Do I Need Umbrella Insurance?
Answer 6 questions about your assets and risk factors. Get a personalized recommendation in under 2 minutes.
What is your approximate net worth?
Assets (home equity, savings, investments) minus debts
What is Umbrella Insurance?
Umbrella insurance provides liability coverage beyond the limits of your auto and homeowners insurance. If you're sued and the damages exceed your regular policy limits, umbrella insurance kicks in to cover the rest.
Example: You're in a car accident that injures several people. Medical bills total $500,000, but your auto liability limit is $300,000. Without umbrella insurance, you'd owe $200,000 out of pocket. With a $1 million umbrella policy, you're fully covered.
Who Needs Umbrella Insurance?
You Likely Need It If:
- • Net worth over $300,000
- • You have a swimming pool or trampoline
- • Teen drivers in the household
- • You own rental properties
- • You frequently host guests
- • You coach or volunteer
You May Not Need It If:
- • Net worth under $100,000
- • You rent and have few assets
- • No high-risk activities or features
- • No teen drivers
- • Your existing coverage is adequate
How Much Does Umbrella Insurance Cost?
Umbrella insurance is surprisingly affordable for the coverage you get:
| Coverage Amount | Annual Cost | Monthly Cost |
|---|---|---|
| $1 million | $150 - $350 | $13 - $29 |
| $2 million | $225 - $450 | $19 - $38 |
| $3 million | $275 - $550 | $23 - $46 |
| $5 million | $350 - $700 | $29 - $58 |
Actual costs vary based on location, driving record, claims history, and other factors. Bundling with your auto/home insurer often saves 10-15%.
What Does Umbrella Insurance Cover?
Covered
- • Bodily injury to others
- • Property damage you cause
- • Certain lawsuits (libel, slander)
- • Legal defense costs
- • Landlord liability (rental properties)
- • Incidents while traveling abroad
Not Covered
- • Your own injuries or property damage
- • Intentional or criminal acts
- • Business-related liability
- • Damage to property in your care
- • Contractual liability
- • Workers' compensation claims
Frequently Asked Questions
How much umbrella insurance do I need?
A common rule of thumb is to have umbrella coverage that equals or exceeds your net worth. If you have $500,000 in assets, consider at least $500,000 in umbrella coverage. Most people start with $1 million since it's affordable.
Do I need to increase my auto/home limits first?
Yes. Umbrella policies require minimum underlying coverage, typically $250,000/$500,000 for auto liability and $300,000 for homeowners liability. You may need to increase your limits before qualifying for umbrella insurance.
Can I buy umbrella insurance from a different company?
Some insurers require you to have auto and home policies with them before they'll sell you umbrella coverage. Others will sell umbrella as a standalone policy. Bundling usually saves money and simplifies claims.
Does umbrella insurance cover dog bites?
Usually yes, umbrella insurance covers dog bite liability beyond your homeowners limits. However, some insurers exclude certain breeds. Check with your insurer, especially if you have a pit bull, Rottweiler, or other breed sometimes excluded.
Does umbrella insurance cover rental properties?
Yes, umbrella insurance typically covers liability from rental properties you own. This is one reason landlords often carry umbrella policies. You'll need adequate landlord insurance on each property as underlying coverage.
Is umbrella insurance tax deductible?
For personal umbrella policies, premiums are generally not tax deductible. However, if you use part of your umbrella coverage for rental properties or a home office, you may be able to deduct that portion. Consult a tax professional.