Our top pick: USAA umbrella insurance
- Coverage up to $1 million
- Rates starting at $19 per month
- Works alongside USAA car and home insurance
Finder is committed to editorial independence. While we receive compensation when you click links to partners, they do not influence our content.
This article was reviewed by Andrew Flueckiger, a member of the Finder Editorial Review Board and certified insurance counselor and licensed insurance agent in five states.
You could find yourself in a tough position if you’re responsible for more damage than your insurance covers. To avoid unexpected debt, you could buy optional umbrella insurance, available through many home or car insurance companies. However, umbrella insurance isn’t necessary for everyone. To figure out whether you need it, look at your current car, home or renters policies and determine if the maximum limits protect all of your financial and property assets.
Umbrella insurance is liability coverage that protects you and family members living in your household over and above your existing liability insurance, like home or car liability coverage. Think of it as an extra safety net that pays for medical bills if you injure someone or pays to repair or replace someone’s belongings that you damage. Umbrella liability insurance also pays for legal fees if someone takes you to court and expenses go beyond your other liability insurance.
Say you needed to make a claim on your car, home, renters, boat or other personal liability insurance. Umbrella coverage kicks in with extra liability coverage if the damage costs above your maximum limits on your current policies, or if you don’t have an existing policy that covers the liability.
Umbrella insurance covers a wide range of scenarios involving liability:
You might need an umbrella policy if you:
You might not need umbrella coverage if:
To find how much umbrella insurance you need, review your net worth, home value, retirement plans and investments and total your assets together. Then, see if your current car, home or renters liability limits meet or go beyond the dollar value of your assets. The rule of thumb is to buy enough umbrella insurance coverage to equal your net worth.
However, consult a financial adviser if you have significant assets, like a net worth over $500,000. The general rule is based on how liability lawsuits often use your current assets or insurance coverage to settle the case. But a personal financial adviser can help you understand whether your finances warrant more or less coverage than other people.
Umbrella policies range from $500,000 to $5 million in coverage. However, you also need a minimum amount of liability coverage on your home and auto policies to qualify, such as $300,000 bodily injury liability and $100,000 of property damage liability on your auto insurance policy.
For example, say your home is worth $400,000, your cars are worth $50,000, and your savings and retirement are worth $250,000. Your net worth totals $700,000, minus any debts you have. An umbrella policy of $1 million should fully protect all your assets if you’re sued, even in a worst-case scenario.
A $1 million umbrella policy typically costs between $150 and $300 each year, according to the Insurance Information Institute.
Those rates may seem lower than a typical car or home insurance policy because umbrella coverage works in addition to your home and auto policies. Your risk of maxing out the coverage is lower with this policy.
Umbrella insurance doesn’t have a deductible, but it might come with a self-insured retention amount. This functions similarly to a deductible in that you may have to pay out of pocket, but differs in that the self retention amount doesn’t reduce your claims payout.
The general rule of thumb is that the self-insured retention only applies if the umbrella policy covers you for something that your underlying insurance doesn’t. Otherwise, your underlying policies have their own deductible, so you won’t be hit twice.
If you have a personal umbrella policy, your premiums likely won’t be tax-deductible. However, if your umbrella policy is supplementing other business policies you have, your premiums may be tax-deductible.
Watch out for some areas that your umbrella insurance doesn’t cover, including:
You can often add umbrella insurance with your existing car insurer, but high net worth individuals may need a separate stand-alone umbrella policy. Compare car insurance companies that offer umbrella insurance.
Umbrella insurance isn’t mandatory, but it could protect you if you’re liable for large expenses that your basic insurance doesn’t cover. To get the best price, compare car insurance companies with umbrella coverage.
Get a low rate guarantee, but you won’t know if you’re eligible until you apply.
Get a line of credit with low closing costs — but you can’t apply online.
From your marketing strategy to financing and insurance, we’ll walk you through how to start a career behind the lens.
Navy Federal’s Visa Buxx card has no fees, but you must qualify for membership with the credit union.
Get fixed- and variable-rate options in a HELOC, if you qualify for membership.
Get low rates with minimal fees — if you qualify for its limited membership.
RefiJet helps you save on your monthly car payment or interest with a few simple steps.
Take control of your money stress by learning to prioritise and plan your financial goals.
Access an intuitive app, wide coverage and few exclusions when Waffle’s car insurance drops in late July.
What you need to know to start building your retirement nest egg.
finder.com is an independent comparison platform and information service that aims to provide you with the tools you need to make better decisions. While we are independent, the offers that appear on this site are from companies from which finder.com receives compensation. We may receive compensation from our partners for placement of their products or services. We may also receive compensation if you click on certain links posted on our site. While compensation arrangements may affect the order, position or placement of product information, it doesn't influence our assessment of those products. Please don't interpret the order in which products appear on our Site as any endorsement or recommendation from us. finder.com compares a wide range of products, providers and services but we don't provide information on all available products, providers or services. Please appreciate that there may be other options available to you than the products, providers or services covered by our service.