Umbrella insurance is a type of liability insurance that provides an extra layer of protection for your assets and income. It is designed to supplement your existing insurance policies, such as homeowners or auto insurance, and can help you avoid financial ruin in the event of a lawsuit or other liability claim.

What Does Umbrella Insurance Cover?

Umbrella insurance can provide coverage for a wide range of liabilities, including:

  • Bodily injury: If someone is injured on your property or as a result of your actions, umbrella insurance can help cover the cost of medical expenses, lost wages, and other damages.
  • Property damage: If you cause damage to someone else’s property, umbrella insurance can help cover the cost of repairs or replacement.
  • Personal injury: If you are sued for defamation, invasion of privacy, or other personal injury claims, umbrella insurance can help cover the cost of legal defense and any damages awarded.
  • Advertising injury: If your business is sued for copyright infringement, trademark infringement, or other advertising injury claims, umbrella insurance can help cover the cost of legal defense and any damages awarded.

In addition to these specific types of coverage, umbrella insurance can also provide additional limits of liability above and beyond what is covered by your other insurance policies. This can be especially important if you have significant assets or income that could be at risk in the event of a lawsuit.

How Much Coverage Do You Need?

The amount of umbrella insurance you need will depend on your specific circumstances and the level of risk you are comfortable with. A general rule of thumb is to purchase enough umbrella insurance to cover the value of your assets, including your home, savings, and investments.

It’s also important to consider your income when determining how much umbrella insurance to purchase. If you have a high-paying job or a significant source of passive income, you may want to consider purchasing more coverage to protect your income from a potential lawsuit.

How to Purchase Umbrella Insurance

Purchasing umbrella insurance is relatively simple and can typically be done through your existing insurance provider or through a standalone umbrella insurance company.

When shopping for umbrella insurance, be sure to compare coverage limits and costs from multiple providers to find the best policy for your needs. You’ll also want to make sure the policy is comprehensive and covers the types of liabilities you’re most concerned about.


Umbrella insurance is an important and relatively inexpensive way to protect your assets and income from the financial ruin of a lawsuit or other liability claim. By understanding what umbrella insurance is and why you need it, you can take steps to protect your financial future and peace of mind.