What umbrella covers
An umbrella policy kicks in once the liability on an underlying policy (auto, home, boat) is exhausted. It covers bodily injury, property damage, and personal-injury claims like libel, slander, and false arrest.
Most insurers require you carry 250/500/250 auto liability and $300K home liability before they'll write umbrella over the top.
How much do you need
Common rule: cover at least your net worth, plus several years of future income. A young professional with a small net worth but a big earning trajectory still benefits from $1M of coverage.
What it doesn't cover
Intentional acts, business activities (buy commercial liability), and damage to your own property are excluded.
Key takeaways
- Cover at least your net worth.
- Underlying limits must usually be raised first.
- $1M of coverage often costs $200–$400/year.
- Excludes intentional acts and business liability.
This article is for general educational purposes and is not legal, financial, or insurance advice. Consult a licensed professional for decisions specific to your situation.