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How Much Does Umbrella Insurance Cost?

From Mary Poppins’ flying umbrella to Hagrid’s wand-concealing brolly, magical umbrellas have been enchanting us for decades. Well, we’ve got another magical umbrella for you: It’s called umbrella insurance.

Sounds super exciting, we know! This is definitely a topic to be enchanted by because umbrella insurance offers protection from all the bad people in the world who want to sue you! Or maybe they’re not bad—maybe you actually messed up. Either way, umbrella insurance makes sure you don’t lose your shirt because of it.

So how much does this bewitching umbrella insurance cost, you ask? Well, we’ll tell you that and more. Hold on to your duck-head handle as we unpack how much you can expect to pay for umbrella insurance so you can make an informed decision and check this off your to-do list.


Key Takeaways

  • Umbrella insurance is a must-have if your net worth is over $500,000.
  • At as little as $12.50 a month, umbrella insurance is one of the best buys in the insurance world.
  • Your unique policy rate is determined by factors like where you live, how many homes and vehicles you own, and your net worth.
  • Umbrella insurance can’t be bought as a stand-alone policy. You have to add it to an existing policy.

What Is Umbrella Insurance?

Umbrella insurance is like . . . well, an umbrella for your money. It’s a form of liability insurance. It protects your money from rainy-day lawsuits or large claims that exceed the coverage in your standard homeowners or auto insurance policies. All it takes is one expensive lawsuit and your finances could be looking worse than Mr. Banks’ bank in Mary Poppins. (And you don’t even have to be at fault. These days, people sue for all kinds of reasons.)

Umbrella insurance kicks in once you reach the liability limit of your homeowners or auto policies. It will give you peace of mind knowing your nest egg and your lifestyle are protected from the elements (meaning, all the bad things that could happen).


What Does Umbrella Insurance Cover? 

Here’s a quick snapshot of the five main areas umbrella insurance covers:

  1. Bodily injury covers incidents like dog bites or car accidents. Basically, anything you’re found responsible for that causes injury to others (like if the neighbor kid breaks their foot on your trampoline).
  2. Property damages are covered if, for instance, you’re at fault for a bad car accident and are on the hook for the other person’s expensive repair costs. So if you caused a 10-car pileup on an icy interstate and people are filing claims left and right for their damaged cars, umbrella insurance has you covered. 
  3. Legal fees can add up quickly. Umbrella insurance protects you from having to shell out a ton of money for lawyers if you’re sued. (Let the insurance company line the lawyers’ pockets so you can keep your money in yours.)
  4. Slander and libel are also covered if you’re sued for damaging someone’s reputation—even through something like an online review of a restaurant.
  5. Rental property is also protected if you’re a landlord.


How Much Does Umbrella Insurance Cost? 

This is what you came for. How much is it going to run you to stand under this umbrella? Umbrella insurance is actually very inexpensive. A $1 million umbrella policy only costs around $150–300 a year. 

Leo O. from the Ramsey Baby Steps Facebook Community said he was able to get $1 million in umbrella insurance for just $150 a year by working with a RamseyTrusted insurance pro.

“It’s a no brainer for the extra liability coverage!” he said.


You’ve worked hard to get to where you are. But don’t leave yourself vulnerable.

Just keep in mind, when it comes to your umbrella insurance cost, a number of details can push it a little up or down. We’ll look at these next.


What Factors Determine the Cost of Umbrella Insurance? 

A couple different things go into the cost of umbrella insurance. Your individual rate will depend on factors like where you live and how many homes, vehicles or boats you need to insure.

You’ll also obviously pay more if you need higher amounts of coverage. Your umbrella insurance cost will be much higher if you need a policy worth $10 million.

A $1 million policy is where you get the best deal. But no matter how much you need (and how much it costs), you still need it.


How Much Umbrella Insurance Do I Need? 

Now, you might also be wondering, How much umbrella insurance do I need? Good question.

Umbrella insurance starts at $1 million worth of coverage and goes up in $1 million increments. Now, $1 million might seem like a lot, but that number could get eaten up fast during an expensive lawsuit.

If you own property, drive a luxury car, have a swimming pool, serve on a board or nonprofit, or are publicly known for your success and wealth, you might want to consider more than the $1 million minimum. Most insurance companies offer up to $5 million or even $10 million.

Whatever you decide, just make sure it covers your entire net worth.


Here's A Tip

Your umbrella insurance should cover your entire net worth.

Average Umbrella Insurance Limits by Carrier

Most umbrella insurance is available in $1 million limit increments of coverage. That means you can buy a policy for $1 million, $2 million, $3 million all the way up to (in one company’s case anyway) $100 million! If you need $100 million in umbrella insurance, hats off to you. Standing ovation. Drinks all around. And you’re paying.

Limit Ranges of Popular Insurance Companies


$1–5 million1


$1–5 million2


$1–10 million3


$1–10 million4


$1–10 million5


$1–25 million6


up to $100 million7


Protect your wealth with umbrella insurance.

You’ve worked years to build your legacy. Keep it safe for the future with a RamseyTrusted pro in your corner.

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How Does Umbrella Insurance Work? 

So what does umbrella insurance look like in action?

You’re in a new city and you miss a light. Your Honda Civic smashes into Chandler’s Tesla. Chandler is in the hospital (and out of work) for months. After the dust settles, you have to cover his totaled Tesla ($84,000), his medical bills ($310,000) and . . . Chandler sues you for lost wages and pain and suffering totaling another $900,000.

Even if you got $500,000 in liability coverage when you signed up for car insurance, you still have to find $400,000 somewhere to cover the rest! That’s where umbrella insurance would save your butt.

Another scenario looks like this: You’re out walking your German shepherd, Bo, in a park. A girl with no dog manners named Krystal reaches out to pet Bo and Bo, who’s never bitten anyone in his life, bites her hand and then her thigh. While Krystal needs stitches, she isn’t hurt that badly—but she takes one look at your Lululemon outfit and the rock on your finger and decides to take you for a ride. She sues you for $1 million for ongoing injuries and trauma. The judge knocks it down to $750,000, but still. Let’s hope you have umbrella insurance.

You're at higher risk of being sued if...

  • You own a pool
  • You own a dog or horse
  • You own a trampoline
  • You’re a volunteer board member
  • You’re a youth sports coach or official
  • You have a teen driver
  • You own a boat, ATV, motorcycle, or Jet Ski
  • You’re a public figure or have a major online presence
  • You own a rental property

Let’s look at a final scenario—and this one’s particularly not fun. You come into a small inheritance and decide to build an in-ground pool. When it’s done, you start enjoying your weekends with some poolside fun in the sun—but you’re not in the habit of putting up the safety screen. After all, you don’t have kids. But your neighbor does, and their 2-year-old wanders off and drowns in your pool. Those parents sue you for every penny you’re worth and the judge doesn’t bat an eye as he awards them $3.3 million in damages.

Umbrella insurance won’t turn back time and help you remember to put up the screen, but it will keep you from financial ruin.

One more thing: There’s another cost people tend to forget, and that’s legal fees. In each of these scenarios, you would have to pay hefty fees to lawyers to defend you—even if you win. Umbrella insurance will cover those too.


What Do I Need to Qualify for Umbrella Insurance?

Most insurers don’t let you get a stand-alone umbrella insurance policy. You’ll need to add umbrella insurance to an existing policy.

And before you can add umbrella insurance to your existing policy, you’ll need a certain amount of liability in your other policies. Most insurance companies require you to have $250,000 in auto insurance liability and $300,000 for your homeowners insurance.8 So keep in mind, you might end up paying more on your auto or home insurance premiums to get umbrella insurance.

Here are two examples of different carriers’ minimum limit requirements:




Home Insurance Liability



Auto Insurance Bodily Injury

$300,000/$300,000 or $250,000/$500,000


Auto Insurance Property Damage


$100,000 10


How to Buy Umbrella Insurance

If your net worth is over $500,000 (great job!), you need umbrella insurance. No question about it. Otherwise, it’s like storing all your money in your house and then deciding not to bother locking the door. Or running around naked. Or moving to a pig farm and refusing to wear anything but high heels. Okay, maybe that last one is a little weird, but you get the picture. When it comes to a defensive strategy for your finances, umbrella insurance is a must-have.


Here's A Tip

If your net worth is over $500,000 (great job!), you need umbrella insurance. No question about it.

For Marc J., the peace of mind that comes with umbrella insurance didn’t even cost him very much.

“Our $1 million umbrella is $131 per year through a RamseyTrusted pro bundled with our home and auto,” he said on the Ramsey Baby Steps Facebook Community Group. “The minimal cost net of what it lowers my homeowners and auto insurance to is more than worth it for me to transfer any additional risks to protect our assets.”

Umbrella insurance is affordable and gives you a crucial extra layer of liability protection. But it can be tricky figuring out exactly how much you need—you don’t want to risk having too little and leaving yourself unprotected from whoever comes along and decides to sue you.

That’s why we recommend working with a RamseyTrusted insurance pro. They’re experts in their field and work in your area. They can look at your entire net worth, all your assets and accounts, and create an umbrella insurance policy that protects everything you’ve worked so hard to build.


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About the author


Ramsey Solutions has been committed to helping people regain control of their money, build wealth, grow their leadership skills, and enhance their lives through personal development since 1992. Millions of people have used our financial advice through 22 books (including 12 national bestsellers) published by Ramsey Press, as well as two syndicated radio shows and 10 podcasts, which have over 17 million weekly listeners. Learn More.

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