Umbrella Insurance Explained: What is it? Do I need it?

November 30, 2023

Liability insurance, usually included in vehicle and property insurance, safeguards you in case you cause injury or damage to others. Umbrella insurance offers additional liability coverage above and beyond standard policies. This can prove to be helpful in the case of a significant claim.

In simple terms, if you or someone under your insurance plan causes damage beyond your liability coverage limits, a personal liability umbrella policy steps in to cover what you owe often times including legal fees. It shields your savings, assets or future earnings.

Umbrella insurance can be helpful in various situations, such as if you:

  • Cause a multi-car accident that can easily exceed your auto policy limits
  • Own a house or rental property
  • Are a landlord with tenant exposures
  • Host parties or frequently entertain guests
  • Have children at home with potential risks from visiting friends (playsets, unlocked liquor cabinets, sleepovers)
  • Possess things that could lead to common injury lawsuits (e.g., pools, trampolines, fitness equipment, ATVs, guns, etc.)
  • Have inexperienced drivers under your policy
  • Have a pet or pets who could potentially cause damage or injury to others (make sure animal liability is included on your home/renters policy)
  • Coach a kids’ sports team
  • Travel internationally
  • Serve on a non-profit board of directors or are a public figure
  • Publicly post or comment on businesses or service providers, risking claims of defamation
  • Have significant savings, financial assets or have the potential for increased future earnings

Regular coverages for umbrella insurance start around $1 million dollars and go as high as $5 million. Depending on the value amount you select, your credit rating score and your personal risk factors, plans can start as low as $300 annually for the $1 million-dollar umbrella policy. For each additional million-dollar increase in coverage, add $50 to $100 more per year. Umbrella insurance is relatively inexpensive considering the benefits you gain if something goes terribly wrong. Even if you don’t have significant assets your wages may be garnished, so for many it is worth the added value of protection and peace of mind.

Determining if umbrella insurance suits your needs is best discussed with your insurance agent. They can weigh the pros and cons of additional coverage and asses if your situation warrants a more comprehensive policy. By exploring multiple carriers, your trusted agent can secure your best options.

If you’re considering umbrella insurance or are unsure if it’s right for you, reach out to us at Robertson Ryan Insurance. We’re here to help!

Insightful Forbes Article