2024-01-01 · personal, liability

Umbrella Coverage

Overview

Umbrella insurance provides extra liability coverage on top of your home, auto, or renters policies. It helps protect your assets if a major claim or lawsuit exceeds the limits of your base policies.

What umbrella insurance typically covers

Bodily injury liability: medical bills and legal costs if you injure someone.
Property damage liability: damage you cause to someone else’s property.
Personal liability incidents: claims like defamation, libel, or false arrest.
Defense costs: legal expenses beyond underlying policy limits.

Common exclusions and limitations

Intentional acts: deliberate harm or illegal activity is excluded.
Business liability: separate commercial coverage is required.
Property damage to your own assets: umbrella is liability-only, not property.
Certain high-risk activities: may require endorsements or underwriting approval.

Key cost factors

Required underlying limits: higher base policy limits are required to qualify.
Coverage limit: umbrellas are commonly sold in $1M increments.
Household risk profile: drivers, teen drivers, and claims history affect rates.

How to compare policies

Confirm underlying requirements: ensure your auto and home limits meet minimums.
Review covered claims: check for personal injury coverage like libel.
Evaluate coverage limits: match limits to assets and income exposure.
Ask about gaps: understand where umbrella coverage does not apply.

Tips for choosing coverage

Consider an umbrella if you own property, have significant savings, or face higher liability exposure.
Bundle with your auto or home insurer for better pricing and simpler claims handling.
Update coverage after major life changes like home purchases or teen drivers.

Frequently asked questions

Is umbrella insurance expensive? It is typically affordable relative to the coverage provided, often a few hundred dollars per year.

Does it cover lawsuits from guests at my home? Yes, if you are found legally responsible and your homeowners liability limit is exceeded.

Can it cover rental properties? Some umbrellas can, but you may need specific endorsements or landlord policies.