How much umbrella insurance do I need?

You need enough umbrella insurance to protect your assets and future income if you're sued. Umbrella insurance policies usually start at $1 million in coverage, but insurance companies offer these policies in increments up to $5 million and sometimes even $100 million.

"The important thing to realize is that you don't need $1 million in assets to need that much coverage," says Ben Schaum, an underwriting process manager for Progressive Insurance. "The amount of coverage depends more on your personal comfort level and where you are in life."

How much coverage you need depends on your particular situation, and we’ve developed an umbrella insurance calculator to help you decide.

Umbrella insurance calculator

Find out how much umbrella insurance you need in a few short steps

1Assets
2Debts
3Coverage
4Risk Exposure
5Results

What are your assets?

Enter your best estimate if you don't have exact numbers
Two hundred fifty thousand dollars
One hundred eighty seven thousand five hundred dollars
One hundred twenty thousand dollars
Forty two thousand five hundred dollars
$600,000
You should have assets!

What are your debts?

It's acceptable to estimate if you don't know the actual amounts
One hundred thousand dollars
Twenty five thousand dollars
Five thousand dollars
Twenty thousand dollars
$150,000

How much coverage do you have?

Enter your current home and auto insurance liability limits.

Before buying umbrella insurance, increase your underlying limits to the maximum available for both home and auto insurance.

What are your risk factors?

Check all the apply:

Results

Our recommendation: You need umbrella insurance of at least $1 million. Before buying an umbrella policy, you need to increase your home and auto insurance liability limits. Click the eligibility tab for details.
Your Net Worth $450K
Risk Level
Your Assets $600K
Your Liabilities $150K
Insurance Coverage $0
Risk Factors: Your current risk profile indicates a low level of risk exposure. However, to protect your assets, we recommend that you purchase an umbrella insurance policy.

You don't need an umbrella insurance policy.

Eligibility Criteria: To be eligible for an Umbrella Policy, insurance companies will require you to maintain certain minimum liability limits on your auto and homeowners policies.
Auto Insurance Policy
  • $250,000 per person (bodily injury)
  • $500,000 per occurrence (bodily injury)
  • $100,000 (property damage)
Home Insurance Policy
  • $300,000 liability
Boat Insurance
  • $100,000 for smaller boats
  • $300,000 for larger boats (26 ft or longer, 50 HP or up)
All information provided is strictly confidential. No contact information is required unless you request a quote.

Do I need umbrella insurance?

Whether you need umbrella coverage or not depends upon the answers to two main questions:

  • What do you have to lose?
  • How much risk are you willing to take on?

Umbrella insurance covers these and other scenarios:

  • Property damage
  • Bodily injury
  • Landlord liability
  • Legal fees
  • Libel and slander
  • Malicious prosecution
  • False arrest

Umbrella insurance works by providing extended coverage once your underlying liability limits (on your home and auto policies) are tapped out. So, before buying an umbrella policy, increase your coverage to the maximum limits on both policies.

Our auto insurance coverage calculator can help with a recommendation for auto insurance coverage. But that's just a start. Many people underestimate what they have to lose and how much coverage they have. The umbrella insurance calculator below can help make things clear.

What should I consider when choosing an umbrella insurance policy?

Before buying an umbrella policy, consider the pros and cons of umbrella insurance and ask yourself the following questions.

What is your net worth?

"Net worth" equals what you own minus what you owe.

So, your net worth is your assets (what you own) minus your liabilities (what you owe).

Basing your umbrella limit off of your net worth is the most common method.

For example, let’s say that your assets total $1,000,000 and your liabilities total $100,000. So, you’d have a net worth of $900,000. This information could help you decide to get umbrella coverage for up to $900,000.

The amount of your personal umbrella policy should exceed your net worth. You may not need an umbrella policy if your net worth is less than your current liability coverage.

What are your total assets?

You can choose to set your umbrella limit based on your total assets. That gives you more protection than basing it on your net worth.

Some experts recommend coverage equal to the value of your assets without regard for your debts. This could help you avoid selling your home to pay a judgment if your net worth is your home equity.

If you apply this to the example above, you'd want at least $1,000,000 of liability insurance because the assets total $1,000,000. You may need an umbrella policy if your insurer's basic liability coverage limit is less than $1,000,000.

Consider your future income

If someone sues you and gets a judgment that exceeds your liability coverage, your future earnings may also be on the line and could be garnished up to 25%.

To address this, consider multiplying your income by five and adding that amount to your asset total. If your total household earnings are $100,000 a year, and you have $500,000 in assets to protect, you may want a $1 million policy.

What would happen if you couldn't pay a judgment against you?

Another facet of this examination is the potential damage to others.

If you've got two teens entering college, plan to retire soon, or are supporting aging relatives, a financial wipeout could be catastrophic and possibly permanent. That's another indication you might need to expand your liability insurance with an umbrella policy.

What is your risk of having to pay a judgment?

When deciding on umbrella coverage, you'll need to review your lifestyle, assets, and what you have to lose.

Chubb, a top-rated insurance company catering to the high-income market, offers a checklist for determining your need for umbrella insurance.

Consider the following points:

  • Do you own a home? Even if it’s not a million-dollar property, it increases your liability.
  • Do you have a swimming pool on your property? Hot tubs, ponds, or trampolines are also a liability risk.
  • Do you drive a car regularly? Remember, it’s not about how much your car is worth but how much damage you could be responsible for if you’re at fault in an accident.
  • Do you have young drivers in your household or drivers that have a car away at school?
  • Do you employ a housekeeper, nanny, gardener, or other staff on the premises of your home?
  • Do you have a dog? Remember that any dog can bite.
  • Do you regularly entertain at your home?
  • Do you serve on the board of a non-profit that won’t be able to provide you with liability insurance if you’re sued?
  • Do you have a boat or other recreational vehicles?
  • Do you participate in social media? Social media participation is something most people take for granted, but verdicts for libeling companies or individuals online can lead to millions in damages.

How much is an umbrella insurance policy?

How much umbrella insurance costs depends on a few factors.

But, as a general rule, extended liability coverage is affordable. A $1 million policy costs about $240 a year (or $20 a month), according to Erie Insurance. This will vary by company and your personal risk factors.

However, if you carry the bare minimum auto and home liability insurance, you can't add a million dollars of umbrella coverage. Insurers won't let you buy umbrella coverage until you have a substantial amount of liability coverage on your auto and homeowners policies.

A company will likely mandate minimum liability coverage of $300,000 (or even $500,000) for homeowners and $250,000 per person/$500,000 per accident for bodily injury for auto before they let you add a personal umbrella policy. That will increase your home and auto insurance rates.

How to buy umbrella insurance

You can buy umbrella insurance with almost any major insurance company. In some cases, you will need to have your home or auto insurance policy with the insurance company before they write you an umbrella policy.

To buy umbrella insurance coverage:

  • Consider how much extra liability coverage you need (our calculator will help)
  • Contact your current insurance company to find out if they offer umbrella insurance and request a quote
  • Request quotes from other companies for comparison. Note that some companies will not sell you umbrella insurance unless the company also insures your home and vehicles; it may be worth getting new quotes for all three
  • Compare quotes and coverage, choose your policy, and complete the application with a premium payment

How to save on umbrella insurance

Adding umbrella liability insurance will increase your insurance bill. However, there are ways to limit the expense.

  • Raise your home and auto deductibles. Choosing a higher deductible means you save on premiums, which can go toward paying for your umbrella coverage.
  • Compare insurance quotes. Compare the whole package when you get insurance quotes (you might find savings on your basic policies as well).
  • Bundle your insurance. You can save hundreds of dollars if you bundle home and auto insurance, including your umbrella policy.
  • Ask about discounts. In addition to bunded discounts, insurers often offer discounts for drivers over 50, safe drivers, and people with good credit.

Some insurers may give you a better rate on your basic liability policies if you add umbrella insurance. It pays to shop the entire package. However, the biggest expense involving umbrella coverage may be the cost of failing to protect yourself with this relatively inexpensive insurance.

Auto insurance FAQs

What is the difference between umbrella and excess insurance?

Is umbrella the same as an excess insurance policy? Not quite. An umbrella policy provides additional coverage over the underlying liability limits. Typically, these policies can include coverage against events not included in the underlying policy. But excess insurance provides more coverage for specific events. With more limitations, excess liability insurance protects against specific situations.

What are the best umbrella insurance companies?

Most major insurers offer umbrella insurance coverage. We spend a lot of time researching the best auto insurance and home insurance companies so you don't have to.

Ask your current provider about umbrella options or shop around with some of the best insurance companies to see what they can offer. Companies like Travelers, Liberty Mutual, and Chubb are known for high umbrella coverage limits. What defines best is different for different people, depending on their needs.

What is standalone umbrella insurance?

Standalone umbrella insurance refers to companies like Auto-Owners and RLI that will sell umbrella policies without requiring home or auto policies to be written with them.

What is drop-down coverage on an umbrella insurance policy?

Drop-down coverage indicates that an umbrella policy will step in to cover relevant expenses when the original liability policy reaches its maximum.

How much does a $5 million umbrella policy cost?

Based on a rate of $240 (from Erie insurance) for $1 million, you can expect to pay anywhere from $50 to $100 for each additional million, giving a range of $320-$640 for a $5 million umbrella policy.

Can I buy umbrella insurance separately?

Yes, umbrella insurance is always purchased separately. But you’ll need underlying homeowners and auto insurance with substantial coverage limits.