How Much Umbrella Insurance Do I Need?

Umbrella insurance isn't coverage for your literal umbrella. An umbrella policy adds coverage to existing coverage you already have in place, like car or home insurance. It is extra protection for you if you don't already have enough coverage to pay for legal expenses should you get sued. If someone gets hurt or has personal property damaged while at your home, you could need umbrella coverage to make sure you have enough insurance to cover you during a liability lawsuit. A common type of umbrella insurance is commercial umbrella insurance.

Read on to see why you may need umbrella insurance.

What Is Umbrella Insurance?

Umbrella coverage is EXTRA insurance. That's the best way to put it. Basically, it extends the coverage of underlying policies, including home, auto and boat insurance. An umbrella policy can also cover things that may be excluded on a standard home or auto policy like libel, slander, false arrest or liability coverage for rental properties.

Umbrella Insurance Explained

While your standard homeowners or auto policy provides you some liability protection, your umbrella policy kicks in when you’ve reached the liability limits on an underlying policy. For example, your child has a pool party, and one of the guests slips and falls on a wet surface. The ambulance comes and immediately takes the child to the hospital, where he undergoes emergency surgery. The medical bills total $800,000, but your homeowner's policy limits for liability are $500,000. So your homeowners insurance pays $500,000 of the bill and the umbrella insurance kicks in and pays the remaining $300,000.

You may think you don't need extra coverage or that something like this could never happen to you. Well, has your child ever run outside by the pool? Has your dog ever barked at a neighbor? Never say never. It's best to be prepared for the worst (even though you're hoping for the best).

What Does Umbrella Insurance Cover?

I mean, you’ve got to be wondering by now. It covers things like injuries, property damage, certain types of lawsuits and personal liability.

You might be sued for slander (spoken defamation of character), libel (written defamation of character), false arrest, malicious prosecution, shock or mental anguish. In addition, tenants in your rental unit can sue you, or you may get sued by someone after a car accident. Dog bite injuries and slip and fall accidents occurring on your property are also other common types of liability lawsuits.

You see the attorney commercials on television every day asking if you've been hurt in an accident. Unfortunately, liability lawsuits are expensive, and umbrella coverage basically handles everything you weren't prepared for.

An important distinction to remember — umbrella insurance is not the same as excess liability insurance. An excess liability insurance policy is a type of extra coverage offered by some insurers that provides extra coverage to the underlying policies (home or auto). However, the excess liability policy comes with the same exclusions as the underlying policy. On the other hand, the umbrella policy can provide additional liability coverage that the underlying policy does not.

What Does Umbrella Insurance Not Cover?

Umbrella policies do not cover damage YOU cause to YOUR property. For example, you can't break your window accidentally while playing catch with your son and file a liability claim. However, suppose a hard-hit ball happens to go over the fence and break your neighbor's high-end exterior french doors. In that case, your neighbor's damage is covered by your liability insurance if you are found to be responsible for the damage. In addition, the umbrella policy would pay if the replacement cost for the damaged property exceeded your homeowners policy liability limits.

Personal umbrella plans will not cover any liability arising from the operation of a home business; you will need business umbrella coverage for this type of risk.

Any criminal acts you commit are not covered by this type of insurance, even if you cause damage to someone else or their property. 

The liability you assumed under a contract is also not covered. For example, you hired a contractor and signed an agreement to remodel your home. Any liability arising when the contractor is working under that contract in your home is not covered by a personal coverage like this.

Compare Commercial Umbrella Insurance Quotes

Do you have enough liability coverage to protect you from a lawsuit? Attorneys claim big-time money foe those injured in an accident, and juries often award those high-dollar settlements. So, how much coverage is enough? You can buy personal liability insurance from insurance companies that also sell home and auto insurance. We've done the legwork for you and compiled a list of some of the best umbrella coverage carriers to save you time.

Protect Yourself From Risk

If you are often in situations where you expose yourself to liability risks such as entertaining large groups of people, umbrella coverage makes good sense. Why take chances? Get the insurance coverage you need to protect yourself because you could end up in a legal situation that you thought only happened in the movies or to "other people."

Frequently Asked Questions