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Umbrella Insurance

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What Is Umbrella Insurance?

Individual umbrella insurance is a type of insurance policy that provides an extra layer of liability coverage beyond what is covered in your homeowners, auto, or renters insurance policies. It’s designed to protect you from financial loss if you are held liable for damages or injuries that exceed the payout limits of your other insurance policies. Without it, you would be forced to pay these additional out-of-pocket expenses which can be devastating.

Who Needs Individual Umbrella Insurance?

Individual umbrella insurance is a good option for anyone who wants additional protection against the financial consequences of a liability claim. However, it’s particularly important for individuals and families who have a higher risk of being sued or facing liability claims.

For example, if you own a home or car, you have a higher risk of being sued if someone is injured on your property or in an accident you cause while driving. Similarly, if you have a high-profile job or a significant amount of assets, you may be more likely to be a target of lawsuits.

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Property Damage Liability
Risk Factor

You can be held responsible if you significantly damage another vehicle and/or property. Do you have enough coverage to protect yourself from the risk?


Your standard auto policy limit could easily be exhausted if you are found to be at fault. An umbrella or excess liability policy provides an extra layer of protection once your standard liability limits are exhausted. It’s a cost-effective way to ensure the peace of mind you deserve.

Bodily Injury Liability
Risk Factor

It’s easy to get distracted while driving. All it takes is an incoming text message, a fussy baby, or changing the radio station and your eyes are off the road long enough to crash into a pedestrian, bicycle, or another vehicle. As an owner/operator of the vehicle, you may be held financially responsible for any bodily injuries caused as a result of the accident.


An umbrella or excess liability policy helps extend your coverage to better protect you against these significant costs. It’s the ideal coverage to provide peace of mind, even when the unthinkable happens.

Risk Factor

You invite guests over for a pool party and one of your guests dives into the shallow end of the pool and is permanently injured. They hire a lawyer to represent them and after a long legal battle, you and your family are left financially responsible for their injuries. Do you have enough money in savings to cover your legal responsibilities as well as the legal defense costs?


An umbrella or excess liability policy increases your personal liability limits by adding protection over and above your current auto, boat, or homeowners policies - providing real financial value, as well as priceless peace of mind. Excess liability insurance is available either by an endorsement to your homeowners policy or available as separate coverage.

Watercraft Liability
Risk Factor

Accidents can happen to anyone at any time, even those who have been out on the water for years. Personal watercraft insurance is a necessity, but sometimes the limit these policies provide isn't enough.


Your standard watercraft policy limit could easily be exhausted if you are found to be at fault for property damage or personal injury. An umbrella or excess liability policy can extend those limits, providing you an additional layer of financial protection.

*It is important to note that individual umbrella insurance only provides coverage for individuals and their families; it does not provide coverage for businesses. To get umbrella insurance coverage for your business, you will need commercial umbrella insurance.

How Does Umbrella Insurance Work?

Umbrella insurance works by providing additional liability coverage beyond what is included in your other insurance policies. The coverage limits for individual umbrella policies typically start at $1 million but can reach over $10 million, depending on your needs and budget.

Here’s an example of how individual umbrella insurance works:

  • You’re found to be at fault in a car accident that results in $600k in damages and injuries. Your auto insurance policy has a liability limit of $500k, so it is up to you to cover the remaining $100k. This is where having an individual umbrella insurance policy comes in! If you have an individual umbrella insurance policy with a limit of $1 million, for example, it will cover the remaining $100k, preventing you from having to pay it yourself.

Considerations When Purchasing Individual Umbrella Insurance

If you’re considering purchasing an individual umbrella insurance policy, there are a few things to keep in mind:

  • Your other insurance policies (e.g., home, auto, renters) may need to meet minimum liability limits to qualify for an individual umbrella policy. This is because an umbrella policy is designed to provide additional coverage beyond what is included in those policies, so coverage limits can’t be too low.
  • Coverage limits and premiums for individual umbrella policies can vary widely depending on your needs and budget. It’s important to shop around and compare policies from different providers to find the best coverage at the best price.
  • Like any insurance policy, umbrella insurance policies may have exclusions or limitations. For example, some policies may not cover certain types of liability claims or may have exclusions for intentional acts or criminal activity. Be sure to read the policy carefully and ask questions if you’re unsure about anything.
  • Purchasing individual umbrella insurance can be complex, so it’s a good idea to work with an experienced insurance agent who can help you shop around, explain your options, and find a policy that meets your needs.
  • As your assets increase, consider increasing your coverage limits to thoroughly protect yourself from significant financial losses. You always want to remain prepared for a liability claim. The best way to do this is to review your policy every year or two with an insurance agent.

How Much Does Umbrella Insurance Cost?

The cost of umbrella insurance varies depending on numerous factors, including where you live, coverage limits of your other insurance policies, how much coverage you are purchasing, and more. However, in general, umbrella insurance is relatively affordable. Though it provides coverage for large payouts, the premiums usually reflect the reduced risk of these payouts occurring.

In conclusion, individual umbrella insurance provides valuable, yet affordable coverage for anyone who wants to protect themselves from significant financial losses in the event of a lawsuit or other liability claim. Whether you’re a homeowner, car owner, or someone who just wants to be thoroughly protected, an individual umbrella policy is worth considering as part of your overall insurance strategy.

Working with an experienced insurance agent can help you find the right policy for your needs and budget. Request a free umbrella insurance quote below today to get started with an MSIG insurance agent!

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