top of page
  • Brooks Green

8 Questions You Should Ask Yourself When Considering an Umbrella Policy

A babysitter left a 5 month old infant unattended in a walker. The infant toppled the walker, struck her head on the floor and suffered brain damage. The parents of the infant sued the teenage babysitter and her parents. The court awarded the infant’s parents $11,000,000.

The insured permitted several of her children and their friends to play paintball in her large back yard. The children were experienced and advised of all the safety rules including the use of headgear at all times. A participant removed her headgear as she was leaving the field in order to better hear someone calling her name. The minor claimant was hit in the eye resulting in a $475,000 settlement.

We've all heard stories of substantial insurance claims that make you wonder if you really are protected from an incident gone wrong. One accident could seemingly cripple you financially. What can you do to protect yourself, your family, and your assets?

If that is a question you've had, it's time to consider an umbrella policy. An umbrella policy is a liability insurance that goes beyond the coverage of your existing policies, or acts as coverage for those circumstances excluded by your existing policies.

But is an umbrella policy something you really need? Don't you have enough coverage with your auto and homeowner policies? In this article, we'll discuss who should consider an umbrella policy and why.


If you answer "yes" to any of the following questions, an umbrella policy might be right for you.

1) Do you have a net worth greater than the coverage limits in your home and auto policies?

2) Are you ever responsible for the care of children that aren't your own (such as babysitting, sleepovers, or playdates)?

3) Do you travel internationally?

4) Do you have children that live in your home or are away at college?

5) Do you own or rent an ATV, boat, RV, or other recreational vehicles?

6) Do you or a family member (i.e. children) host social gatherings in your home?

7) Do you or a family member engage on social media?

8) Do you own a rental property?

Answering "yes" to any of these questions exposes the amount of risk you may have. In some cases, your home or auto policies will be enough to cover that risk. But, in others, you will need more coverage.


A 28-year old engineer dove into a friend’s above ground swimming pool struck his head on the bottom and, as a result became a quadriplegic. He sued both the homeowner and the pool manufacturer. The court found the homeowner to be 60 percent responsible and the pool manufacturer to be 40 percent responsible, and awarded $10,000,000.

Accidents are bound to happen. But, how do you know if you will be liable for these monetary amounts if you are found to be at fault? Consider the following questions:

1) How much do you have to lose?

2) How much risk are you willing to take on?

First, how much do you have to lose? The old adage says that "You can't squeeze blood from a turnip." The same is true for liabilities within insurance. When the at-fault party has little or nothing available to pay, a lawsuit is unlikely.

But, it you have a higher net worth, you can expect a legal team to come after you and your assets in an at-fault incident. In some cases, legal teams could even come after your future income to help cover the pay-out, garnishing up to 25% of your wages. There is a great potential for loss when you have higher assets and higher income levels.

Let's take, for example, an individual with the following net worth:

Home(s) $600,000 (value of property - mortgaged amount)

Vehicles $90,000

Investments $250,000

Total Assets $940,000*

*This individual would want to have at least $940,000 in umbrella coverage. Therefore, a million dollar umbrella policy would be appropriate.

Let's assume, in this scenario, that this person is found liable in an accident. First, the individual would file a claim under their auto/home insurance. If the coverage available from those policies isn't enough to cover the pay-out, then the umbrella coverage would kick in and cover up until the coverage limit (an additional million dollars if a million dollar policy was purchased). Having this level of coverage provides peace of mind when considering the value of your assets and what they mean to you and your family.

Second, how much risk are you willing to take on? Just like the stock market, there are times in your life where it is unwise to take certain risks. If you are close to retirement, are you in a place where you can recover from a large payout in legal fees from an at fault incident. If the answer to that is "no," you may want to consider an umbrella policy.


In the even of an accident or incident that you are found liable, an umbrella policy can help with:

1) Legal Fees

2) The portion of a settlement for which you are liable that goes beyond your home or

auto coverage.


When deciding how much coverage you should buy, it is important to consider both your net worth and the total value of your assets. Usually, policies come in the 1 million, 5 million, and even 10 million dollar range. Most customers opt for the 1 million dollar policies. But, this number entirely depends on what you are working to insure.

Thankfully, umbrella insurance is relatively inexpensive- often only a few hundred dollars per year. Before purchasing, insurance companies will often encourage you to increase your auto/homeowners insurance coverage to qualify for the umbrella policy.


Like other forms of insurance, umbrella policies exist to give you peace of mind. When you are covered, it is easier to enjoy day to day living without the worry of potential risk.

Give me a call today to discuss your insurance needs so I can help you and your family find the protection and peace of mind you need.

bottom of page