We are independent & ad-supported. We may earn a commission for purchases made through our links.

Advertiser Disclosure

Our website is an independent, advertising-supported platform. We provide our content free of charge to our readers, and to keep it that way, we rely on revenue generated through advertisements and affiliate partnerships. This means that when you click on certain links on our site and make a purchase, we may earn a commission. Learn more.

How We Make Money

We sustain our operations through affiliate commissions and advertising. If you click on an affiliate link and make a purchase, we may receive a commission from the merchant at no additional cost to you. We also display advertisements on our website, which help generate revenue to support our work and keep our content free for readers. Our editorial team operates independently from our advertising and affiliate partnerships to ensure that our content remains unbiased and focused on providing you with the best information and recommendations based on thorough research and honest evaluations. To remain transparent, we’ve provided a list of our current affiliate partners here.

What is Personal Umbrella Insurance?

Tricia Christensen
By
Updated May 16, 2024
Our promise to you
SmartCapitalMind is dedicated to creating trustworthy, high-quality content that always prioritizes transparency, integrity, and inclusivity above all else. Our ensure that our content creation and review process includes rigorous fact-checking, evidence-based, and continual updates to ensure accuracy and reliability.

Our Promise to you

Founded in 2002, our company has been a trusted resource for readers seeking informative and engaging content. Our dedication to quality remains unwavering—and will never change. We follow a strict editorial policy, ensuring that our content is authored by highly qualified professionals and edited by subject matter experts. This guarantees that everything we publish is objective, accurate, and trustworthy.

Over the years, we've refined our approach to cover a wide range of topics, providing readers with reliable and practical advice to enhance their knowledge and skills. That's why millions of readers turn to us each year. Join us in celebrating the joy of learning, guided by standards you can trust.

Editorial Standards

At SmartCapitalMind, we are committed to creating content that you can trust. Our editorial process is designed to ensure that every piece of content we publish is accurate, reliable, and informative.

Our team of experienced writers and editors follows a strict set of guidelines to ensure the highest quality content. We conduct thorough research, fact-check all information, and rely on credible sources to back up our claims. Our content is reviewed by subject matter experts to ensure accuracy and clarity.

We believe in transparency and maintain editorial independence from our advertisers. Our team does not receive direct compensation from advertisers, allowing us to create unbiased content that prioritizes your interests.

If a person falls asleep at the wheel when driving home, he could cause an accident that seriously injures several people. Someone who has been meaning to fix the deck in his backyard might fail to do so before a guest walks over it and falls through. In these cases, the injured parties may sue the person responsible for a great deal of money. Auto insurance will offer some coverage in the first case, but it will pay only to the amount of liability the policyholder possesses. Likewise, a homeowner’s policy will pay out at the liability rate that the owner has purchased. In these cases, personal umbrella insurance, sometimes also called personal liability insurance, can help the person survive a lawsuit without losing everything he owns.

Personal umbrella insurance acts as protection once an individual's other policies have been exhausted. In cases where it is not purchased, causing an accident can mean that the person responsible must surrender of all his material goods in order to assess their value. Most often, the property is assessed is the home, cars, and boating goods that the person owns. Other property, like jewelry and assets, may also be part of the money that a person in a lawsuit can claim. Additionally, a portion of the person's salary may need to go to any successful claimants for many years, if not for the rest of his life.

Even if a lawsuit does not result in a huge reward, court costs are frequently high and exceed amounts an auto or home insurance will allow. Umbrella insurance will also step in to allow for repayment of court costs without the policyholder needing to sell assets to meet these costs.

Personal umbrella insurance coverage and costs vary by company. Most require that that a client carry a defined amount of liability on a car or home policy. If he does not meet this requirement, he will be personally liable for the difference between the liability limit he should have carried and the limit that he does.

Most policies can insure liability at huge numbers, often starting in the millions of US Dollars (USD). Policies can stretch to the multiple millions, and what the policyholder owns should determine how much he purchases. Someone who has few assets may find that this type of coverage may actually attract rather than discourage lawsuits. A claimant knows that he or she can get more money as a result of the coverage.

With highly valued property, however, personal umbrella insurance is a must. The investment on such policies is generally not high, and it may translate to about $100 USD a year for $1,000,000 USD in coverage. With lawsuit awards on an upward trend, it’s probably better to purchase a policy that can offer $5,000,000 USD in coverage, although people with fewer assets likely won't need so much.

Financial experts often recommend that most people not skimp on this type of insurance, and they suggest that those in the marked should compare prices and buy a policy. Discounts may be available if the policy is purchased through the same company that provides a person's auto or home insurance. Companies often offer reduced rates when multiple types of insurance are purchased.

SmartCapitalMind is dedicated to providing accurate and trustworthy information. We carefully select reputable sources and employ a rigorous fact-checking process to maintain the highest standards. To learn more about our commitment to accuracy, read our editorial process.
Tricia Christensen
By Tricia Christensen , Writer
With a Literature degree from Sonoma State University and years of experience as a SmartCapitalMind contributor, Tricia Christensen is based in Northern California and brings a wealth of knowledge and passion to her writing. Her wide-ranging interests include reading, writing, medicine, art, film, history, politics, ethics, and religion, all of which she incorporates into her informative articles. Tricia is currently working on her first novel.

Discussion Comments

By anon173744 — On May 08, 2011

It's easier to compare your auto, home and investment property umbrella insurance today than it has been before. Even if you live in NJ and your policy kept renewing, it's always a good idea to review your policies annually and shop around.

By geronimo8 — On Feb 03, 2011

There are so many different kinds of insurance policies these days, and now I've learned of a new one -- personal umbrella insurance. It really does seem like there is an excess of insurance policies we are expected to have.

While the idea of losing everything I own to an accident is terrifying, I don't think I can afford to keep buying additional insurance policies.

Maybe I'll look into seeing if I can get a discount through my current insurance company. But I know there will just be a new kind of insurance I'll need soon! I'd rather just enjoy life than spend everything I have on insurance policies!

By eagles543 — On Mar 27, 2008

While living in Pennsylvania, I've had a personal umbrella policy for a number of years. I moved to New Jersey in 2005 and notified my Penna. agent of the change of address at that time. They kept renewing my Penna. Umbrella policy each anniversary since then. However, I've now been advised that such coverage *must be written in the state of primary residence* which, in this case, is New Jersey and there were grounds for the insurance company to deny claims on these grounds. In addition, my NJ rate is less than one-half that of Penna. I feel I've been ripped off! Please advise.

Thanks,

Eagles543

Tricia Christensen

Tricia Christensen

Writer

With a Literature degree from Sonoma State University and years of experience as a SmartCapitalMind contributor, Tricia...
Learn more
SmartCapitalMind, in your inbox

Our latest articles, guides, and more, delivered daily.

SmartCapitalMind, in your inbox

Our latest articles, guides, and more, delivered daily.