How much does umbrella insurance cost?
Last updated: January 1
The cost of umbrella insurance depends on different circumstances, such as how much protection you buy and the potential risks you may face. Here's a closer look at how prices are determined when it comes to adding extra liability insurance through a personal umbrella policy.
What factors determine the cost of umbrella insurance?
Umbrella insurance is typically sold in $1 million increments, up to $5 million. The more coverage you choose, the more you'll likely pay for umbrella insurance, the Insurance Information Institute (III) says.
The cost of an umbrella insurance policy is also based in part on risk factors that may make you more likely to face a liability claim. Risk factors may include owning a backyard swimming pool or trampoline, or having a teen driver in your household, for example.
Your local insurance agent can give you a personalized quote for umbrella coverage based on your specific situation.
What do I need to qualify for umbrella insurance?
Before you can buy umbrella insurance, you typically need to have certain underlying liability limits on other insurance policies, such as auto or homeowners insurance.
If you don't already meet the underlying insurance coverage limits (often $300,000 in homeowners liability coverage, according to the III), you may need to increase those coverage limits for an additional cost before you can purchase an umbrella policy.
How does umbrella insurance work?
A personal umbrella policy helps prevent you from paying out of pocket if you're found responsible for another person's injury or damage to their property.
Umbrella insurance kicks in after you've reached the limits of your underlying insurance policy. For example, suppose you're found responsible for $1 million in damages after a car accident. If you only have $250,000 in auto liability coverage, you will likely have to pay out of pocket for the remaining $750,000 of the court judgment. But, if you have $1 million in coverage from umbrella insurance, it will pay the remaining $750,000.
Just as with other types of insurance, the cost of an umbrella policy depends partly on how much protection you choose.