What is Umbrella Insurance?

Umbrella insurance or a personal umbrella policy (PUP) extends the protection you already get from auto, homeowners, condo, renters, and boat insurance policies and gives you extra protection against certain personal injury lawsuits. Policies start at $1 million in protection and usually cost only a few hundred dollars a year to protect you, your assets, and your household members.

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How do umbrella policies work?

Personal umbrella policies are sometimes referred to as excess liability insurance because they provide excess coverage on policies you already own. Typically they kick in after you've exhausted the limits of other personal insurance policies, like your auto, homeowners, renters, landlord, boat, or motorcycle insurance.  

Personal umbrella policies also provide additional protection you don’t typically receive from your existing policies. Your auto and homeowners policies, for example, will exclude personal injury - which covers losses you might pay out if you’re charged with slander, libel, false arrest, invasion of privacy, or defamation. A personal umbrella policy, however, protects against personal injury claims for you and your household members. 

Scenario 1: Your neighbor slips and falls in your house, sustaining a major back injury. They sue you for their $1 million in medical bills and lost wages, but your homeowner's personal liability coverage only covers $500,000. A $1 million personal umbrella policy would step in to cover the remaining $500,000 in medical bills. Without it, you could be forced to pay for that remaining $500,000 with your assets. 
Scenario 2: Your newly licensed teen causes a major traffic accident. Luckily, no one is seriously hurt but they’re determined to be at fault. Several high-value cars plus an expensive retail storefront sustain property damage over $500,000. Your car insurance only covers $250,000 in property damage per accident, but a $1 million umbrella policy shields your savings from the additional $250,000 you owe the other drivers and property owners. 
Scenario 3: You own a duplex and rent out the unit you don’t live in. After a dispute with your tenant, you go onto social media and share personal details that get them fired and reviewed by their state licensing board. It turns out those details you shared are inaccurate and now you’re being hit with a $1.5 million libel lawsuit after your tenant had to get a new job, go through therapy, and rehabilitate their professional image. With a $2 million umbrella policy, you’re covered for all of those damages that your landlord insurance policy didn’t cover.

Like most insurance, umbrella policies come with their own complex legal vocabulary. To understand your own policy or learn what it all means before you buy, read Coverage Cat's Guide to understanding a personal umbrella policy.

Do I need personal umbrella insurance?

You need umbrella insurance if your net worth is over $1 million and you drive a car. Most auto insurance policies only provide up to $500,000 in coverage per accident. While that upper limit works for many drivers, having a high net worth can make you a magnet for expensive lawsuits. 

You can also determine your need for umbrella insurance by considering your assets and your risk. Umbrella insurance could be a good idea for you if: 

  1. You own a home, especially one with a swimming pool. 
  2. You have young drivers in your household. 
  3. You own rental properties. 
  4. You frequently have guests or host parties in your home. 
  5. You have many valuable assets, like real estate and vehicles. 
  6. You have a high amount of expected assets, like stock options, royalties trusts, or even future wages.  

Who is covered under a personal umbrella policy?

Umbrella insurance doesn't just cover your family in your home or your car. Umbrella coverage protects you around the world and when your household members are driving a borrowed or rental car.

What isn't covered by umbrella insurance?

Umbrella insurance can't protect you from everything, for example, it doesn't cover libel or slander in a business setting, damages to property you own, or intentional and/or criminal acts. For a more comprehensive review of exclusions, it's best to take a look at your individual umbrella policy and talk to an insurance broker.

Do I qualify for umbrella insurance?

Umbrella insurance usually requires that you have an underlying auto policy and policies for any homes you live in or own. You’re not required to own a car or a home to qualify for a personal umbrella policy, however. If you have renters insurance or buy a policy you can qualify for umbrella insurance. If you don’t own a car but want to protect your high net worth, you can purchase Non-Owner Car Insurance that protects you when you’re borrowing or renting cars. 

Depending on what type of property and properties you own or rent, you might need: 

Umbrella policies also require minimum liability limits for all of your existing policies, meaning you might need to raise your existing limits. 

Many companies require at least $300,000 in personal liability limits on any properties you own or rent out, and the most common required bodily injury and property damage limits are $250,000/$500,000/$100,000 on each vehicle. Certain states and companies, however, offer different requirements that may lower or increase the amount of liability you need. 

How do I buy umbrella insurance?

Umbrella insurance might be available through your current home or auto insurance carrier, but you can also purchase it through standalone umbrella insurance companies, such as RLI.

If you live in CA, FL, NY, TX, or WA, try Coverage Cat for free online umbrella insurance quotes. Our insurance optimization considers whether umbrella insurance makes sense for you, without any phone calls or spam. If you don't live in those states, reach out to your insurance company or a local insurance broker for more options.

Can I buy umbrella insurance online?

Most insurance companies won’t give you an online quote for umbrella insurance. They might ask you to fill out an online form, but most will end up connecting you with a sales call. Coverage Cat wants to make buying umbrella insurance easier, and we offer online quotes without any calls and with no spam, ever. Most major carriers like Progressive, Allstate, or Geico also require that you buy an auto policy before they sell you a personal umbrella policy. Buying a standalone umbrella policy – a policy that just covers your personal liability, and lets you buy your own car, home, or boat insurance - can be a great alternative if you want to keep your current insurance company or shop around whenever you need to find the best price.

Need help shopping for insurance?

Coverage Cat shops for your insurance for you. We search across dozens of major insurers, and use data science to compare millions of real quotes, to find the best combination of policies, coverage, and price for your personal financial situation.

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  • You will not receive any phone calls from us or any other insurance companies
  • We will only send you a few emails while we find the perfect insurance for you

We can only optimize insurance for people in: California, Florida, New York, Texas, and Washington state. More states are coming soon.

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