As you grow older and your finances increase, the future is always on your mind. Having enough money for retirement and enough to leave your family is a major concern. While you’re working hard toward those goals, the last thing you want is a lawsuit or claim to destroy your savings. Your homeowners or auto insurance may cover part of your savings, but there are a lot of gaps that liability coverage leaves behind.
What Is Personal Umbrella Insurance?
Personal umbrella insurance fills in the gaps left over by other liability insurances. It’s an additional policy that activates when your other liability insurance coverage reaches its maximum point. For example, if a legal settlement will cost you $2 million but your homeowners insurance only covers $1 million, umbrella insurance will come in to pay the other $1 million. Due to the umbrella nature of these policies, umbrella insurance applies to homeowners, auto and personal insurance coverages.
What Does Personal Umbrella Insurance Cover?
Personal umbrella insurance generally covers: 
- Bodily or personal injury
- Property damage
- Landlord liability
- Lawsuits (libel, slander, etc.)
What Does Personal Umbrella Insurance Not Cover?
This insurance option typically doesn’t cover:
- Bodily injury (to you). Umbrella insurance usually won’t provide coverage if you get injured.
- Personal possessions damage. Your personal property won’t be covered by an umbrella policy.
- Business injuries. If someone is injured or property is damaged at your work, you may require professional liability insurance.
- Intentional damage or injury. If you cause intentional damage or injury — or commit illegal acts —umbrella insurance typically won’t cover you.
Who Really Needs A Personal Umbrella Policy?
Personal umbrella insurance can be useful for people in the middle or upper middle class financially. Although assets of these policyholders aren’t as drastic as upper-class members, any unexpected liability events will have a more adverse effect on these assets. Members of the middle and upper middle classes can’t always afford huge claims. If you’re in this group, losing all savings because of one accident can mean losing retirement income or money to be left over for your children after your passing.
If you’re at risk of being in this precarious financial position, you should especially consider personal umbrella insurance. Also, lawyers and those with similar high-income professions present more liability risk when it comes to claims. And if you live in a neighborhood where expensive cars are commonplace, it’s important to have umbrella insurance in case of an accident goes beyond your car insurance coverage.
How Much Does Personal Umbrella Insurance Cost?
Personal umbrella insurance typically comes by the millions ($1-$5 million.) Luckily, this insurance is relatively cheap. With a $1 million policy, you can pay as low as $12.50-$25.00 a month. This amounts to around $150-$300 a year. However, you must already have a certain amount of homeowners or auto insurance coverage to be eligible for this coverage.
What Affects The Cost Of Personal Umbrella Insurance?
Many factors affect personal umbrella insurance, including:
- Amount of coverage. More coverage generally costs more in premiums.
- Net worth. Personal umbrella insurance policies should be equal to or more than your net worth.
- Credit history. As with most insurance, your credit history affects the cost of your personal umbrella insurance.
- Location. Rates for any insurance policy vary by state. The cheapest insurance policy in Texas may not be the cheapest in South Carolina.
- Amount of risk. Insurance companies consider the likelihood that an insured policyholder will file a claim through risk. Households that have teenagers, dogs, swimming pools, boats or any combination are seen as higher risks because injury is more likely. This may apply to your profession as well.
- Driving record. Personal umbrella insurance can help with costs due to a car crash. Umbrella insurance underwriters consider the driving record of each family member in the household.