Do You Need Personal Umbrella Insurance?

Personal umbrella insurance can be a valuable tool in your insurance portfolio since it protects your assets. Before you purchase this important protection, though, understand if you need it.

What is Personal Umbrella Insurance?

Your auto and homeowners or renters insurance policies cover your liability if you're in an auto accident or cause property damage. The liability coverage of these policies limited, though.

Use your personal umbrella insurance policy to increase your liability coverage and protect your personal assets. Personal umbrella insurance policies are typically available in million-dollar increments between $1 and $5 million.

In addition to supplementing your auto and homeowners or renters insurance, a personal umbrella insurance policy can cover:

  • Personal injury claims of slander, libel or defamation of character
  • Vacation rental liability protection for scooters, boats, jet skis and other rentals
  • Defense coverage for attorney and legal fees
  • Incidents that occur while you're traveling abroad
How Does Personal Umbrella Insurance Work?

Here's an example of personal umbrella insurance in action.

You cause an auto accident that injures the other driver and causes property damage. Because the driver cannot return to work for several months, you are also sued for lost wages.  Your total liability is $1 million.

Your auto insurance will pay up to its bodily injury and property damage limit, which is typically capped at $500,000. The remaining $500,000 is your responsibility.  

How will you cover what you owe? You may need to cash out your financial accounts, including your retirement fund or college savings account, or sell property, including your house or vehicle. If you don't own adequate resources, a judge could stipulate that your future earnings will go toward repaying your debt.

A third option is personal umbrella insurance. It covers your liability and protects your current assets, lifestyle and future financial security.

Do you Need Personal Umbrella Insurance?


You may think that you don't have enough assets to warrant a personal umbrella insurance policy. However, experts suggest that if you earn a living you should purchase this insurance.

Consider these guidelines when purchasing personal umbrella insurance.

  • Assets exceed $1 million and income is $100,000 per year - purchase at least $1 million in umbrella coverage
  • Assets exceed $2 million and income is $200,000 per year - purchase at least $2 million in umbrella coverage
  • Own rental property - purchase $3 to $5 million in umbrella coverage
Where to Buy Personal Umbrella Insurance

Are you ready to purchase personal umbrella insurance? Contact your insurance agent for more details. They will help you examine your assets and purchase the right coverage for your needs, financial security and peace of mind.
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