What is umbrella insurance?

Yes, umbrella insurance is worth it if the value of your assets exceeds your liability insurance limits. Umbrella policies are relatively inexpensive so they are worth the investment if you have significant assets you’re looking to protect from costly liability claims.

Umbrella insurance provides additional liability coverage, typically starting at $1 million, and it usually costs at least $150 to $300 per year. Umbrella policies also cover certain situations that don’t typically fall under ... read full answerliability insurance, like libel and slander.

How To Decide If Umbrella Insurance Is Worth It

1. Add up the value of your assets, including your home equity, personal savings, and retirement accounts.
2. Compare your assets to the limits of your auto or homeowner’s liability insurance policy. If your assets exceed the current limits, then you should consider getting umbrella insurance.
3. Consider any factors that would make you more likely to have a liability claim filed against you, like owning a swimming pool or a dog.

Most home or auto liability insurance policies can only be purchased with maximum limits of $300,000 or $500,000, depending on the insurer. While these limits may be high enough for the average person, wealthier individuals with more assets may need even more protection. That’s when umbrella insurance is worthwhile. To learn more, check out WalletHub’s guide to umbrella insurance.

Umbrella insurance covers injuries, property damage, certain lawsuits, and personal liability situations that exceed your home and auto liability coverage. An umbrella policy extends your liability insurance limits and offers protection for situations not covered by a standard liability policy, such as libel or slander.

On the other hand, umbrella insurance does ... read full answernot cover claims that are excluded outright from liability insurance, such as intentional damage or damage to your own property.

What Umbrella Insurance Covers

• Liability in excess of auto/home insurance policy limits
• Libel and slander
• Malicious prosecution
• Psychological harm and mental anguish
• Legal defense costs related to liability claims
• Liabilities when traveling overseas
• False arrest

Umbrella insurance is typically recommended for individuals who have a high net-worth that can’t be covered by a standard liability policy. To learn more, check out WalletHub’s guide to umbrella insurance.

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.