Do You Need a Personal Umbrella Policy?
One serious liability claim can put years of accumulated wealth at risk. A personal umbrella policy can provide an
additional layer of financial protection when eligible claims exceed the liability limits of your existing insurance.
How umbrella coverage works
Umbrella insurance generally sits above your auto, homeowners, or certain other personal liability policies. If you are held
legally responsible for a covered accident, it may pay eligible damages and legal defense costs beyond your primary policy
limits. Some policies also cover certain personal-injury claims, such as libel or slander. 1
Example: A covered auto accident results in a $1 million liability judgment. Your auto policy pays $300,000. Subject to its
terms, a $1 million umbrella policy may cover the remaining $700,000, helping protect your savings and investments.
Who should consider it?
Umbrella protection may be especially important if you have substantial savings or investments, teenage or additional
household drivers, a pool or trampoline, dogs, rental property, recreational vehicles, or frequent guests. These exposures
can increase the potential for a costly claim. 1
How much coverage is appropriate?
There is no universal coverage amount. Review your net worth, income, potential exposure to lawsuits, lifestyle risks, and
the liability limits on your existing policies. Coverage is commonly offered in million-dollar increments; higher limits may be
available through specialty insurers. An insurance professional can help evaluate whether your current coverage is
sufficient. 2
What to check before purchasing
Underlying limits: Umbrella carriers typically require minimum auto and homeowners liability limits. Confirm that all
required policies and exposures are included.
Coverage gaps: Ask whether boats, rental properties, household drivers, or board service are covered or require separate
protection.
Exclusions: Umbrella policies generally do not pay for your own injuries, damage to your own property, business or
professional liability, or intentional acts. Terms vary by insurer.
The bottom line
Make liability protection part of your broader wealth-protection review. If you do not have an umbrella policy—or have
not reviewed your limit recently—ask your insurance advisor to assess your exposure, policy exclusions, and options for
additional coverage.
SOURCES & NOTES
1. Insurance Information Institute, “Should I Purchase an Umbrella Liability Policy?” https://www.iii.org/article/should-i-purchase-an-umbrella-liability-policy
2. Massachusetts Division of Insurance, “Personal Umbrella and Excess Liability Insurance.” https://www.mass.gov/info-details/personal-umbrella-and-excess-
liability-insurance
3. National Association of Insurance Commissioners, “What’s an Umbrella Policy?” https://content.naic.org/article/whats-umbrella-policy
Educational information only; not insurance, legal, or financial advice. Coverage is governed by the actual policy, exclusions, and applicable law. Consult a
licensed insurance professional.