Summary: A personal umbrella policy provides an extra layer of liability protection above your home and auto insurance, safeguarding your assets and future income from large claims or lawsuits. Stein Insurance helps Minnesota and Wisconsin residents determine how much coverage they need and find affordable options tailored to their risk and lifestyle.
You know you need an auto policy to cover your vehicles and a homeowners or renters policy to cover your home and personal belongings. These insurance policies are essential coverage that protect you, your loved ones, and your property in the event of an accident, weather event, and other incidents.
However, you may not know what happens if a claim exceeds the limits on your insurance policies. In the event of a serious accident, lawsuit, or major damage to your home due to fire, water, or other event, you are on the hook to cover any remaining costs after you reach your insurance policy limits. This means dipping into your savings, selling assets, and putting your future income and financial stability at risk.
This is where a personal umbrella policy comes in. It is one of the most cost-effective ways to protect your assets and your family when the worst happens. At Stein Insurance, we love educating our clients about umbrella policies and how to take advantage of this affordable additional coverage. Let’s dig into the details.
Personal Umbrella Policy Basics
As its name implies, a personal umbrella policy shields you from a wide range of liability risks. It kicks in once you have exhausted the limits of the liability coverage included in your auto and homeowners or renters policies.
Think of an umbrella policy like a personal financial safety net that protects you from worst-case scenarios. It won’t cover your own personal injuries or property damage, but it will cover excess claims made against your policy.
| Covered | NOT Covered |
| Bodily injury liabilityProperty damage liabilityLegal defense costsPersonal liability claimsCertain types of lawsuits, such as libel or slander | Your own injuries or property damageIntentional or criminal actsBusiness-related liability (Stein can help you find a commercial umbrella solution) |
Choosing the Right Amount of Umbrella Coverage
Your Stein Insurance independent agent will work with you to determine the right amount of personal umbrella coverage you need. The number depends on your overall financial picture. Generally, your umbrella policy should at least match your total net worth.
With your agent, review the following assets to decide how much coverage is right for you:
- Home value and property ownership
- Savings and investments
- Retirement accounts
- Income and future earnings potential
- Risk factors, such as drivers, property features, and lifestyle
Typical umbrella policies start at $1 million in coverage, but $2 million, $5 million, and higher limits are also available. The best thing about umbrellas? They’re surprisingly affordable! Don’t let the high coverage limits intimidate you.
Signs You May Need an Umbrella Policy
How do you decide if an umbrella policy is a smart choice for you? Our agents suggest paying attention to these signs.
1. You Have Significant Assets
If you own a home, have savings, investments, or retirement accounts, all of these could become targets if you are a party in a lawsuit. Liability claims can exceed standard policy limits fast. An umbrella policy would protect your assets in the event that yours do.
2. You Are a High Earner
If you make a substantial amount of income or you future income may be large, an umbrella can protect your current and future earnings.
3. You Have Teen Drivers or Multiple Drivers
Statistically, teen drivers and multi-driver households have a higher risk of accidents. A serious accident with injuries could easily exceed standard auto liability limits. An umbrella policy would kick in once these limits are met.
4. You Own Property with High-Risk Features
Pools, trampolines, and large properties can increase your liability exposure. Accidents involving guests or neighbors can lead to significant claims against your homeowners policy. An umbrella would protect your assets in the event of a large claim.
5. You Regularly Entertain
If you frequently have people over, especially large groups of people, your risk of someone being injured on your property increases. An umbrella offers additional liability protection.
6. You Own Recreational Vehicles
Boats, ATVs, snowmobiles, and other recreational vehicles are popular in Minnesota and Wisconsin, but they come with additional liability risks. An umbrella would keep you covered in the event of a serious claim.
7. You Want Extra Peace of Mind
Even if none of these situations apply to you, umbrella coverage is relatively affordable and offers substantial protection. Many people find the peace of mind they feel is worth the cost of the premiums, even when their increased risk is not immediately apparent.
The Stein Insurance agents will help you evaluate your liability exposure, understand your risk, and find affordable coverage to protect your finances. If you’re unsure whether you need an umbrella policy, contact Stein Insurance for expert advice and to find the right level of coverage for your lifestyle.
Personal Umbrella Policy FAQs
What does a personal umbrella policy cover?
It provides additional liability coverage for bodily injury, property damage, legal fees, and certain personal liability claims once your home or auto policy limits are exceeded.
Who should consider buying an umbrella policy?
Homeowners, families with teen drivers, high-income earners, and anyone with significant assets or higher liability risks should strongly consider umbrella coverage.
How much umbrella coverage do I need?
A common recommendation is to match your umbrella coverage to your net worth, though higher limits may be appropriate depending on your risk exposure and future earnings.
Is umbrella insurance expensive?
No. Umbrella policies are typically very affordable compared to the amount of protection they provide, often costing a few hundred dollars per year for $1 million in coverage.
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