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Home > Blog > Is an Umbrella Policy Worth it?
MONDAY, SEPTEMBER 12, 2022

Is an Umbrella Policy Worth it?

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What is an umbrella policy?

Personal umbrella insurance, or personal umbrella coverage, protects you and your family when you've exceeded the liability limits on your auto and/or property insurance policy. Your assets, home equity, retirement savings, and more could be at risk from personal injury and property damage claims if you don't have the right level of coverage.

Who Needs Umbrella Insurance?

 The umbrella policy isn’t just for the wealthy. Anyone who has income and assets that they want to protect should consider purchasing umbrella insurance. Here are some things to consider:

  • At-Home Dangers - Trampolines and swimming pools could potentially lead to serious injuries.
  • High-Risk Outdoor Activities - If you participate in high-risk outdoor activities like skiing or hunting, you may need coverage if you are held responsible for an accidental injury or fatality.
  • Dog Owner - Dogs are a popular pet, but you could be held liable if your dog injures someone by knocking them over, biting someone, or getting loose in traffic.
  • Youth Sports Coach - If you help coach your child’s sports team, you could be held personally liable for any accidents or injuries.
  • Family Matters - If you have a teenager at home, it’s possible that you’ve seen your auto insurance premiums spike. Now imagine your liability if your child is blamed for a fight at school, throws a party where someone gets injured or has a major accident while driving. Umbrella insurance helps cover your whole family.

What else could possibly happen?

Though you try to avoid them, accidents happen. The following everyday examples help illustrate why you need extra protection:

  • You have a holiday party and one of your guests (a) slips and falls, causing temporary paralysis, as well as serious head injuries, or (b) leaves the party intoxicated and is involved in an auto accident, causing serious injury to themself and others.
  • While playing recreation football, your errant throw strikes a nearby pedestrian in the face.  The injuries require reconstruction surgery but still cause permanent disfigurement.
  • While reaching to pick up her cell phone, your daughter swerves across the center line and hits an oncoming SUV. She is OK, but the accident disables the other driver and causes serious injury to the two passengers.

How Much Umbrella Insurance Do I Need?

Umbrella insurance is designed to help protect both your current and future assets if you’re sued. For this reason, umbrella insurance policies typically start with $1 million in limits. That may seem like a lot, but when you consider your potential net worth beyond your annual income, it starts to make more sense. To help determine how much umbrella insurance you may need, start by totaling up the value of all your property and financial assets, including:

  • Cars, boats, and other vehicles
  • Jewelry, art, antiques, and other valuables
  • Cash, savings accounts, CDs, and bonds
  • Life insurance and annuities
  • Your home’s equity, and the equity in any other properties you own
  • Stocks, bonds, and other investment accounts
  • 401(k), IRA or other retirement accounts

Once you’ve determined the value of your assets, talk to your insurance agent for guidance on the amount of umbrella coverage that makes sense for you. It’s also a good idea to review your coverage periodically and make the necessary adjustments to reflect any changes to your net worth as time goes by.

How Much Is Umbrella Insurance?

Typically, umbrella coverage is considered very affordable. According to the Insurance Information Institute, a $1 million policy costs between $150 and $350 annually. Your final cost will depend on variables specific to your situation. Talk to your insurance agent about whether you can save money on your premiums by bundling policies with the same insurance carrier. 

Is an Umbrella Policy Worth It?

To determine an umbrella policy’s worth, consider this: you hope you’ll never have to use it, but if you do, you’re grateful that it’s there. Umbrella coverage can pick up where the liability limits of your homeowners and auto policies leave off. It’s an economical way to protect your assets now to help avoid the possibility of years of financial hardship later.

Ready to protect yourself now and into the future? Call us and we’ll assist you. 


Posted 9:00 PM

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Raving Fans

Thank you so much for all the time and careful explanation you shared this morning --- You are SO knowledgeable and well spoken!

I have alerted State Farm that I have found a superior company/policy. So, let's proceed with our plan to begin coverage on Monday, July 22!

Many, many thanks again, Julie!

Cynthia Pierce

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