Personal Umbrella Insurance 101
January 11, 2023
A personal umbrella insurance policy extends well beyond your home and auto insurance in case you’re found liable for more than your other policies can cover. A personal umbrella policy gives you the flexibility to select a liability limit that best protects your assets, all the way up to 5 million dollars. It can also include: personal injury coverage, worldwide coverage, vacation rental liability coverage, and defense coverage. Personal umbrella insurance helps you avoid paying out of pocket if you’re liable for large claims on your assets.
Coverage
Personal umbrella insurance covers:
- It extends the liability of your auto and homeowners insurance policies
- Personal injury coverage
- Libel and slander
- False arrest
- Malicious prosecution
- Worldwide coverage
- Vacation rental liability coverage
- Legal defense costs for covered losses
- Personal psychological harm and mental anguish
Personal umbrella insurance does not cover:
- Your own injuries and property damage
- Property damage or injuries that you intentionally cause to others
- Property damage that you cause while performing business or professional activities
- Any liability that you have assumed through a contract
Some umbrella policies also exclude damage or injuries caused by certain dog breeds or recreational vehicles, medical bills, and other things.
How much does umbrella insurance cost?
You can expect 1 million dollars’ worth of personal umbrella coverage to cost between $150 and $300 annually. Each additional million dollars’ worth of coverage will cost $50 to $75 per year. This type of coverage is relatively inexpensive because it supplements other policies, and because it covers against circumstances that are relatively unlikely. One thing to note: you can’t purchase a personal umbrella policy until you first get the maximum level of coverage available on your other liability policy that you are looking to supplement with this policy.
Do you need personal umbrella insurance?
There’s no law stating that you need an umbrella insurance policy. However, if you have a lot of assets or a high chance of being sued, you might want an umbrella policy. It might be worth buying umbrella insurance if you:
- Own property
- Have significant assets or other savings
- Are worried about liability claims against you when traveling outside of the US
- Own things that can lead to injury lawsuits such as pools, trampolines, guns, or dogs
- Are a landlord
- Have an inexperienced driver in your household
- Coach kids’ sports
- Often host parties in your home
- Serve on the board of a nonprofit
- Regularly post reviews of products and businesses
- Take part in sports where you could easily injure others, such as hunting, skiing, or surfing
- Are a public figure
Pros and Cons
To wrap things up, lets lay out the pros and cons of purchasing an umbrella policy, so that you can make the best decision for you and your family. Some pros of owning personal umbrella insurance are:
- It provides extra liability coverage and legal defense costs once the limits of your auto, home, or other underlying policies (such as boat or motorcycle) have been exhausted
- It covers incidents that your main insurance might not, such as libel and slander
- Coverage is relatively inexpensive for limits starting at 1 million dollars
- The coverage often applies everywhere in the world
- It may cover certain rental items for which you don’t have insurance, such as a boat
Here are some cons for owning personal umbrella insurance:
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- You must already carry auto or property insurance (usually homeowners) to qualify
- You may need to have the umbrella policy and all underlying insurance with the same company. This prevents you from being able to shop around for better rates on individual policies
- Your total premium costs may go up if you need to add extra liability coverage to your existing policies. You typically need a minimum amount of liability insurance on underlying policies to add an umbrella policy
At WebFirst, we can get you umbrella insurance to cover your assets and give you peace of mind. Consider contacting one of our agents today.