Personal Umbrella Policy

What Is It and Why Do I Need It?

Protecting your family and assets is a top priority, which is why people have insurance. But what happens if you find yourself in a situation where your insurance is not enough? Well, that’s when a personal umbrella policy could help cover you.

A personal umbrella policy is a type of insurance that provides liability coverage over and above your auto or home insurance policy. So, if your liability coverage isn’t enough to cover the damages of an accident you cause or an incident on your property, a personal umbrella policy kicks in right where your other liability underlying limits have been reached. Simply put, an umbrella policy protects you when your auto or home insurance policies aren’t enough.

An Umbrella Policy in Action

To better understand how a personal umbrella policy works, here’s an example. If you’re at fault in a car accident that injures another driver, your regular automobile insurance will cover the other driver up to the limit you selected, say $250,000. But what happens if that limit is not enough to cover the other driver’s needs?

If the other driver’s injuries are severe, he may require benefits beyond the $250,000 your policy covers. In this case, he could sue you, which means your personal assets would be at stake. This could be a small amount, but imagine if that injured driver were a surgeon or another high paying professional. What if the accident you caused resulted in an injury that kept him from doing his job for six months? Suddenly, he’s suing you for $1 million to cover his injuries and the six months he’s away from work.

Your automobile policy covers the initial $250,000, but where would you come up with the remaining $750,000? That’s where the umbrella policy comes in. A personal umbrella policy can cover the additional costs when your insurance isn’t enough. The personal umbrella policy could provide the additional coverage you need so that you don’t get stuck trying to pay the remaining balance yourself. This extra policy could protect your assets, your retirement savings, your future income, and other personal property.

Understanding Your Options

In most cases, personal umbrella policies are available in million dollar increments, from $1 to $5 million. Beyond covering you for liability, some personal umbrella policies can also extend coverage to your auto policy’s Uninsured Motorist coverage.

How Much Coverage Should I Carry?

This is the most difficult question you can ask an insurance agent because you can not predict the future. But when choosing your coverage limits, consider these:

    • Your risk profile. Do you have a swimming pool, trampoline, swing set, ATV or dog? These potential liability hazards add to your risk profile.
    • The value of your assets. These include properties, possessions, stocks, bonds, savings and retirement funds. The more assets you have to protect, the higher the umbrella policy limit you should carry.
    • The potential loss of future income. Because liability lawsuits can result in loss of both current assets and future income, even those with few assets to protect may want to consider the long-term ramifications of a serious claim. You may not have many assets now, but if you’re on track for a high paying carrier, you could be involved in a lawsuit that can target money you haven’t earned.

A personal umbrella policy may sound expensive, but the good news is that this level of protection is more affordable than many people think. At a cost of about $1 a day, a personal umbrella policy can prevent the possibility of financial ruin due to one mistake or unforeseen accident.  No one is suggesting you have to live your life differently, but you should protect yourself to prevent such an outcome.


Your best choice for insurance

The first right decision in protecting all of your assets is finding an insurance agent who understands YOU and your family. We pride ourselves in taking the time to discuss your needs to ensure that you don’t find a gap in coverage when you need it most…something that can’t always be done in 15 minutes and is too important to rush. Make sure you and your family are fully protected and call us at 407-977-5700 or email any time at

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