Should I get umbrella insurance? This question is about Umbrella Insurance

Should I get umbrella insurance?

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This question is about Umbrella Insurance

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@WalletHub • 11/04/21 This answer was first published on 11/04/21. For the most current information about a financial product, you should always check and confirm accuracy with the offering financial institution. Editorial and user-generated content is not provided, reviewed or endorsed by any company.

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You should get umbrella insurance if your net worth is at least $1 million. Umbrella insurance supplements existing home and auto liability insurance, and it usually costs between $150 and $300 annually for the minimum $1 million in coverage.

You may also want to purchase an umbrella policy if your net worth is lower but still exceeds your home and auto liability insurance limits. After all, if you cause a multi-vehicle accident while driving, for example, you would be responsible for the accident victims’ medical bills. And if your personal liability limit is $300,000 while the total cost of the medical bills adds up to $400,000, then there would still be $100,000 left for an umbrella policy to cover.

Similarly, you should consider umbrella insurance if you are at a high risk for being sued because of your job, your hobbies, or because you own high-risk leisure items like a pool or trampoline.

When You Should Get Umbrella Insurance

Your assets are greater than your home or car insurance policy limits.
Your work puts you at high-risk for a lawsuit.
You own a trampoline, hot tub, or swimming pool.
You participate in a hobby where you could injure someone else.
You own rental or investment properties.
You have a dog with a bite history.
You are a public figure.
You own guns.
You frequently host guests.

To learn more, check out WalletHub’s guide to umbrella insurance.

Answer Question

Is an umbrella policy a waste of money?

No, an umbrella policy is not a waste of money for people with more than $500,000 in assets. Umbrella policies provide liability coverage beyond the limits of another insurance policy, and even if a policyholder never files an umbrella claim, the low cost of coverage is usually worth the added financial protection.… read full answer

Most auto insurance policies only provide up to $500,000 in liability coverage, and a good rule of thumb is to make sure you have enough liability insurance to cover your assets. So, if your net worth is $1 million, for example, then you should purchase an umbrella policy, which only costs an average of $150-$300 annually.

On the other hand, umbrella insurance is generally not a good investment for individuals without many assets. Their car, home, or renters insurance probably provides enough coverage already.

For more information, check out WalletHub’s complete guide to umbrella insurance.

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What is the point of an umbrella policy?

What is not covered by an umbrella policy?

An umbrella insurance policy does not cover your own injuries or damage to your personal property. Personal umbrella insurance also will not cover intentional acts, criminal behavior, damage caused while you’re performing business activities, or damage from certain dogs or vehicle types. If you need umbrella insurance for business purposes, you can purchase a commercial umbrella policy.… read full answer

What Umbrella Insurance Does Not Cover

Your own injuries or property damage

Property damage or injuries that you intentionally cause

Damage that you cause while committing a criminal act

Property damage or injuries that you cause while performing business or professional activities

Any liability that you assumed through a contract prior to the incident

Property damage or injuries caused by dog breeds or recreational vehicles that are specifically excluded from your policy

Because umbrella insurance extends the limits on an existing home or auto liability insurance policy, it does not apply to anything that is specifically excluded from the underlying coverage. To learn more, check out WalletHub’s guide to umbrella insurance.

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