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

Dying Careers You May Want to Steer Clear Of
careers

Dying Careers You May Want to Steer Clear Of

It’s tough to change, but your job could depend on it. Be flexible in your career goals – and talk with your kids about their own aspirations, because…
September 13, 2021
5 Top Dividend Aristocrats to Beef Up Your Portfolio
dividend stocks

5 Top Dividend Aristocrats to Beef Up Your Portfolio

The 65-member Dividend Aristocrats are among the market's best sources of reliable, predictable income. But these five stand out as truly elite.
September 14, 2021
7 Best Commodity Stocks to Play the Coming Boom
commodities

7 Best Commodity Stocks to Play the Coming Boom

These seven commodity stocks are poised to take advantage of a unique confluence of events. Just mind the volatility.
September 8, 2021

Recommended

11 Best Things to Keep in a Safe Deposit Box
savings

11 Best Things to Keep in a Safe Deposit Box

These valuables and documents, along with some items you hold dear, should be stored securely at your bank.
September 25, 2021
9 Things You’ll Regret Keeping in a Safe Deposit Box
savings

9 Things You’ll Regret Keeping in a Safe Deposit Box

Locking up certain important documents and valuables in a bank vault could turn into a headache for you or your heirs.
September 24, 2021
Your Tree, Your Neighbor’s Property: Whose Insurance Pays?
insurance

Your Tree, Your Neighbor’s Property: Whose Insurance Pays?

And how to be a good neighbor when your tree drops by uninvited.
September 2, 2021
10 Things to Know About Hurricane Insurance Claims
Becoming a Homeowner

10 Things to Know About Hurricane Insurance Claims

Know what's covered, what isn't, and how to make the most of your policy if you need to file a claim.
August 30, 2021