What does umbrella insurance cover?
Umbrella insurance helps pay for major liability claims when the limits on your underlying insurance run out. It adds extra liability coverage above your primary policies so it can help protect you from large claims involving bodily injury, property damage, libel, slander, and other covered personal liability losses. According to the ACE Private Risk Services, a typical $1 million umbrella insurance policy costs about $150 to $400 per year, making it an affordable option to ensure you're fully covered.
Key Takeaways
- Umbrella insurance provides additional liability coverage above the limits of your home and auto policies, covering major claims involving bodily injury to others, property damage, personal liability lawsuits, libel, slander, defamation, and landlord liability if you rent out property.
- Umbrella insurance does not cover your own injuries or medical expenses, business liability (unless specifically included), intentional or criminal acts, contract disputes, or damage caused while driving a vehicle not covered by your underlying auto policy.
- You may benefit from umbrella insurance if you own a home, drive regularly, have teen drivers in your household, rent out property, host guests frequently, or have savings and assets you want to protect from a lawsuit that could exceed your current liability limits.
What umbrella insurance covers
Umbrella insurance usually extends liability protection for claims involving:
- Bodily injury to others
- Property damage you cause to others
- Personal liability claims (including some lawsuits)
- Libel, slander, and defamation
- Landlord libility, if you rent out property and are sued over incident on the premises
It's important to remember that umbrella insurance does not replace home or auto insurance. It sits on top of those policies and kicks in only after your underlying liability limits are used up.
Here are two examples of when umbrella insurance can be crucial:
- You cause a serious car accident. If the other driver's medical bills and legal costs exceed your auto liability limits, umbrella insurance can help cover the rest.
- A guest is injured at your home. If you're found responsible for their injuries, umbrella insurance can help after your homeowners liability coverage is exhausted.
What umbrella insurance does not cover
Umbrella insurance is valuable because it covers high-cost liability situations, but it has limits. It generally does not cover:
- Your own injuries or medical expenses
- Your business liability, unless your policy specifically includes it
- Contract disputes
- Intentional damage or criminal acts
- Damage you cause while driving a vehicle not covered by your underlying auto policy
- Liability that isn't covered by your base policy first
That's why umbrella insurance is best thought of as a financial backstop for major liability events, not a broad “everything” policy.
$1 million vs. $2 million umbrella coverage
Many customers start with $1 million in umbrella coverage, but some choose $2 million for added protection.
Many customers start with $1 million in umbrella coverage, but some choose $2 million for added protection.
| Cost factor | How it affects price |
|---|---|
| Liability limit | Higher limits usually cost more, but the increase is often gradual |
| Existing home/auto premiums | Carriers often require certain underlying limits, and your current policy setup can affect pricing |
| Location | Lawsuit trends, weather risk, and local claim patterns can influence premiums |
| Claims history | Prior claims may raise your rate or make coverage harder to place |
Other common pricing factors include the number of drivers in your household, teen drivers, rental properties, boats, dogs, or other exposures.
Do I need umbrella insurance?
You may want umbrella insurance if you:
- Own a home
- Drive regularly
- Have teen drivers in your household
- Rent out property
- Have savings or assets to protect
- Host guest often
- Worry about a lawsuit wiping out your current liability coverage
If you're unsure, read our guide: Do I Need Umbrella Insurance?
Get added liability protection with Liberty Mutual
Umbrella insurance can help provide added peace of mind by extending your liability coverage beyond the limits of your home and auto insurance. With Liberty Mutual, you could get umbrella insurance for about $2 a day, making it an affordable way to prepare for large, covered claims and lawsuits. Start your umbrella insurance quote with Liberty Mutual to see how umbrella coverage may fit your needs.
Written by Jess Feldman
Jess Feldman is an Editor of Liberty Mutual Resources, the company's consumer-focused insurance hub. She brings more than a decade of experience in content strategy, editorial management, and instructional communication, with a focus on translating complex, YMYL (Your Money or Your Life) topics into clear, accurate, and actionable resources for consumers. Prior to Liberty Mutual, she served as Content Manager at Course Report and Editor at ParksByNature Network. She holds an M.F.A. in Writing and a B.A. in English from the University of New Hampshire.