Umbrella Insurance: How Extra Liability Coverage Protects Your Future

One unexpected lawsuit can put your savings and future income at risk.

Most people understand car insurance and homeowners insurance, but fewer know about umbrella insurance—an extra layer of liability coverage that can help protect you if you’re responsible for a serious accident or injury.

Umbrella coverage is designed to kick in when the liability limits on your underlying policies are used up, helping cover larger claims that could otherwise come out of your pocket.

Umbrella insurance is often more affordable than people assume and can be a smart option for anyone with assets to protect or a higher risk of liability claims.

What Umbrella Insurance Covers

Umbrella insurance generally provides additional liability coverage above and beyond what your auto or home policy includes. That can help with costs related to injuries, property damage, and certain lawsuits.

Coverage varies by insurer, but umbrella policies commonly help cover things like:

• Bodily injury claims if someone is hurt in an accident you cause
• Property damage claims if you damage someone else’s property
• Legal defense costs, including attorney fees, even if you’re sued unfairly
• Certain personal liability situations, like a guest injury at your hom

It’s important to know what umbrella insurance typically does not cover. Most policies won’t cover damage to your own property, your own injuries, business-related claims (unless endorsed), or intentional harm. Your agent can help you understand what’s included and what’s excluded.

When Your Regular Liability Limits May Not Be Enough

Liability limits on auto and home policies can feel high—until a major claim happens. Medical bills, legal expenses, and settlement amounts can add up quickly, especially if multiple people are involved or a claim turns into a lawsuit.

Here are a few examples of situations where umbrella coverage may help:

• A serious auto accident leads to large medical bills and a lawsuit
• Someone is injured on your property and can’t work for an extended period
• Your teen driver causes an accident with multiple vehicles involved
• You’re found responsible for damaging someone else’s property in a costly incident

Umbrella coverage can help protect your savings and may even help shield future income from garnishment in some situations, depending on the circumstances.

Who Should Consider Umbrella Insurance

Umbrella insurance isn’t only for the wealthy. It can be a good fit for many households, especially if you have things that could increase liability risk or create a bigger financial target in a lawsuit.

You may want to ask about umbrella coverage if you:

• Own a home or have significant savings
• Have a teen driver in the household
• Host guests frequently or have a property with higher risk (pool, trampoline, dog, etc.)
• Own recreational vehicles like a boat, RV, or ATV
• Rent out property or frequently travel and drive rentals
• Serve on a board or volunteer in ways that could increase personal liability exposure

Even if none of these apply, umbrella coverage can still be worth considering if you simply want added peace of mind.

How Umbrella Policies Work

Umbrella insurance typically requires you to carry certain minimum liability limits on your auto and homeowners (or renters) policies. Once those underlying limits are reached, the umbrella coverage may help cover additional costs up to its limit.

Many policies start at $1 million in coverage and can often be increased. The right amount depends on your assets, your risk level, and what you want to protect.

Need Help Deciding If It Makes Sense?

Umbrella insurance is one of those coverages that’s easiest to understand after a quick review of your current limits and your overall risk. Your local independent insurance agent can help you compare options, explain requirements, and recommend coverage that fits your situation.

Have questions? Contact your local independent insurance agent to review your liability limits and see whether umbrella coverage is a smart next step.