An umbrella policy is extra liability insurance. It sits on top of your home and auto insurance and pays after their liability limits run out. If you’re sued over a bad accident and the bill is bigger than your other policies cover, the umbrella is there to help pay the rest.
How an umbrella policy works
Your car and home insurance each come with liability coverage, up to a limit. If you cause a crash or someone gets hurt at your house, those policies pay for the claim and your legal defense, up to that limit.
The Insurance Information Institute (III) explains that an umbrella policy kicks in when you reach the limit on your auto, homeowners, renters or condo liability coverage. In other words, it’s a second layer of protection on top of the first one.
Here’s a simple example. Say your auto policy has a $250,000 liability limit and you’re found responsible for an injury claim that’s larger than that. Your auto policy pays its $250,000. Your umbrella can pay the amount above that, up to the umbrella’s own limit.
What an umbrella can cover that your other policies might not
According to III, an umbrella can also cover some types of claims your other policies may not, such as libel and slander. Every policy is different, so ask your agent what yours includes and what it leaves out.
What you need underneath it
An umbrella only works on top of solid home and auto coverage. III says most insurers want you to carry about $250,000 of liability on your auto policy and $300,000 on your homeowners policy before they’ll sell you an umbrella.
If your limits are lower than that today, your agent can show you what it would take to raise them.
Do you really need one?
Nobody can promise you’ll be sued. But it’s worth a closer look if any of these fit you:
- You have savings, a home or other things you’d want to protect in a lawsuit.
- You have a teen driver in the house.
- You have a pool, a trampoline or a dog.
- You host a lot of guests at your home.
- You own a rental home.
- You coach, volunteer or serve on a board.
If any of those sound like you, it’s worth asking what an umbrella would cost. Price depends on the company, the limit you pick and your household, so we’ll quote it for you instead of guessing here.
How to get one
Most people buy an umbrella from an agent who also handles their home and auto coverage, so the limits line up. As an independent agent, we can shop multiple top-rated carriers for your umbrella and the policies underneath it. We’ll try to save you money and make sure there are no gaps between the layers.
Want to see what an umbrella policy would cost you? Call or text us at 330-486-8404, or start a quote online.
Kaufman Insurance Group is an Ohio-based independent agency with agency licenses in Ohio and North Carolina. Contact us to shop multiple top carriers.
FAQs
What does umbrella insurance cover?
It adds liability coverage on top of your home, auto, renters or condo policy. It pays after those limits run out. It can also cover some claims your other policies might not, such as libel and slander.
How much liability do I need before I can buy an umbrella?
It varies by company. III says most insurers want about $250,000 on your auto policy and $300,000 on your homeowners policy.
How much does an umbrella policy cost?
It depends on the company, the limit and your household. Ask your agent for a quote.
Sources
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