Is it necessary to buy umbrella insurance for my home?

It's hard to figure out what the right level of insurance coverage is for my property. Do I need umbrella coverage?

Shannon Martin · Answered on Mar 12, 2021
Reviewed by Shannon Martin, Licensed Insurance Agent.
An umbrella policy is an excellent addition to home and auto insurance, but it is not a requirement. An umbrella policy’s purpose is right in its name — it applies an extra layer of protection that covers both auto and home on a day that rains down expensive liability losses. It usually will extend what you are already covered for by an extra $1 million, $2 million, or $5 million.
It is a common misconception that only the wealthy need this type of protection. This is simply not true! If you own your home, have a retirement plan/401(k), have a new driver, or have any children, this is something you should look into.
While it is something no parent wants to think about, if your teen causes a bad accident or decides to throw a party where alcohol is served and someone gets hurt, you are financially responsible for this and your standard coverage will not be enough. This means that your home and retirement are at risk in the event of a lawsuit.
Even in situations that appear innocuous on the surface, if something goes wrong and your teen is sued, you, by extension, are sued as well. So, for example, if your child does some volunteer work for their college applications and they’re found responsible for another person’s medical bills after an accidental injury, this is where umbrella insurance can kick in. Furthermore, in a world where one tiny joke made on social media can go viral, guess what? It could be considered slander and your umbrella policy would protect you against a lawsuit.
The cost of a $1-million umbrella policy can sometimes be as low as an additional $100 per year, so it is something you should discuss with your insurance agent. For more helpful information about umbrella policies, check out this article: How to Protect Your Assets With an Umbrella Insurance Policy.
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Jerry partners with more than 50 insurance companies, but our content is independently researched, written, and fact-checked by our team of editors and agents. We aren’t paid for reviews or other content.

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