How do I know if I need an umbrella policy?

Should we wait to get an umbrella policy until we have more assets, or get it now since we both make close to a 6 figure salary? My State Farm agent advised me that my husband and I should think about getting an umbrella policy. We don't own any property yet, but we are saving for a house.

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Shannon Martin
Answered on Jun 25, 2021
Shannon is an expert in personal lines liability insurance with 13 + years of insurance industry experience. She also served as a special insurance liaison to AARP members for 6 of those years. She is a graduate of UL Lafayette and currently resides in NY with her family. Shannon is also an amateur juggler, ukulele player, and is a time travel paradox theory enthusiast.
“You don’t need to have a lot of physical assets to purchase an umbrella policy. A big part of liability coverage is about protecting your future. The earning potential between you and your husband suggests that your retirement plans and 401k add up to a hefty sum and need to be protected.
It would be wise to have your State Farm agent provide you with a quote on the lowest umbrella policy option, which is $1 million. It would give a million dollars of coverage above your current auto and renters policies. Once you purchase your home, the policy would transfer protection to your homeowner’s policy.
Here are a few examples of when an umbrella policy would come in handy:
  • Your pet bites someone and they sue you for medical payments and pain and suffering.
  • You serve alcohol at a party at your home and someone gets in a car accident after they leave. They can sue you for the accident since the drinking took place on your property.
  • Your child hurts another child by accident at the playground.
These are very common situations many people find themselves in. Having more protection is always a good idea.”
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