Do I Need Umbrella Insurance? (2024)

FAQs

Do I Need Umbrella Insurance? ›

However, if the liability insurance limits on your homeowners, renters, and motor vehicle policies offer enough coverage to protect your assets, then you don't need umbrella insurance. An umbrella insurance policy should match your wealth.

There's no law requiring you to buy umbrella insurance. But if you have a lot of assets or a high chance of being sued, you might want an umbrella policy. It might be worth buying umbrella insurance coverage if you: Own property.

Key Takeaways. Umbrella insurance is the defensive part of your wealth-building plan. Anyone with a net worth of $500,000 or more should have umbrella insurance. Your umbrella policy limit should be equal to or greater than your net worth.

What are the disadvantages of the umbrella policy? While umbrella insurance offers extensive coverage, it doesn't cover personal injuries or property, business losses, and intentional or criminal acts.

Your umbrella insurance policy limits should at least cover the amount of your assets left exposed once your underlying auto or home policy liability limits are exhausted. Speak with a representative about umbrella insurance and get a Progressive umbrella policy quote for up to $5 million by calling 1-877-777-1783.

Umbrella policies typically start at $1 million in liability coverage. According to an ACE Private Risk Services report noted by Forbes, the average cost a $1 million personal umbrella policy is $383 per year for an individual with one home, two cars, and two drivers.

Because any underlying policy limits are used first, insurers typically can write commercial umbrella policies at relatively low rates. This means you'd be able to increase the coverage of several critical policies while controlling your premium costs.

In fact, only about 20% of homeowners carry an umbrella policy ¹. Many that do are sold a $1 million policy though their assets and earnings greatly exceed that number.

As a general rule, it's recommended to have umbrella insurance coverage equal to your net worth. For example, if your net worth is $1 million, you should have at least $1 million in umbrella insurance coverage. Also, evaluate your insurance providers—they aren't all the same.

What State Farm Umbrella Policies Cover. State Farm's umbrella policies are a good choice for customers with a high net worth who want extra coverage for property damage, injuries, and possible lawsuits that could result from various types of incidents. To be eligible, you will also need an auto policy from State Farm.

Why not to use an umbrella company? ›

Minimal control of your finances

You don't have much control over your finances when you use an umbrella company because they'll pay you your salary after all the deductions have been made on your behalf. While it's straightforward and stress-free, many contractors like having a more “hands-on” approach.

Umbrellas don't work well during high winds. They can blow away, turn inside-out, or just fail to protect very far below the rim. Since they require an arm to hold them, they don't work well when you need both hands, such as when carrying things.

After spending years building up your retirement savings, the last thing you want is for an unexpected catastrophic accident to wipe it all out with one lawsuit. The umbrella liability policy is your key instrument for helping to protect your assets.

Never underestimate the peace of mind and potentially invaluable protection offered by umbrella insurance. However, if the liability insurance limits on your homeowners, renters, and motor vehicle policies offer enough coverage to protect your assets, then you don't need umbrella insurance.

An umbrella insurance policy through the AARP^® Auto & Home Insurance Program from The Hartford¹ can help protect you and your family if: A neighbor sues you after tripping in a hole in your yard, but your personal liability insurance only covers a portion of the claim.

Umbrella insurance is a must-have if your net worth is over $500,000. At as little as $12.50 a month, umbrella insurance is one of the best buys in the insurance world. Your unique policy rate is determined by factors like where you live, how many homes and vehicles you own, and your net worth.

Umbrella insurance provides additional liability coverage beyond standard policies, protecting against large claims or lawsuits. It's beneficial if you have significant assets or engage in high-risk activities. It's also relatively inexpensive for the peace of mind and financial protection it offers.