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How Much Does Umbrella Insurance Cost?

Umbrella insurance is one of the best insurance moves you can make to protect your hard-earned wealth. But how much does it cost?

We’ll 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.

What Is Umbrella Insurance?

Umbrella insurance is like . . . well, an umbrella for your money. It protects it 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 set back big time. (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 Cost? 

Umbrella insurance is actually very inexpensive. A $1 million umbrella policy only costs around $150–300 a year.1 And if you want to bump your coverage up to $2 million, you’ll only pay an extra $75 per year. In fact, for each $1 million in coverage you add, you’ll only pay an extra $50 a year on average.2 That’s so cheap you might even pay more for an actual umbrella!

Also, keep in mind that most insurers don’t let you get a stand-alone umbrella insurance policy. You’ll need to add umbrella insurance to an existing policy.

Before you can buy umbrella insurance, 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. So, you might end up paying more on your auto or home insurance premiums.

What Factors Determine the Cost of Umbrella Insurance? 

A couple different things go into the cost of umbrella insurance. What you pay 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. But no matter what you pay, umbrella insurance is still a great buy.

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 that you are found liable 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 are 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 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.


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

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.

Should I Purchase an Umbrella Insurance Policy? 

If your net worth is over $500,000 (great job!), you need umbrella insurance. No question about it. Umbrella insurance is affordable and gives you a crucial extra layer of liability protection.

When it comes to your defensive strategy for your finances, umbrella insurance is a must-have. But 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 an independent insurance agent who’s part of our Endorsed Local Providers (ELP program). 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. And our agents are RamseyTrusted, meaning you’ll be working with the top agents in your area.

Connect with an insurance ELP today.

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Ramsey Solutions

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Ramsey Solutions

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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