What is Personal Umbrella Policy?

Homeowners, auto, and other primary insurance policies may provide robust protections, but there’s almost always a limit to how much coverage they afford. For individuals who want additional protection beyond what their underlying policies will provide, it may be appropriate to purchase a personal umbrella policy.

Personal umbrella insurance is a secondary form of insurance that supplements the protections afforded by primary, underlying policies. In many cases, personal umbrella policies offer levels of protection that simply are unavailable through only primary insurance policies.

How Do Personal Umbrella Policies Supplement Underlying Policies?

Personal umbrella policies may supplement the protections provided by primary insurance policies in two ways. First, an umbrella policy will sometimes fill in coverage gaps left by primary policies, thus providing coverage where there otherwise would be none. Second, an umbrella policy may build on the limits of underlying policies, frequently providing more protection than is offered by underlying policies’ highest available limits.

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Who is Personal Umbrella Insurance For?

Anyone who wants more protection than the limits of their underlying insurance policies allow for may be interested in personal umbrella insurance. This may include (but isn’t limited to):

  • People who participate in high-risk activities (e.g. boating or riding motorcycles) and want additional protection in case they’re liable for an accident
  • Dog owners who want extra liability protection in case their dog bites another person
  • Landlords who need additional coverage from potential lawsuits filed by tenants
  • Wealthy individuals who fear they might be targeted by an opportunistic lawsuit
  • Volunteers who take on additional responsibilities and may be held responsible for accidents

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Are Personal Umbrella Policies the Same as Excess Liability Policies?

Both personal umbrella and excess liability policies are supplemental insurance policies that offer protection beyond what primary policies provide. There is an important distinction between them, though.

Personal umbrella policies typically come with their own terms, conditions, definitions, and exclusions. Since they have their own language, personal umbrella policies are often able to supplement multiple underlying policies at the same time, and they can sometimes fill in coverage gaps.

Excess liability policies usually don’t have their own terms, conditions, definitions, and exclusions. They’re what are known as “follow form” policies, adopting the language of the underlying policy that they supplement. Because these policies adopt another policy’s terms and conditions, they generally can only supplement one policy, and they normally can’t fill in coverage gaps.

Do Personal Umbrella Policies Protect Property?

Most personal umbrella policies are strictly liability policies and don’t offer additional protection for property. People who need more coverage for specific property may need to increase the property limits of their current property insurance policy (e.g. homeowners policy), purchase a rider for their current policy, or get a different property insurance policy.

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Are Personal Umbrella Policies Affordable?

The majority of personal umbrella policies are affordable, especially considering how much coverage they provide. Policies typically provide $1 million or more worth of coverage, yet have fairly low premiums. Insurers are normally able to keep rates for these policies low because they’re secondary policies.

How Should People Shop for a Personal Umbrella Policy?

When getting a personal umbrella policy, it’s important to compare a policy’s particular terms and conditions with the coverages afforded by underlying policies. Most personal umbrella policies have coverage requirements that primary policies must meet, and failing to meet these requirements might void an umbrella policy’s protections.

People should contact an independent insurance agent to get help comparing a personal umbrella policy’s underlying coverage requirements with the protections their primary policies provide. An independent agent will have the expertise necessary to make sure all required coverages are in place, and they can help compare personal umbrella quotes from different insurance providers.

Meet Your Industry Specialist

Jim Hickey

Mr. Hickey is a Partner and the President of Personal Lines. He was the President of Links Insurance Services, which he started in 2001. Jim grew Links Insurance to 40 employees by the time it became a division of World Insurance Associates in 2019.

Jim Hickey has been a top commercial and personal lines producer for the past 15 years and has guided the company to 18 years of year-over-year growth.

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