Umbrella Policy

To become eligible for an umbrella policy, you might have to maximize the coverage on your auto and homeowners insurance policies since these will become deductibles for an umbrella policy.

Keep Your Umbrella Policy Handy

As of 2017, the United States was the home of 11.5 million millionaires, almost 1 million more than the year before. Increased personal wealth can mean more financial flexibility, but it may bring with it more liability. People with a high net worth, or even people whose net worth is perceived to be high, are often more likely to be the targets of lawsuits. This is important because personal injury claims can be millions of dollars.¹  

Increasing the protection between your assets and a possible lawsuit is the purpose of umbrella liability insurance. It gives you coverage above and beyond your current homeowners and auto insurance limits.

Imagine your teenager borrowing your car and getting into an accident causing serious injury to the driver of the other vehicle. As a result, you are sued and receive a $1 million judgment against you. If the liability on your auto insurance is $500,00, it would cover only that much of the judgment. But if you happen to have properly designed umbrella insurance, your policy will kick in and cover the balance of the judgment. Without the umbrella insurance, you could end up responsible for the remaining $500,000 out of pocket, and that could lead to having your wages garnished, losing your home equity or liquidating assets.

Generally, umbrella liability insurance costs only a couple hundred dollars annually and is purchased in $1 million increments. It usually covers a wide range of scenarios, including slander, libel, false arrest, defamation of character, bodily injuries, and property damage you or someone in your home has caused.

Your lifestyle may play a role in whether liability insurance is right for you. You should think about getting a policy if you: 

• Run a business out of your house
• Entertain a lot and often serve alcohol
• Employ uninsured workers on your property
• Participate in published interviews
• Have teen drivers or drive many miles
• Own a dog, especially an aggressive breed
• Own a boat, jet skis, snowmobiles or motorcycles
• Live your life in a way that demonstrates wealth

So, even if you’re not quite a millionaire yet, you should think about the many benefits of liability insurance. Millionaires aren’t the only people who get sued for a million dollars. Any person who is working to build a financial portfolio may want to lower their risk exposure. Umbrella liability is often an inexpensive means to protect your current assets and future income from unexpected events.

This is a simplified description of coverage. All statements made are subject to the provisions, exclusions, conditions, and limitations of applicable insurance policies. Please refer to actual policy documents for complete details regarding coverage.

Who’s Got What?

In 2017, there were about 31 million households in the United States whose net worth was in the $100,000 to $1 million range (excluding primary residence). Only 172,000 households had a net worth of $25 million or more.