Is an Umbrella Policy right for you?

How often do you have someone fall down the stairs in front of your home? Not too often, right? Yet, it has become increasingly popular to carry an Umbrella policy. Why? Unfortunately, we have become an increasing litigious society with liability claims resulting in big lawsuits with very large settlements or judgements.

An Umbrella, as strange as the name seems, is fairly accurate in its description. An Umbrella policy is actually additional coverage on your underlying policies and the items you own – your home, autos, boat, bikes, RVs, or any other items you list on your Umbrella policy. The Umbrella policy provides coverage on top of what you currently have with your underlying policies. Say that you have $300,000 in home insurance and a $1 million umbrella policy, you effectively have 1.3 million in liability insurance coverage. Umbrellas may be purchased starting at $1 million of added coverage and are typically very low in costs. Generally speaking, a $1 million umbrella will run in the range of $175 to $200.

How Does an Umbrella Policy Work?

Let’s say in a recent auto accident you are sued for $500,000, yet you only have $100,000 of liability coverage from your underlying Auto Policy. You are now left with a balance owing of $400,000 to pay the accident claim. This is where your Umbrella insurance comes to pay the remaining $400,000.

Remember, an Umbrella policy covers all of your underlying policies listed on your Umbrella policies.

Do I really need such a large amount of coverage?

Unfortunately, the answer is almost a definitive “yes.” I say “almost” because it is possible you will never be threatened with a lawsuit or have someone either injured at your home or in your boat or car.


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