Christy Rakoczy has been a personal finance and insurance writer for over a decade. Her work has been published on USA Today, MSN, Yahoo Finance, Credit Karma, Forbes Advisor, and more. Christy has a JD from UCLA School of Law and previously worked as a data analyst for Blue Cross and as a paralegal studies instructor before transitioning to writing full time.
Christy has been a contributor at Insurify since August 2023.
Más de 3 años produciendo contenidos sobre seguros y finanzas personales
Principal artífice de la puntuación de calidad de Insurify
Los profundos conocimientos de Courtney sobre finanzas personales van más allá de los seguros y abarcan las tarjetas de crédito, los préstamos al consumidor y la banca. Le encanta crear contenidos prácticos.
Konstantin HalachevVP of Engineering & Data Science
7+ years experience in data analysis
Ph.D. in Computational Biology
Konstantin has led data teams across multiple industries, including insurance, travel, and biology. He’s led Insurify’s engineering team for more than three years.
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Umbrella insurance is useful for people who have assets and savings that exceed a typical auto or home insurance policy limit. For example, the average net worth of U.S. households increased to more than $1 million in 2023.[1] But typical limits are $500,000 for home insurance and $300,000 for auto insurance.
Here’s how umbrella insurance can protect your assets and when you should get it.
What is umbrella insurance?
Umbrella insurance, also called excess liability insurance, covers losses you’re responsible for that exceed your policies’ liability limits. When a claim exhausts your underlying — or primary — insurance policies, umbrella insurance protects your assets by paying for additional legal fees or liabilities you owe.[2]
This type of coverage differs from other personal insurance policies because it’s a supplementary policy. Umbrella policies require an underlying insurance policy listed on the declarations page; you can’t purchase umbrella insurance as a stand-alone policy.[2]
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4.8/5
How does an umbrella insurance policy work?
Umbrella insurance companies typically require you to have an underlying insurance policy before purchasing excess liability coverage. For example, you may need an auto, home, or watercraft insurance policy for the umbrella coverage to supplement.
Then, if someone makes a claim for injuries or property damage against your policy or sues you in excess of your primary policy’s limits, umbrella insurance can cover the excess. And your umbrella insurance only covers additional damages and liability up to its limits.
Umbrella policies usually have at least $1 million in coverage. And it’s often cheaper to purchase an umbrella policy than it would be to purchase $1 million in liability coverage for your home or auto insurance.[2]
FOR EXAMPLE
Say you have bodily injury liability car insurance coverage with a $300,000 limit and cause an accident that results in $1 million of medical bills for other people. Without umbrella insurance, you’re on the hook for the excess $700,000. With a $1 million limit for umbrella insurance, your auto insurance pays for $300,000 and umbrella insurance pays for the remaining $700,000, plus any legal fees your auto insurance doesn’t cover.
What does umbrella insurance cover?
Umbrella insurance pays for excess liability, like damages you owe to others. It doesn’t cover your own property damage or medical bills. Examples of what umbrella insurance would pay for include:[3]
Some liability claims your primary insurance won’t pay, such as defamation and libel claims
Additional damages exceeding the policy limits for injuries or property damage you cause
Legal fees your primary insurance doesn’t cover
Umbrella insurance pros and cons
Here are important advantages and disadvantages to consider before buying umbrella insurance.
Pros
Can be cheaper than increasing policy limits on underlying insurance
Doesn’t require a deductible
Can provide more asset protection than primary insurance
Cons
You still have to maintain underlying insurance coverage
Insurers usually only cover existing customers
Doesn’t cover damage to your property
Who needs umbrella insurance?
You need umbrella insurance if you have assets that exceed your primary policies’ limits. If someone brings a lawsuit against you with damages that exceed your policy limits, you’re responsible for paying excess costs out of pocket.
If your assets’ value doesn’t exceed your policy limits, you probably don’t need umbrella insurance.
You may also need umbrella insurance if your business or home puts you at a higher risk of claims. For example, homeowners with pools and landlords may want umbrella coverage to provide added protection.
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Where to buy umbrella insurance
Many insurance companies require you to have an existing insurance policy with them to purchase umbrella insurance. But some insurers may offer stand-alone umbrella policies.
You can usually purchase an umbrella policy online, but you may have to contact your insurance agent or company to modify your existing policies.
The Insurify Quality (IQ) Score uses more than 15 criteria to objectively rate insurance companies on a one-to-ten scale. The Insurify editorial team researches insurer data to determine the final scores.
9.3 /10
Liability Only
Liability-only insurance, sometimes called minimum-coverage insurance, pays for bodily injury and property damage to others in an accident the policyholder causes. It does not pay for the insured’s own damages.
$54/mo
Full Coverage
Full-coverage car insurance generally includes liability, collision, and comprehensive coverage, and may include other optional coverages such as uninsured motorist coverage. Collision covers a policyholder’s repair or replacement costs in case of an accident. Comprehensive covers damages caused by non-accident events. The average quote displayed here reflects policies with the following coverage limits: $50,000 bodily injury liability per person; $100,000 bodily injury liability per accident; $50,00 property damage liability per accident; $1,000 collision deductible; and a $1,000 comprehensive deductible.
$119/mo
4.2
Best choiceBased on 9,243 verified guest reviews and ratings
How drivers feel about State Farm
Drivers appreciate the helpful local agents and initial service but dislike the high prices and frequent rate increases.
AI-generated from the text of verified reviews collected by Insurify
Best For
Customer service
Competitive rates
Discounts for safe drivers
How drivers feel about State Farm
Drivers appreciate the helpful local agents and initial service but dislike the high prices and frequent rate increases.
AI-generated from the text of verified reviews collected by Insurify
Best For
Customer service
Competitive rates
Discounts for safe drivers
Reviews (5,080)
Al
December 19, 2024
Verified Review
My Opinion
Way too high premium.
Agnes
December 19, 2024
Verified Review
Best Insurance Company
I have been with them for a long time. Claims are handled quickly. I never had a problem, even when I had three teenagers driving.
Gabriel
December 18, 2024
Verified Review
My Experience with State Farm
Beware, some companies are more interested in making money than meeting the customers' needs. My wife had a medical issue while driving, and they covered it. A year later, there was a fender bender involving two moving vehicles. To me, it was no fault, but they considered it a second incident. We also had hail damage to our roof. They said there wasn't enough damage, yet my next-door neighbors received a new one. Now, they're canceling me for too much.
J.D. Power data measures overall customer satisfaction and claims satisfaction based on a 1,000-point scale.
842
NAIC Index
Average amount of customer complaints relative to competitors on a 0-5 scale. A lower score represents fewer complaints.
0.78
A.M. Best
A.M. Best analyzes an insurer’s financials, operating performance, business profile, and other factors to generate an opinion-based rating of a company’s financial and credit strength. Ratings range from A++ (exceptional) to D (poor).
A++
Why we picked this company
State Farm offers umbrella insurance with a minimum limit of $1 million and additional limits in $1 million increments. Its umbrella policies cover claims traditional policies may not cover, including defamation, libel, and slander claims. State Farm also has a network of more than 19,000 agents nationwide to provide in-person help for people who have questions when buying coverage.
Pros
High rates of customer satisfaction
Rideshare insurance available
Savings for bundling auto with home, renters, condo, or life insurance
Cons
No gap insurance offering
May not be the cheapest choice for drivers with violations
Accident forgiveness limited to longtime customers with clean driving records
The Insurify Quality (IQ) Score uses more than 15 criteria to objectively rate insurance companies on a one-to-ten scale. The Insurify editorial team researches insurer data to determine the final scores.
9.1 /10
Liability Only
Liability-only insurance, sometimes called minimum-coverage insurance, pays for bodily injury and property damage to others in an accident the policyholder causes. It does not pay for the insured’s own damages.
$72/mo
Full Coverage
Full-coverage car insurance generally includes liability, collision, and comprehensive coverage, and may include other optional coverages such as uninsured motorist coverage. Collision covers a policyholder’s repair or replacement costs in case of an accident. Comprehensive covers damages caused by non-accident events. The average quote displayed here reflects policies with the following coverage limits: $50,000 bodily injury liability per person; $100,000 bodily injury liability per accident; $50,00 property damage liability per accident; $1,000 collision deductible; and a $1,000 comprehensive deductible.
$160/mo
4.5
Best choiceBased on 394 verified guest reviews and ratings
How drivers feel about American Family
Drivers appreciate the responsive customer service and reliability but dislike the high prices and frequent rate increases.
AI-generated from the text of verified reviews collected by Insurify
Best For
Outstanding customer service
Flexible coverage options
Families with young drivers
How drivers feel about American Family
Drivers appreciate the responsive customer service and reliability but dislike the high prices and frequent rate increases.
AI-generated from the text of verified reviews collected by Insurify
Best For
Outstanding customer service
Flexible coverage options
Families with young drivers
Reviews (211)
Kelley
December 2, 2024
Verified Review
They raise rates every two months. They handled an incident where my wife got rear-ended and then raised the rate.
They raise rates every two months. They handled an incident where my wife got rear-ended and then raised the rate.
Jim
November 30, 2024
Verified Review
Highway Robbery
I had no claims, yet my premiums are skyrocketing. The app for auto monitoring seems to be negatively skewed for those of us who drive very little. The agents are unresponsive and add no value.
J.D. Power data measures overall customer satisfaction and claims satisfaction based on a 1,000-point scale.
840
NAIC Index
Average amount of customer complaints relative to competitors on a 0-5 scale. A lower score represents fewer complaints.
0.3
A.M. Best
A.M. Best analyzes an insurer’s financials, operating performance, business profile, and other factors to generate an opinion-based rating of a company’s financial and credit strength. Ratings range from A++ (exceptional) to D (poor).
A
Why we picked this company
American Family offers quotes online, or you can work with one of the insurer’s 1,700 agents to buy umbrella coverage. Coverage is customizable, and you can qualify for bundling and multi-policy discounts when you supplement your home or auto insurance with American Family’s umbrella insurance.
Pros
High rates of customer satisfaction
Save by bundling auto with home, renters, or motorcycle coverage
Much lower-than-average number of consumer complaints with the National Association of Insurance Commissioners
Cons
Only available in 19 states
Rates are merely moderate compared to other insurers
The Insurify Quality (IQ) Score uses more than 15 criteria to objectively rate insurance companies on a one-to-ten scale. The Insurify editorial team researches insurer data to determine the final scores.
9.0 /10
Liability Only
Liability-only insurance, sometimes called minimum-coverage insurance, pays for bodily injury and property damage to others in an accident the policyholder causes. It does not pay for the insured’s own damages.
$89/mo
Full Coverage
Full-coverage car insurance generally includes liability, collision, and comprehensive coverage, and may include other optional coverages such as uninsured motorist coverage. Collision covers a policyholder’s repair or replacement costs in case of an accident. Comprehensive covers damages caused by non-accident events. The average quote displayed here reflects policies with the following coverage limits: $50,000 bodily injury liability per person; $100,000 bodily injury liability per accident; $50,00 property damage liability per accident; $1,000 collision deductible; and a $1,000 comprehensive deductible.
$191/mo
4.7
Best choiceBased on 771 verified guest reviews and ratings
How drivers feel about Travelers
Drivers appreciate the lowest prices, excellent service, and responsive call centers but dislike the rising premiums and poor claims handling.
AI-generated from the text of verified reviews collected by Insurify
Best For
Numerous discounts
Gap insurance
Rideshare coverage
How drivers feel about Travelers
Drivers appreciate the lowest prices, excellent service, and responsive call centers but dislike the rising premiums and poor claims handling.
AI-generated from the text of verified reviews collected by Insurify
Best For
Numerous discounts
Gap insurance
Rideshare coverage
Reviews (399)
Larry
December 14, 2024
Verified Review
Bye
It's very hard to file a claim. You have to take all kinds of pictures.
Joan
December 13, 2024
Verified Review
Not Recommended: Travelers Insurance
Their prices are outrageous. I have been with them for 10 years without any accidents. The customer service representatives can barely speak English and don't offer solutions.
Thomas
December 10, 2024
Verified Review
Checking Rates
I have no problem with Travelers. I'm just looking to check rates with other insurance carriers.
J.D. Power data measures overall customer satisfaction and claims satisfaction based on a 1,000-point scale.
829
NAIC Index
Average amount of customer complaints relative to competitors on a 0-5 scale. A lower score represents fewer complaints.
0.94
A.M. Best
A.M. Best analyzes an insurer’s financials, operating performance, business profile, and other factors to generate an opinion-based rating of a company’s financial and credit strength. Ratings range from A++ (exceptional) to D (poor).
A++
Why we picked this company
Travelers offers umbrella insurance policies with between $1 million and $10 million in coverage. Its policies pay for libel, slander, defamation, and invasion of privacy claims. It even covers liabilities outside of the U.S. Bundling discounts are available, and you can get help from one of Travelers’ 13,500 independent agents when buying coverage.
Pros
Accident forgiveness available
Offers discount for hybrid and electric cars
A++ (Superior) financial strength rating from AM Best
Cons
Rideshare coverage not available in all states
High number of negative customer reviews with the Better Business Bureau
Higher-than-average number of complaints with the National Association of Insurance Commissioners
Umbrella insurance FAQs
Here’s what you need to know about split-limit insurance. And check out the answers to common questions about umbrella insurance below.
Is an umbrella policy with insurance worth it?
Yes. An umbrella policy is a relatively affordable way to buy additional liability protection for your auto or home insurance policies. Anyone with substantial assets to protect may find umbrella insurance is well worth purchasing to avoid excessive financial losses in a personal lawsuit.
Who needs umbrella insurance, and why is it important?
Umbrella insurance is important for people with significant assets. If the value of your property exceeds the policy limits on your primary insurance, and you don’t want to pay excess damages and legal costs out of pocket, you should have umbrella insurance.
Can you add umbrella insurance to an existing policy or do you need a separate policy?
Yes, you can add umbrella insurance to supplement an existing policy. In fact, many insurers require you to have existing policies with them.
Can you get umbrella insurance from a different company from your auto insurance?
Not usually. Insurers typically require you to have primary insurance policies with them to buy an umbrella policy. Some exceptions exist, as a few insurers offer stand-alone policies for special circumstances or limits that exceed typical umbrella insurance limits.
Christy Rakoczy has been a personal finance and insurance writer for over a decade. Her work has been published on USA Today, MSN, Yahoo Finance, Credit Karma, Forbes Advisor, and more. Christy has a JD from UCLA School of Law and previously worked as a data analyst for Blue Cross and as a paralegal studies instructor before transitioning to writing full time.
Christy has been a contributor at Insurify since August 2023.
Más de 3 años produciendo contenidos sobre seguros y finanzas personales
Principal artífice de la puntuación de calidad de Insurify
Los profundos conocimientos de Courtney sobre finanzas personales van más allá de los seguros y abarcan las tarjetas de crédito, los préstamos al consumidor y la banca. Le encanta crear contenidos prácticos.
Konstantin HalachevVP of Engineering & Data Science
7+ years experience in data analysis
Ph.D. in Computational Biology
Konstantin has led data teams across multiple industries, including insurance, travel, and biology. He’s led Insurify’s engineering team for more than three years.
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