What Umbrella Insurance Covers
Umbrella insurance provides additional liability coverage above and beyond your auto, home, and other policies. If you cause an accident that results in a $1.5 million lawsuit but your auto policy only covers $500,000, your umbrella policy would cover the additional $1 million. It also covers some situations your other policies don't, like false arrest, slander, and libel claims.
Excess Liability
Adds $1-5 million or more above your auto, homeowners, and other liability limits. Kicks in when underlying policies are exhausted.
Auto Liability Extension
Covers auto accidents that exceed your auto policy's liability limits—a common need since serious accidents often result in large lawsuits.
Home Liability Extension
Extends your homeowners liability when someone is seriously injured on your property and the claim exceeds your policy limits.
Personal Liability
Covers personal liability situations that may not be covered by underlying policies, like claims arising from volunteer activities.
Worldwide Coverage
Protects you globally, not just in the U.S. Important for international travelers.
Legal Defense Costs
Pays for attorney fees and legal expenses even if the claim is groundless. Legal defense alone can cost tens of thousands.
Why You Need Umbrella Insurance
In America's lawsuit-happy society, a single accident can result in a multi-million dollar judgment. If a teenager swerves to avoid your dog and becomes paralyzed, you could be sued for millions. If your tree falls on a neighbor's house and kills someone, standard homeowners coverage probably isn't enough. Umbrella insurance protects your assets—your home, savings, retirement accounts, and even future wages—from being taken to pay a judgment.
Texas-Specific Considerations
Texas has no caps on personal injury awards, meaning jury verdicts can be enormous. High-profile cases in Texas have resulted in tens of millions in damages. Additionally, if you have a pool (common in Texas), a dog, teenage drivers, or recreational vehicles, your risk of a large liability claim increases. Central Texas residents with assets to protect should seriously consider umbrella coverage.
Umbrella Insurance FAQs
Who needs umbrella insurance?
Anyone with assets to protect should consider umbrella coverage. If you own a home, have savings, earn a good income, have teenage drivers, own a pool or trampoline, or own a dog—umbrella insurance is worth considering.
How much umbrella insurance do I need?
A common recommendation is to have umbrella coverage equal to your net worth. Most people start with $1 million, but those with more assets or higher-risk situations may want $2-5 million or more.
How much does umbrella insurance cost?
Umbrella insurance is surprisingly affordable. A $1 million policy typically costs $200-400 per year. Each additional million costs about $100-200 per year.
What are the requirements for umbrella insurance?
Carriers require you to have certain minimum limits on your underlying auto and home policies (often 250/500 auto and $300,000 home liability). If your current limits are lower, you'll need to increase them.
Does umbrella insurance cover my business?
Personal umbrella policies typically exclude business activities. If you have a business, you may need commercial umbrella coverage in addition to personal umbrella coverage.
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