Umbrella Insurance (Personal)
Published
When umbrella kicks in
Serious auto accident
Step 1
Auto policy pays up to $250k
Step 2
Umbrella covers the excess up to $1M
Step 3
Personal umbrella insurance adds high-limit liability coverage on top of your auto and home policies. When a covered loss exceeds the underlying limits, your umbrella can help pay the remaining amount—up to the umbrella limit—along with covered defense costs.
How a Personal Umbrella Works
Example:
- Auto policy liability limit: $250,000 per person / $500,000 per accident
- Umbrella limit: $2,000,000
- A severe accident results in $1,200,000 in damages
- Auto pays $500,000 (per accident limit); umbrella pays the additional $700,000 (subject to policy terms)
Umbrella policies generally follow form of the underlying policies. They typically respond when the underlying limits are exhausted and requirements are met.
What’s Typically Covered
- Bodily injury and property damage you or a covered household member cause to others
- Incidents arising from your residence premises and personal activities
- Personal injury (libel, slander, defamation) in many policies
- Defense costs (often in addition to limits, but confirm your policy)
What’s Not Covered
- Your own injuries or damage to your property (that’s not liability)
- Business-related activities (consider a separate business or commercial umbrella)
- Intentional or criminal acts
- Certain vehicles, watercraft, or recreational toys unless specifically insured
- Professional services (E&O/Professional Liability needed instead)
Who Benefits Most
- Households with drivers under 25 or multiple vehicles
- Homeowners with pools, short-term rentals, or frequent guests
- Pet owners (especially larger breeds)
- People with significant assets or high future income potential
- Those who volunteer, coach, or sit on boards (check the policy for board service)
Choosing the Right Limit
Consider a mix of:
- Net worth and projected earnings
- Home equity and investment balances
- Risk exposure (driving patterns, household activities, property features)
- Legal environment in your state
Common choices are $1M–$2M; households with higher exposure often consider $5M+.
Underwriting & Cost
- Requires minimum underlying limits (auto/home)
- All drivers in the household generally must be listed and acceptable
- Prior claims and driving records affect eligibility and price
- Premiums are often modest relative to protection (hundreds per year)
Quick Tips
- Raise underlying limits first—most umbrellas require it and it narrows the gap
- Ask whether personal injury is included
- Consider UM/UIM umbrella in states where it’s offered
- Review recreational vehicle/watercraft coverage and exclusions
- Reassess limits annually as assets and risk change
A personal umbrella is a cost-effective way to protect what you’ve built from rare but high-severity events.
Next Steps
- Make sure your base policy is solid: Personal Liability Insurance
- Check your auto liability limits: Car Insurance
- Confirm your home liability limits: Homeowners and Renters Insurance
Your liability stack
Auto Liability: $250,000
Umbrella: $1,000,000