Do You Really Need an Umbrella Policy?

Mar 25 2021

No one expects to be sued. But the truth is, more than 40 million lawsuits are filed every year in the United States, the U.S. Financial Education Foundation estimates. Lawsuits – even frivolous claims – have cost people their financial assets.
Umbrella Policy

If you’re sued and lose, your wages could be garnished and property could be seized. The U.S. Chamber of Commerce says excessive litigation and abusive legal practices are taking a heavy toll on our economy, businesses, and workers.

Consider this scenario provided by one of our insurance company partners:

A woman allowed her children and their friends to play paintball in her large back yard. While the children were experienced and advised of safety rules – including using headgear at all times – one participant removed her headgear as she was leaving the field and was hit in the eye. Her parents sued, resulting in a $575,000 settlement.

One way to protect your assets against lawsuits is to purchase an insurance policy. “More is better than less,” the foundation states. “It’s always better to have excess insurance than be under-insured.”

A standard auto or homeowners’ insurance policy usually provides you with some liability coverage that will pay for legal judgments against you and related attorney’s fees – up to your policy limits. If you own property or have investments and savings worth more than those limits, the Insurance Information Institute suggests considering a separate excess liability or umbrella policy.

What is an Umbrella Insurance Policy?

An umbrella policy is a separate policy (not a coverage added to an existing policy) that provides liability limits above and beyond limits on other policies. It can also provide coverage for losses not covered by other policies.

In another example provided by one of our insurance company partners, after a high-school student made several false remarks about a teacher on social media, the teacher sued the student’s parents for personal injury and won $750,000.

Some types of liability that an umbrella policy may cover and a homeowner’s policy often excludes include:

  • False arrest
  • Libel (a written statement that damages someone’s reputation)
  • Slander (a spoken statement that damages someone’s reputation)
  • Invasion of privacy

How Much Does an Umbrella Insurance Policy Cost?

Umbrella policies are sold in increments of $1 million. Because an umbrella policy goes into effect after underlying coverage is exhausted, annual costs are typically rather inexpensive – ranging from $125 to $300 a year.

Your premium depends upon how many homes, cars or toys you have. Most insurance companies require you to have a certain limit on your other policies before you can purchase an umbrella liability policy for additional coverage.

Need a quote? Insurance can be complex. We’re here to help. Call our office at 800-369-2501 or request a quote online.


Bell Insurance Services, LLC is a wholly owned subsidiary of Bell Bank. Products and services offered through Bell Insurance are: Not FDIC Insured | No Bank Guarantee | May Lose Value | Not A Deposit | Not Insured by Any Federal Government Agency.