insurance

How to Add a Personal Liability Umbrella Policy

Some insurers require that you have both auto and home insurance with their company before they sell you an umbrella policy.

I’m considering getting an umbrella liability policy for my home and cars. Can I do that if I have my home and auto insurance with two different companies? Also, how much do umbrella policies cost? --John Culbertson, Port Neches, Tex.

CALCULATOR: How Much Umbrella Insurance Do I Need?

An umbrella liability insurance policy helps protect your assets and future earnings from lawsuits. It kicks in after you’ve exhausted the liability coverage from your auto or home insurance policy. Some insurers require that you have both auto and home insurance with their company before they sell you an umbrella policy, but most will sell you a policy if you have either home or auto with them (and a few insurers issue stand-alone umbrella policies). You typically get a 5% to 10% discount per policy if you buy them together, says David Spencer, senior vice-president of insurer ACE Private Risk Services.

To qualify for an umbrella policy, you generally must have at least $250,000 in liability insurance on your car and $300,000 on your home, says Bill Howard, an independent insurance agent in Alexandria, Va. The insurer may offer you a discount on your umbrella policy if your coverage exceeds those amounts.

The age and driving records of people in your household and other factors affect premiums: A $1 million umbrella policy runs $175 to $300 a year for a family with a house and two cars and no special risks, says Spencer. (A $5 million policy generally costs up to $800 a year.) Go with the higher end if you have a teenage driver, a swimming pool or other big risks, or assets worth over $1 million. Some insurers include legal fees in the coverage; others cover them above the policy limit. Boosting your auto and home insurance deductibles by, say, $500 can help you afford the umbrella coverage.

Most Popular

Planning to Sell Your Home in Retirement? Downsize Costs Along With Space
Budgeting

Planning to Sell Your Home in Retirement? Downsize Costs Along With Space

In this hot real estate market, consider the costs of buying and selling a house along with the expenses associated with your new digs.
November 13, 2020
What Biden Will Do: 24 Policy Plays to Expect From the Next Administration
Politics

What Biden Will Do: 24 Policy Plays to Expect From the Next Administration

The Kiplinger Letter forecasts President-Elect Joe Biden’s biggest priorities -- and the likelihood of progress on them.
November 19, 2020
The 13 Best Healthcare Stocks to Buy for 2021
Kiplinger's Investing Outlook

The 13 Best Healthcare Stocks to Buy for 2021

Most of the best healthcare stocks for 2021 will have some sort of ties to COVID, whether it's producing a vaccine or cure, or benefiting from the vir…
November 20, 2020

Recommended

Kiplinger’s Best Firms for Customer Service: Banks, Credit Cards and More
banking

Kiplinger’s Best Firms for Customer Service: Banks, Credit Cards and More

We crunched a lot of numbers (and ran a survey) to crown top firms for their service on banking, credit cards, mortgages, and home and auto insurance.…
October 22, 2020
How Much Insurance Should You Get? A Lawyer’s Advice
insurance

How Much Insurance Should You Get? A Lawyer’s Advice

The advice to “Only pay for what you need” sounds good. But when it comes to home, auto and business insurance coverage, four guidelines could help de…
October 12, 2020
7 Things Medicare Doesn’t Cover
Healthy Living on a Budget

7 Things Medicare Doesn’t Cover

Medicare Part A and Part B leave some pretty significant gaps in your health-care coverage. Here's a closer look at what isn't covered by Medicare.
October 1, 2020
Your Guide to Open Enrollment
health insurance

Your Guide to Open Enrollment

Your options may look a little different this fall. Meanwhile, the cost of coverage continues to climb.
October 1, 2020