How umbrella insurance works
Your auto and home policies each have a liability limit. If a claim against you is larger than that limit, an umbrella policy can pay the difference, up to its own limit. For example, if the damages from an accident you cause come to $700,000 and your auto liability limit is $300,000, an umbrella can step in for the remaining $400,000.
Who should consider an umbrella
- Homeowners with equity, savings or investments to protect
- Families with teen drivers
- People who host gatherings or have a pool or trampoline
- Landlords and anyone who owns rental property
- Boat, ATV or RV owners
- Anyone whose income is likely to grow over time
What to know before you buy
- Underlying limits. Umbrella insurers usually require minimum liability limits on your auto and home policies.
- Broader protection. An umbrella may also cover some claims your other policies don't, such as certain libel or slander claims.
- Choosing an amount. A common starting point is your net worth plus the future income you want to protect.
Read our guide, Do you need an umbrella policy?
