If you have a high net worth or own a lot of assets, it may be in your best interest to expand your liability insurance with an umbrella policy. Not only can this coverage save you from maxing out limits and paying significant amounts out of pocket, but it can also cover costs that standard liability doesn’t.

Is it really worth paying a couple of hundred dollars extra per year? Let’s take a look.

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What is an umbrella insurance policy?

An umbrella insurance policy, also referred to as a personal umbrella policy (PUP), is a type of insurance safeguard that covers you, your family, and members of your household if you exceed the liability limits of your car insurance or homeowners insurance.

While umbrella insurance acts as an extension of your

personal liability insurance

, it can also cover you against more damages than your standard policy, too—like slander or defamation lawsuits.

Most umbrella policies start your

liability coverage

with a $1 million limit and go as high as $5 to $10 million in coverage (

Allstate

only goes as high as $5 million). This is much greater protection than the average $300,000 to $500,000 limit of a standard policy, which can make umbrella insurance a great value—especially since it only costs an average of $150 to $300 a year!

Typically, your standard car insurance or homeowners policy must meet certain minimum liability limits in order for umbrella coverage to be added on. When you file a liability claim, your standard policy’s limits must then be used up first before an umbrella policy kicks in.

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How does umbrella insurance work with Allstate?

Allstate

policyholders may purchase a personal umbrella policy if their auto or property insurance has met the following required limits:

Insurance type	Bodily injury per person	Bodily injury per accident	Property damage
Auto	$250,000	$500,000	$100,000 per accident or $500,000 combined single limit (CSL)
Motorcycle	$100,000	$300,000	$100,000 per accident or $300,000 CSL
Homeowners	$300,000 per occurrence
Renters	$300,000 per occurrence

Additionally, Allstate offers umbrella coverage for motor homes whose liability limits meet the same requirements as those for auto insurance, and RVs and personal watercraft whose limits meet the same requirements as those for motorcycle insurance.

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What does Allstate umbrella insurance cover?

Allstate’s personal umbrella policy fills in the gaps of your bodily injury and property damage coverage up to a $1 to $5 million limit and covers certain personal injury losses that standard liability coverage doesn’t. This includes:

Invasion of privacy

Libel

False arrest

Slander, humiliation, or defamation

Alongside this additional personal injury loss protection, your Allstate PUP also covers defense and attorney costs and expands your liability coverage outside of the country. It can also be extended to cover any relative or dependent in your household.

Here’s a look at Allstate’s umbrella coverage in action. Let’s say your teenage driver forgets to look when merging on a highway and accidentally causes a three-car collision while picking up groceries for the family. In your state, you are liable for the accident as a parent and are therefore responsible for all of the medical bills and vehicle repairs since your teen was at fault.

A standard Allstate car insurance policy might only cover up to $500,000 per accident in medical bills and vehicle repairs. But with two full vehicles and seven passengers involved, medical expenses quickly climb up to $580,000. One of the cars is absolutely totaled, and the other one is a severely damaged

Porsche

—so vehicle repairs and replacements swiftly exceed your liability limit, as well.

Without umbrella coverage, the drivers involved could file personal injury lawsuits against you to collect the damages they’re still owed. In this case, those court costs will come directly out of your pocket since they aren’t covered in a standard liability policy either.

These costs, along with attorney fees and lost wages while in court, would be covered under a personal umbrella policy, however.

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What it won’t cover

While it may seem that umbrella coverage is as close as you can get to a car insurance catch-all, some losses aren’t covered.

In an Allstate PUP, this includes the following:

Business-related liability or damages

Personal belongings

Intentional crimes or omissions

Anything that’s held to an existing written or oral contract

Here’s an example of how these exclusions can play out. Let’s say you’re hosting a pool party for the neighborhood and a guest slips and falls on your slippery tiles and breaks their back. The medical expenses and lost wages that result exceed the liability limits of your homeowners insurance, but since you have umbrella coverage, you’re still able to handle it.

Now, here’s a different story. Let’s say instead of hosting a pool party for the neighborhood, you’re hosting a pool-side launch party to promote your latest line of skincare products. Since this is now a business-related expense, it is no longer covered by an umbrella policy—only your business insurance can cover it.

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How much does Allstate umbrella insurance cost?

Just like standard insurance coverage, Allstate’s umbrella insurance rates vary based on individual factors like your

driving record

and

credit score

. However, you can almost always expect it to cost very little, especially for the amount of coverage it gives you.

In fact, average umbrella insurance policies across the board only cost between $150 and $300 annually—which could come down to just $12.50 a month.

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Who can buy a personal umbrella policy from Allstate?

As long as you have an underlying insurance policy with Allstate that has already reached the required liability limits, you are typically eligible to purchase umbrella coverage. This includes auto, homeowners, renters, and even watercraft insurance.

That said, not all states offer umbrella coverage, so you’ll want to talk to your Allstate agent to discuss whether a personal umbrella policy is available for you. If it is, you may very well benefit from this extra coverage given the following:

You travel (and drive) abroad frequently

You have a swimming pool, swing set, or trampoline at your residence

You own (and drive) a boat

You have a

teen driver

on your policy

You have a dog

You are at risk of a defamation lawsuit (i.e. someone on your policy is prone to posting negative reviews online or criticizing big names in big ways)

You own a lot of assets that give you a high net worth

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Is an Allstate personal liability umbrella policy worth it?

While it’s clear that you can receive some very comfortable coverage from Allstate’s personal umbrella policy, is it actually worth it? Here’s a look at some of the pros and cons you may want to consider before buying.

Pros

It has great value. Adding only $12.50 to $25 to your monthly premiums on average, umbrella coverage is very affordable for the amount of additional protection you receive.

You get significantly higher limits. A lot of damage can happen with one small mistake, and costs can climb quickly—especially as

average car accident costs increase

. Umbrella insurance gives you much greater peace of mind that you will be able to recover from an otherwise financial nightmare.

You get broader liability coverage. Not only does Allstate’s umbrella insurance take care of certain legal fees and lawsuits, but it also covers you while you travel both around the country and out of it.

Cons

Your policy as a whole will cost more. Because you need to max out your liability limits before you can secure umbrella coverage, your regular insurance premiums will be higher. This can make umbrella coverage less attainable for many policyholders who don’t already have higher limits.

Umbrella coverage can be limited. Depending on your location and risk profile, you may not always be able to buy Allstate’s personal umbrella coverage for your liability policy.

Your own injuries and damages are not covered. While Allstate’s PUP covers significant amounts of other vehicles’ damages, your damages aren’t covered by liability insurance. If you’re looking to pad your protection more,

collision insurance

and

comprehensive insurance

are much better options.

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The bottom line

If you’ve already maxed out Allstate’s liability limits in your standard policy, you may strongly benefit from Allstate’s umbrella policy protection—especially if those limits are lower than your net worth.

If your current liability limits are still pretty far from Allstate’s maximum values, you may want to build up some coverage first before jumping straight into an umbrella policy.

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