a car accident that injures several people in another vehicle. You have auto insurance liability limits of $100,000 per person and $300,000 per accident ($100,000/$300,000). But you end up being liable for $500,000 because the total medical expenses for all passengers are $250,000 plus an additional $250,000 for one of the passengers who is a surgeon and won’t be able to work because of a badly broken arm. If you have umbrella insurance, it will pay the additional $200,000 of liability that is above your auto insurance limit. If you don’t have umbrella insurance, you will either need to pay this amount (possibly by selling your assets or personal property) or file for bankruptcy.

What does umbrella insurance cover?

Umbrella insurance covers the same liability risks covered in your auto and homeowner insurance:


  • Bodily injury to others
  • Damage to property of others
  • Legal fees to defend a lawsuit against you, even if you are not held liable

It also covers some things you wouldn’t otherwise be protected for:

  • Personal injury—lawsuits against you for defamation, libel, slander, malicious prosecution.
  • Invasion of privacy
  • Unlawful entry
  • Assault and battery
  • Work with a charitable organization

How much does it cost?

Umbrella insurance might cost less than you would think. A one-year policy with a $1 million limit usually runs between $150 and $300. Each additional million costs less than the last. The second million is around an additional $75, and a third million is about an additional $50.

Your costs will vary based on the same factors that impact your other insurance: where you live, how many household members live at your house, how many vehicles you own, your insurance claims history, etc.

Do you need umbrella insurance?

People often decide to get umbrella insurance because they have assets to protect—like a home, condo or savings—because any of these could be targets for liability lawsuits.

Another reason to consider liability insurance is if your hobbies or lifestyle increase your liability exposure.

You should think about umbrella insurance if you have the following assets or exposures:


  • Have a teen driver in the house
  • Could be a target for a lawsuit due to high net worth
  • Own a business
  • Things at your home could lead to liability: trampoline, swimming pool, dog, tree house, swing sets, etc.
  • Coach kids’ sports
  • Have hobbies where you could significantly injure others: auto racing, hunting, etc.

How much umbrella insurance do you need?

You can buy umbrella insurance in million-dollar increments ($1m, $2m, etc.), up to $5m or $10m, depending on the insurance company.

An easy way to determine how much you need is to add your total assets (home/condo, savings and investments) and subtract the limit of liability in your home or auto insurance. The difference is a fairly good estimate for how much liability insurance you need.

How to buy umbrella insurance

To qualify for umbrella insurance, most insurance companies require that you carry a minimum of $250,000 (per person) / $500,000 (per accident) bodily injury liability and $50,000 property damage liability. If you own a home or condo, you will need a minimum $300,000 bodily injury liability. The amounts may be different based on the insurance company.

Most companies require that you carry your auto insurance and home/condo/renter insurance through them, but some do sell stand-alone policies.

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