How much extra liability protection you need based on your net worth and risk factors.
Umbrella policies sit on top of your auto and home liability coverage and kick in once those limits are exhausted. Most insurers require at least $300,000 in underlying liability before they'll write an umbrella policy.
The first $1M of umbrella coverage often costs less than $300/year.
Get an umbrella quote →Make sure your underlying policies meet the umbrella prerequisite.
Check auto coverage →Umbrella insurance is extra liability coverage that kicks in after your auto or home policy's liability limit is exhausted — for example, if you're sued for more than your $300,000 auto liability limit covers after a serious accident. It's designed to protect assets (savings, investments, home equity, future wages) that a lawsuit could otherwise go after.
Because it only pays out after your underlying policies are exhausted — a relatively rare event — insurers can offer $1M+ in coverage for a few hundred dollars a year, making it one of the highest-value additions to a typical insurance portfolio for anyone with meaningful assets to protect.
This is a simplified rule-of-thumb, not a substitute for talking through your specific exposure with an agent — high-net-worth households, landlords, or anyone with unusual liability exposure (e.g. serving alcohol at home regularly, owning certain dog breeds) often need more nuanced advice than a net-worth-based formula.
Future income can also be at risk in a lawsuit through wage garnishment, so some advisors recommend a baseline umbrella policy even for people early in their careers with lower current net worth but strong future earning potential.
It generally doesn't cover your own injuries or property damage, business liability (a separate policy is usually needed), or intentional acts. It's specifically for liability claims where you're found responsible for someone else's injury or property damage.
Umbrella policies are priced assuming your base auto/home policy absorbs claims up to a certain point first. Without adequate underlying coverage, the umbrella insurer would effectively be covering risk they didn't price for.