How umbrella insurance works
Your home and auto policies each have a liability limit: the most they'll pay if you're found responsible for someone else's injury or property damage. A personal umbrella policy sits on top of those limits. If a covered claim is bigger than your underlying limit, the umbrella can pay the rest, up to its own limit.
An example
This is a hypothetical example. A guest is badly hurt on your deck and wins a $750,000 judgment. Your homeowners policy has $300,000 of liability coverage. With a $1 million umbrella, the umbrella could cover the remaining $450,000, subject to your policy's terms. Without it, you could be personally responsible for the difference.
What it often covers
Coverage depends on your policy, so read the details. Many umbrella policies include:
- Bodily injury and property damage above your home and auto limits
- Certain personal injury claims, like libel or slander, that base policies may exclude
- Legal defense costs for covered claims
- Household members, such as a spouse or children who live with you
What it usually doesn't cover
- Your own injuries or damage to your own property
- Business activities, unless the policy says otherwise
- Intentional or criminal acts
- Liability you agreed to take on in a contract
Typical requirements
Carriers usually require you to carry certain liability limits on your home and auto policies before they'll write an umbrella. Requirements vary by carrier. Many also ask you to list all household drivers, vehicles and properties, including rental homes.
Who might consider one
An umbrella may be worth a look if you have more to protect, or more ways to be sued.
- You have significant savings, investments or home equity
- You have a teen driver in the household
- You have a pool, trampoline or dog
- You own a rental property
- You host often or volunteer in roles with liability exposure
How much coverage to choose
Many households start with $1 million. A common way to decide is to compare your limit with what you'd want to protect: your net worth, home equity and future earnings. An insurance agent can help you weigh the options.
Umbrella policies are often affordable for the amount of coverage they add, especially when bundled with home and auto. Prices vary by carrier, state and your household.
Getting a quote
CapCenter's in-house insurance agency shops home, condo, renters, auto, landlord and umbrella coverage across multiple carriers. We can review your current home and auto limits and show you what an umbrella would add.
