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Insurance | What is

Commercial Umbrella Insurance: Cost & Coverage

Published January 30, 2024

Published Jan 30, 2024

WRITTEN BY: Nathan Weller

This article is part of a larger series on General Liability Insurance .

• 1 How It Works
• 3 Who It Is Right For
• 4 Umbrella vs Excess Insurance
• 5 Bottom Line

Commercial umbrella insurance is a special policy a small business owner can purchase that adds additional protection to existing commercial insurance. Similar to commercial general liability and commercial auto liability insurance, it covers legal costs, medical bills, damages to other property, judgment-issued payments, and settlements. Commercial umbrella policies can run anywhere from $300 to $1,500 annually for small businesses.

How Does Commercial Umbrella Insurance Work?

A commercial umbrella policy works in two ways:

• It acts as surplus coverage. This means it can only be used if there is an outstanding financial liability from an existing loss and the other applicable insurance coverage limits have been exhausted.

For example, your business has a general liability policy with $1 million in coverage. Thankfully, your business purchased an umbrella policy for $5 million, too. On a rainy day, the manager on duty neglected to make sure the floor remained dry and did not display a “Wet Floor” warning sign, causing multiple customers at your store to slip, fall, and injure themselves.

The total cost of the combined losses, including medical bills, legal fees, and damages, are in excess of $3 million. The general liability insurance would cover the first $1 million and the umbrella insurance would then cover the remaining $2 million.

• It can help small business owners when trying to bid on a job that requires higher-than-normal liability limits.

Let’s say you have a general liability policy for $1 million and a commercial umbrella policy for $5 million. Your company bids on a construction job that requires a liability policy of $6 million. Thankfully, the combined limits of both of your policies meet that requirement, so you don’t need to purchase additional coverage to bid on the project.

What Business Umbrella Insurance Covers

Because umbrella insurance supplements liability coverage, it will kick in to cover legal fees, medical bill payments, damages, judgment, and settlement costs that exceed your other policy limits. A commercial umbrella policy can only be purchased to supplement an existing policy, and it will include specifications on what type of policy it can supplement. An umbrella policy supplements:

• General liability insurance
• Commercial auto insurance
• Product liability insurance
• Employer’s liability insurance (workers’ compensation)

The employer’s liability insurance supplement can be confusing. While it sounds like umbrella insurance is the same as employment practices liability insurance (EPLI), it isn’t. As a reminder:

• EPLI protects employers from claims related to hiring or interviewing a candidate or events like harassment that occur during employment.
• Employer’s liability insurance supplement is solely intended to protect an employer from an employee suing them if they become injured on the job and is a part of workers’ compensation insurance .

What Commercial Umbrella Insurance Doesn’t Cover

Because a commercial umbrella insurance policy is a type of liability coverage, it won’t cover any type of commercial property for the insured, such as claims related to office space, equipment, or inventory. It also will not cover all types of liability. For example, an umbrella policy does not cover professional liability or employment practices liability losses.

In terms of specific claims, an umbrella policy cannot be used in a liability claim if it is already fully covered by the underlying policies. It also will not cover claims if you don’t already have the primary coverage in place at the time of the incident. So if you have an umbrella policy but no general liability policy, and a claim arises that would ordinarily be covered under general liability, your umbrella insurance policy will not cover that claim.

Commercial Umbrella Insurance Costs

While the cost of umbrella insurance varies for each business, many carriers offer the average cost its customers can expect to pay. I analyzed these cost ranges and found the cost of an umbrella policy premium can range from $300 to $1,500 annually for smaller businesses.

Similar to other small business policies, insurers will draw on multiple data points to determine the cost of the premium for commercial umbrella insurance. This data could include prior claims history, risk management controls, and industry.

The total requested umbrella limit also plays a role in price. Costs may be increased or reduced depending on whether the umbrella and underlying policies are with the same carrier.

Expect to call a provider or work with an agent to get a quote for umbrella insurance. Remember that it is highly unlikely a carrier will issue a quote for a commercial umbrella policy if your business doesn’t already have existing insurance.

How Industry Affects Cost

Because umbrella insurance is supplemental coverage for liability insurance, industries deemed higher risk for general liability coverage will also be considered higher risk for umbrella insurance.

For instance, a construction company is far more likely to have a general liability claim than an accounting firm because of the scope of work being conducted. Another example is a cleaning company where employees are frequently on customers’ property can expect a higher premium rate. This means the company’s underlying liability and umbrella policies generally will cost more.

Who Commercial Umbrella Insurance Is Right For

Most businesses can benefit from umbrella insurance because of the surplus coverage it provides.

Below are some scenarios of when umbrella insurance would be especially important to have:

• The business has a lot of employees: Umbrella insurance can act in excess of workers’ compensation policies, specifically for the employers’ liability portion.
• The business has property open to the public: General liability is often called “slip and fall” coverage because slipping- and falling-related injuries are common. Umbrella insurance can supplement general liability and give small business owners peace of mind by providing additional coverage above their normal limit.
• The business has a lot of commercial vehicles: Umbrella insurance acts in excess of commercial automobile liability coverage.
• The job contract requires very high liability limits: If you work in an industry where you need to bid on a job, some jobs require higher-than-normal liability limits. Assuming the contract stipulates that coverage limits can be fulfilled with an umbrella or excess policy, using an umbrella policy can be an affordable option to have a liability policy with lower limits but maintain higher limits at the same time

Umbrella Insurance vs Excess Liability Insurance

A common misconception is that a commercial umbrella policy is simply excess liability insurance. While a relationship exists between the two, excess liability is a separate, distinct policy:

• Excess liability insurance extends coverage for only one type of liability policy
• Umbrella insurance can fill in coverage gaps for more than one type of policy

This means that an umbrella policy and an excess liability policy could both provide additional coverage on top of the underlying policy.

A commercial umbrella policy can also help cover additional causes of loss and locations that aren’t covered by underlying policies. So, if an incident happens that results in an injury, but the cause or location of that injury were excluded from the underlying liability policy, then the umbrella insurance could kick in and cover the additional loss. In contrast, excess insurance could not cover the loss because it only covers one type of liability.

Bottom Line

Commercial umbrella insurance can be the saving grace in the event of a catastrophic loss. For example, if one terrible incident wiped out your business’ liability insurance coverages, an umbrella policy might be the difference between bankruptcy and continuing operations.

Umbrella insurance is relatively inexpensive when you evaluate how much coverage you receive. Plus, it can fill in coverage gaps in terms of the scope and, sometimes, the geographic location of the loss that underlying policies don’t cover.

The Hartford is an experienced small business insurance provider that writes commercial umbrella insurance with a business owner’s policy (BOP). Do you want to learn more? Click on the button below.

Visit The Hartford

About the Author

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Nathan Weller

Nathan Weller is a subject matter expert at Fit Small Business focusing on commercial insurance. He has 15 years of experience in insurance: operations, FNOL, and claims handling. He also helped build a claims department at an insurance start-up. In between his time working at different insurance carriers, he spent 8 years running a small, non-profit organization. Nathan understands the small business daily operations as well as the complexities of insurance.

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Small Business Trends

What is business umbrella insurance, and do you need it.

A business umbrella insurance policy adds more coverage to any existing liability policies you have. It covers liability claims that go above your coverage limits. It’s additional liability protection.

What is Umbrella Insurance for Business?

Commercial umbrella insurance provides an added layer of protection for small businesses, similar to the way business liability insurance functions.

It becomes crucial when unexpected expenses arise, including legal fees, medical costs related to injuries, and other unforeseen liabilities.

Importantly, commercial umbrella insurance doesn’t operate in isolation. It’s designed to complement and extend other liability insurance policies, such as general liability insurance, by covering costs that exceed their limits.

Read More: Types of Business Insurance

Does My Business Need an Umbrella Policy?

Business needs an umbrella policy for additional coverage.

• If the public goes on your commercial property.
• If anyone you employ works on other people’s property.
• If a government contract requires umbrella coverage, most do.

If your business might get sued. In other words, most can use this additional layer to cover the financial risk from lawsuits.

Why You Should Have Umbrella Insurance

Commercial umbrella insurance covers what other policies miss.

Here are five other reasons why you need this extra liability coverage.

• Got lots of foot traffic? This covers liability risk.
• Got lots of vehicles? An umbrella policy offers auto insurance.
• Use dangerous equipment? Umbrella policies cover employees’ severe injury claims, it is great for construction businesses.
• Need to land a big contract? Extra coverage through an umbrella insurance policy helps satisfy bigger clients.
• Is a lawsuit escalating? An umbrella insurance policy steps in when you exceed your coverage limits.

What is Covered by Business Umbrella Insurance?

A commercial umbrella policy needs to be comprehensive. Look through these different types of business insurance for reference.

Read More: Business Insurance Benefits

A business should check to be sure it has the following:

Liability Coverage

When your business faces potential legal challenges, having commercial umbrella insurance can be a lifesaver. Whether it’s a claim related to property damage or personal injuries, these policies step in to address liabilities that could financially cripple a business.

By choosing an umbrella policy, businesses can increase the liability limits beyond those provided by their standard general liability coverage.

This enhancement ensures that businesses can tackle larger claims without straining their resources.

Global Coverage

In our digitally connected world, many small businesses operate beyond their physical borders, engaging with global audiences through online platforms.

Such expansive operations present unique risks, especially when dealing with customers from different countries and legal jurisdictions. There might be situations where a standard liability policy falls short of providing adequate protection.

That’s where commercial umbrella insurance shines—it fills in those coverage gaps, ensuring that businesses remain protected even when operating on a global scale.

If your current location or insurance provider doesn’t offer this level of protection, it’s worth exploring options with other insurers. Thorough research can equip you with the best policy, preventing undesirable outcomes in case of unexpected global liabilities.

Property Damage

When it comes to safeguarding the tangible assets of your business, considering additional financial protection is a wise move. This could mean securing a policy that takes into account damages to essential business equipment or other valuable items your enterprise possesses.

Within the scope of umbrella insurance for property damage, the coverage typically extends to two primary categories: ‘loss of use’ and ‘bodily injury’. ‘Loss of use’ pertains to scenarios where your business assets become temporarily unusable due to damages, impacting your operations.

On the other hand, the ‘bodily injury’ category kicks in when someone gets injured due to your business assets, necessitating compensation.

Medical Expenses

In the realm of business, unforeseen events like accidents resulting in injuries can lead to hefty medical bills. Extending your existing liability insurance to cover such medical expenses is a strategic decision.

With the added layer of a commercial umbrella insurance policy, your small business gains robust protection against bodily injury claims that could otherwise financially strain your operations.

As you delve into the world of commercial umbrella insurance, it’s essential to have a clear understanding of the various components it can cover.

Engaging in a detailed discussion with potential insurance providers will give you insights into the specific requirements and protections tailored to your business’s unique needs. Always remember to ask pointed questions to ensure you’re adequately covered.

What is Not Covered by Umbrella Insurance for Business?

Commercial umbrella insurance supplies coverage to look after business operations when you’re located on someone else’s property. But any small business insurance policy won’t cover everything. These professional services are no exception.

Here’s a list of what a commercial umbrella policy doesn’t have.

Claims Above Your Commercial Umbrella Insurance Limits

While commercial umbrella insurance provides an additional layer of financial protection, it’s crucial to remember that every policy has its maximum coverage limit. If claims arise that exceed these predetermined limits, the financial responsibility falls squarely on the business.

As a business owner, it’s essential to be aware of these limits and anticipate potential financial implications. Before finalizing a policy, make an informed decision by consulting with potential insurance providers to fully understand the coverage boundaries and any associated costs.

Errors and Omissions

In the course of business operations, inadvertent mistakes and oversights can occur. Typically, commercial umbrella insurance doesn’t encompass such errors and omissions.

To safeguard your business from potential financial repercussions resulting from such unintentional lapses, it’s prudent to maintain a cash reserve.

This reserve acts as a buffer, complementing your umbrella insurance, ensuring that your business remains financially stable even in unexpected situations.

Commercial umbrella insurance has its constraints, especially when it comes to illegal activities. If any illicit actions are undertaken by the business owner or its employees, the umbrella policy won’t provide any coverage.

Business owners should be cognizant of these limitations and instill a culture of compliance and integrity within their operations.

Property You Own

One common misconception is that commercial umbrella insurance encompasses property damage, especially regarding owned assets. However, this is not the case. For damages to assets that your business owns, you’ll need to turn to dedicated property insurance policies.

It’s vital to differentiate between these types of coverage and ensure that your assets are adequately protected against potential damages.

Your Business, If You Don’t Have Proper Underlying Policies

For commercial umbrella insurance to be effective, it cannot stand alone. A foundational general liability insurance policy is imperative, serving as the primary layer of defense against claims.

This base coverage is non-negotiable and acts as the groundwork upon which additional umbrella policies can be built. As a business owner, ensuring that you have this underlying coverage in place is not just advisable; it’s essential for the comprehensive protection of your enterprise.

Commercial Umbrella Insurance Cost

One of the bottom lines for a small business is the commercial umbrella insurance policies’ cost. Off the top, this kind of liability insurance with 1 million dollars in coverage costs just a couple hundred dollars a year.

Remember commercial umbrella insurance doesn’t work by itself. It needs to piggyback on other liability insurance policies. For example, umbrella insurance cost depends on what you pay for other liability insurance.

According to HowMuch.net , there is a low-end and high-end involved. The high-end applies to the construction industry as well as doctors and lawyers. It will run you about $2500 a year and up. The low-end for this type of insurance costs as little as $200-$400 a year. That can include self-employed people who need low liability.

How to Choose the Right Umbrella Insurance for Small Business

For many businesses, it comes down to choosing the right indemnity company.

Here are five ways that you can choose a commercial umbrella policy that’s right for your business.

Decide on Your Risk

The amount of commercial umbrella insurance you’ll need depends on your industry. Computer stores and gun shops as well as anything in the construction and mining industries qualifies as high risk.

The higher the risk the more commercial umbrella insurance you’ll need.

Check Your Net Worth

Generally, you should have commercial umbrella insurance that equals your net worth.

Ask About Bundles

Ask any insurance company you are considering about bundling these policies. Remember you need an underlying policy to start with.

Check Self-Insured Retention

Make sure to ask the insurance company about this. It’s the amount you need to pay before the policy kicks in.

Make Sure You’re Getting An Umbrella Policy

Make sure to get what you’re paying for from the insurance company that draws up these policies.  Some call it an umbrella policy when it’s something else. Terms are different depending on the insurance company you use.

Risk Analysis for Determining Umbrella Insurance Needs

• Assessing Business Risk : To decide if your business requires umbrella insurance, conduct a thorough risk assessment. Consider factors like the nature of your business operations, the extent of public interaction, and the types of risks involved.
• Industry-Specific Risks : Certain industries inherently carry higher risks, making umbrella insurance more crucial. For example, construction companies, businesses that deal with heavy machinery, or those that frequently host public events may find umbrella insurance particularly beneficial.
• Financial Exposure Analysis : Analyze your business’s financial exposure in the event of a lawsuit. Businesses with substantial assets or those at risk of significant legal claims might find umbrella insurance indispensable for financial protection.

Strategies for Integrating Umbrella Insurance with Existing Policies

• Policy Coordination : Ensure that your umbrella insurance policy is properly aligned with your existing liability policies. It’s essential that the umbrella policy effectively extends the coverage where your primary policies end.
• Gap Identification : Regularly review your primary liability policies to identify any coverage gaps. Your umbrella insurance should effectively bridge these gaps, providing comprehensive protection.
• Customization and Review : Work with your insurance provider to tailor the umbrella policy to your specific business needs. Regularly review and update the policy to reflect changes in your business operations or risk profile.

How Umbrella Insurance Enhances Business Reputation and Trust

• Building Trust with Clients : Demonstrating that your business is well-protected with umbrella insurance can build trust with clients and stakeholders, showcasing your commitment to risk management.
• Enhancing Credibility in the Industry : Carrying umbrella insurance can enhance your business’s credibility, especially when dealing with large contracts or high-profile clients who may require such extended coverage.
• Risk Management Reputation : A business that invests in comprehensive insurance coverage, including an umbrella policy, is often viewed as responsible and prudent, positively impacting its reputation in the industry.

Limitations and Exclusions of Umbrella Insurance

• Exclusions Awareness : It’s crucial to understand what is not covered under your umbrella policy. Typical exclusions might include intentional criminal acts, contractual liabilities, and certain types of legal liabilities.
• Limitations in Coverage : Be aware of the limits of your umbrella policy and ensure that they align with your risk assessment and business needs. Consider higher limits if your business operates in a high-risk environment or has significant assets to protect.
• Regular Policy Audits : Conduct regular audits of your umbrella policy to ensure that it remains relevant and comprehensive. Stay informed about any changes in policy terms or exclusions.

The Cost-Benefit of Umbrella Insurance for Different Business Sizes

• Small Business Considerations : For small businesses, the cost of umbrella insurance should be weighed against the potential financial risks. Small businesses with limited assets might prioritize essential liability coverage before considering an umbrella policy.
• Medium to Large Businesses : Larger businesses or those with significant public exposure may find the cost of umbrella insurance a worthwhile investment, given the higher risks and potential for large legal claims.
• Industry-Specific Factors : Different industries carry varying levels of risk. Businesses in high-risk industries should consider the benefits of umbrella insurance more seriously, despite the costs.

Best Umbrella Insurance Providers for Small Businesses

Choosing the best insurance company is about more than just looking to save money. Here’s a list of some of the best in the industry.

1. Travelers

Lots of different options. Like auto liability coverage for businesses with employees who drive on the clock. Good for SMBs having a hard time getting a business umbrella policy.

2. Allstate

Medical expenses from bodily injury claims are covered. This indemnity company advertises the cheapest rates.  Coverage over existing auto insurance is available.

3. Liberty Mutual

Additional coverage is available for business use that expands existing auto insurance. Offers coverage from $1 million up to $100 million for an accident involving the policyholder’s own cars is covered.

Need to have one of their car insurance policies to get umbrella insurance. Aggregate limits are tied to the $5 million policy limits.

This is the best insurance company to deal with when you’re looking to bundle policies. It takes just a few minutes to get started with them.

Is it worth having an umbrella policy?

Yes, because they widen your safety net as a business. Otherwise, something like an injured customer can incur huge medical expenses. Having a commercial auto insurance policy covers traveling sales teams. Restaurants get important coverage for product liability. This insurance adds a layer of protection. Remember you are covered even when your employees rent a space to work in.

How do commercial umbrella limits work?

These policies act like a backstop protecting businesses from claims above other policy limits. The qualifying financial loss is the benchmark for this insurance to kick in.

Most kick in when you reach these thresholds. This type of insurance supplies an extra layer of protection for your small business. Commercial umbrella insurance works by giving you peace of mind for the unexpected.

Does umbrella insurance cover sole proprietorship?

A policy like commercial auto insurance for sole proprietors becomes important as they grow. Adding to a general liability insurance policy is a good idea too. Don’t forget to look into a bedrock, business owner’s policy.

It’s always a good idea to have this type of insurance to cover your business. It doesn’t matter whether you are a sole proprietor or a bigger enterprise. An umbrella policy can protect a sole proprietor from defamation and customer lawsuits. The right additions can replace damaged or lost business property, and even adds income replacement.

Sole proprietors should also include errors and omissions insurance as they grow. This can cover you for data breaches, missed deadlines, and incomplete work.

What is the difference between umbrella insurance and general liab ility insurance?

General liability insurance covers your business in a number of different scenarios. Your business is kept safe from claims for bodily and personal injury and others. Umbrella-type policies cover you from costly claims when you’ve reached the limits of the other ones.

Your situation will change when you start hiring employees. Then, you will be legally required to find workman’s compensation insurance coverage. This can help your company pay for work-related injuries and illnesses like ongoing care and medical bills.

Overall a policy like this covers defense costs if you find yourself in a lawsuit.

Comparison Between General Liability Insurance and Umbrella Insurance

For businesses trying to navigate the insurance world, understanding the distinction between General Liability Insurance and Umbrella Insurance is crucial. Below is a comparison table that provides a snapshot of the two, emphasizing their primary differences.

Image: Depositphotos

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• Business Insurance

Small Business Umbrella Insurance

Last Updated: February 16, 2024, 11:46 am by TRUiC Team

Small business umbrella insurance provides an additional layer of protection when other coverage limits have been met. When unexpected and expensive claims arise, an umbrella policy can absorb the remaining expenses and safeguard your business from financial strain.

Our guide will help you understand what small business umbrella insurance covers, as well as the best coverage options for your business.

Recommended: Next Insurance is dedicated to matching small businesses with the right umbrella policy at the best price.

What Is Small Business Umbrella Insurance?

When a claim reaches the limit on an existing insurance policy (such as general liability, commercial auto, or employer’s liability insurance), umbrella insurance comes in to provide an additional layer of liability coverage.

Umbrella insurance isn’t a standalone form of liability protection. Instead, it functions like a safety net, helping to ensure you and your business won’t be paying for excess liability out-of-pocket.

Commercial umbrella insurance can help cover costs like legal expenses, medical bills, damage to someone else’s property, and settlements.

For example, imagine your business is sued for $1.5 million, but your general liability policy only covers $1 million. Without umbrella insurance, you and your business are left to cover the remaining costs on your own. With umbrella insurance, the remaining $500,000 would be covered, allowing your business to continue without financial strain.

Find the Right Policy at the Best Rate

Using a fully online insurance provider saves time and money and offers the most accurate quotes.

What Is Covered by Small Business Umbrella Insurance?

Umbrella insurance covers expenses that exceed your current limit of protection. Some examples of what umbrella insurance can provide coverage for include:

• Third-party bodily injury
• Employee injury lawsuits
• Third-party property damage 
• Car accident liability 

It is not uncommon for claims — especially third-party bodily injury — to escalate and become more costly than initially anticipated. 

Example: If your business has a physical location and experiences foot traffic, there is a higher risk for third-party bodily injury. Having a business umbrella insurance policy will help protect you should a trip-and-fall or heavy equipment accident arise.

If your business has a company vehicle, having an umbrella insurance policy will provide important coverage. 

Example: An employee hits another car in a company vehicle, resulting in multiple vehicles crashing. The other drivers sue your business and are awarded $4 million. Your commercial auto insurance policy only covers $2 million. With an adequate umbrella policy, the remaining $2 million will be covered, and your business will be protected.

Umbrella insurance can also help with legal costs associated with personal and advertising injury claims. Personal and advertising injuries include slander, libel, invasion of privacy, and copyright claims. Even if your business is ultimately found not at fault, the legal fees for these claims can be significant. Commercial umbrella coverage will help to ensure legal defense costs do not put your business at financial risk. 

Recommended: Visit our Low-Cost Insurance Review to find the ideal balance of affordability and coverage.

What Isn’t Covered by Business Umbrella Insurance?

While commercial umbrella insurance can provide extended coverage for third-party property damage, it doesn’t cover damage done to your own business property. For example, if your business equipment is significantly damaged by a fire and the repair costs exceed the amount covered by your commercial property claim, umbrella insurance won’t help with the additional expenses. 

General Liability vs. Commercial Umbrella Insurance

General liability and umbrella coverage provide different forms of protection for your business. The most common type of business insurance , general liability insurance, covers the basic needs of most businesses. 

General liability insurance protects a business from claims occurring due to bodily injury, personal injury, or property damage (your property as well as others). Other risks typically covered by these policies include medical payments (resulting from accidents that happen on your premises), personal and advertising injuries, and legal defense. 

To learn more about general liability insurance, check out our General Liability Insurance guide.

Do I Need Umbrella Insurance for My Small Business?

Now that you know what umbrella insurance is, you can decide if your small business would benefit from the additional coverage. We recommend reviewing our guide to business insurance to understand the differences in types of coverage and providers of insurance, as well as discover solutions specific to your state or industry. 

If you’re unsure about whether or not your business needs commercial umbrella insurance, consider the different claims your business is likely to deal with. Would your existing policy be able to cover all costs associated with these claims? If your business would need to close the gap on requirements above $2 million, has high liability risks, or needs more liability protection across multiple policies, umbrella insurance is a good idea. 

Frequent customer interaction, working on someone else’s property, and working with heavy machinery or in warehouses are all examples of high-liability risk scenarios. If your business has a physical location with foot traffic, there is a considerable risk of bodily injury. Work performed on a third-party location is at risk for a variety of accidents, such as physical damage to property and vehicles. 

When employees work with heavy equipment, the risk for bodily injury, as well as property damage, increases. Contract requirements (typically with vendors and landlords) will occasionally require a commercial umbrella policy, as well. 

Knowing that these situations can become costly quickly, an umbrella insurance policy is a great way to bolster your coverage and strengthen your business's financial security.

Small Business Insurance FAQ

Is it worth having an umbrella policy.

Small businesses that work on other people’s properties, interact with clients in person, and work with heavy or dangerous equipment are all strong candidates for an Umbrella Insurance policy. If your business would need to close the gap on requirements above $2 million, has high liability risks, or needs more liability protection across multiple policies, umbrella insurance is a good idea.

Does my umbrella policy cover professional liability?

Typically, a business umbrella policy will cover professional liability insurance . Also known as errors and omissions (E&O) insurance, personal liability insurance is a policy that is meant to protect professionals in the workplace. 

Expert advice given to a client by you or your employees may not always lead to the desired result. This can leave you open to liabilities if the client is financially damaged and blames your company.

Is $1 million enough for an umbrella policy?

The amount of umbrella coverage you need will depend on the specifics of your business and the types of risks that are common in your business’s industry. Umbrella policies are typically offered in increments of $1 million and range from $1 million to $15 million.

Does umbrella Insurance cover directors and officers?

Directors and officers insurance (D&O insurance) covers the cost of legal claims made against a company’s directors and officers by other shareholders, employees, regulators, and other third parties. While an Umbrella policy may help with the legal costs associated with a relevant claim, D&O Insurance is its own type of business insurance. 

Businesses with a higher risk for D&O claims might consider purchasing a separate D&O policy.

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When looking for the best umbrella insurance, ask each company what’s covered — and what’s not.

You may need to boost the limits on your underlying policies before buying umbrella insurance.

Get quotes from at least three insurers before making a decision.

If you caused a major car accident and the other driver sued you to cover their medical costs, would you have enough liability insurance to pay the damages? In a financially disastrous situation like this one, an umbrella insurance policy could help.

Umbrella insurance offers extra liability coverage beyond what’s on the policies you already have, such as auto or homeowners insurance. But there can be big differences from one umbrella policy to the next, including coverage details and maximum limits. Here’s how to find the best umbrella insurance for you.

How to find the best umbrella insurance

When comparing umbrella insurance options, consider the following questions.

What’s covered?

A standard umbrella insurance policy will cover injuries or property damage you cause to others, as well as your legal defense for such claims. But the nitty-gritty details may vary between policies.

For example, if your idea of a fun vacation is renting a Jet Ski and hitting the water, know that some umbrella insurers won’t cover these kinds of personal watercraft. The best umbrella insurance coverage for you will include your hobbies and other activities.

Many umbrella policies offer coverage anywhere in the world, which could be useful if you often travel overseas. But some policies may pay only for lawsuits brought in the U.S. or Canada.

You might also see some insurers offering excess liability policies, which tend to be similar but not identical to umbrella policies. Excess liability policies essentially boost the limits on the coverage you already have, while umbrella policies may also offer extra types of coverage that aren’t available on your existing policies.

An independent insurance agent can help talk you through exactly what’s covered and what isn’t by each policy you’re considering.

Check out our umbrella insurance guide to learn more.

How much underlying coverage is required?

Insurers often require a minimum amount of liability insurance on your underlying policies before you can buy umbrella insurance.

For instance, to add umbrella coverage to your car insurance, your policy may need to have $250,000 of bodily injury liability coverage and $100,000 of property damage liability coverage. To add umbrella coverage to a homeowners policy, you often need $300,000 of liability insurance.

If your existing policies fall short of these limits, increasing your coverage amounts will likely raise your premiums.

» MORE: Liability car insurance: What it covers and how it works

Can you buy your policies from different companies?

Before they sell you an umbrella policy, many insurers require that you carry your auto, homeowners, condo or renters insurance with them, too. RLI and Auto-Owners Insurance are two companies that offer stand-alone umbrella insurance policies, meaning you could carry your auto or homeowners coverage with someone else.

How much coverage should you buy?

Another factor to look at when shopping is the maximum limit a company offers. Most umbrella policies stop at $5 million, but some go higher. Farmers , for instance, offers umbrella insurance up to $10 million in most states, while Chubb 's umbrella limits go up to $100 million.

When choosing your coverage limit, add up the value of your assets , such as savings, investments and real estate. These are things you could lose if someone files a lawsuit against you. Consider choosing an umbrella liability limit at least high enough to cover all your assets.

» MORE: How to calculate your net worth

Where to buy umbrella insurance

Many major carriers offer umbrella insurance. A good first step is to call your current auto and home insurer and request an umbrella insurance quote. Remember that you may have to increase the coverage limits on your underlying policies, which could raise your total cost.

If you have coverage with multiple companies, ask how much it would cost to move all your policies to that company, including the new umbrella. See if a bundling discount could reduce the total cost of your premiums.

Take this opportunity to shop around. Since you’re adding a new type of insurance and potentially raising the coverage limits on your existing policies, you may find that your current insurer no longer offers the best value.

We recommend getting quotes from at least three companies before making a decision. An independent agent or broker can shop around on your behalf and explain the coverage differences between policies.

» MORE: What is personal liability insurance for homeowners?

Umbrella insurance companies to consider

Below are some of the major umbrella insurance companies in the U.S., along with details about their coverage limits and eligibility requirements. Keep in mind that smaller regional insurers may also offer solid coverage at an affordable price. A local insurance agent can help you find them.

Coverage limits: $1 million to $5 million.

States available: Washington, D.C., and all states except Alaska, Massachusetts, Nevada and New York.

Eligibility requirements: You must have underlying policies with at least the following limits:

» MORE: Allstate home insurance review

States available: Washington, D.C., and all states except Hawaii.

Eligibility requirements: Requirements vary by state. Generally, your underlying policies must meet the following minimums:

» MORE: Amica home insurance review

Auto-Owners

Coverage limits: $1 million to $5 million, with additional limits potentially available.

States available: Alabama, Arizona, Arkansas, Colorado, Florida, Georgia, Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky, Michigan, Minnesota, Missouri, Nebraska, North Carolina, North Dakota, Ohio, Pennsylvania, South Carolina, South Dakota, Tennessee, Utah, Virginia and Wisconsin.

Eligibility requirements: Eligibility requirements differ depending on underlying policy, underlying carrier and where you live.

» MORE: Auto-Owners home insurance review

Coverage limits: $1 million to $100 million.

States available: All 50 states and Washington, D.C.

Eligibility requirements: Minimum limits for underlying policies vary by state.

Note: Chubb’s policy is technically an excess liability policy, not an umbrella policy.

» MORE: Chubb home insurance review

Coverage limits: $1 million to $10 million, except in Florida and California, where the maximum limit is $5 million.

States available: All states except Alaska, Delaware, Hawaii, Kentucky, Louisiana, Maine, Massachusetts, Mississippi, New Hampshire, North Carolina, Rhode Island, Vermont, Washington, D.C., and West Virginia.

Eligibility requirements: Farmers must insure at least one car with bodily injury liability limits of at least $250,000 per person and $500,000 per accident. You can insure your home with any company as long as it has at least $300,000 of liability coverage.

» MORE: Farmers home insurance review

Coverage limits: $500,000 to $10 million. (Limits above $2 million require additional eligibility requirements.)

States available: Washington, D.C., and all states except Alabama, California, Georgia, Montana, Nevada, New York, Texas and Washington. In the states where Geico doesn’t currently sell umbrella insurance, it can offer a policy through a partner carrier.

Eligibility requirements: You generally must have all vehicles insured with Geico and have the following minimum coverage limits on any relevant underlying policies:

» MORE: Geico home insurance review

Liberty Mutual

States available: All states except California, Georgia, Louisiana and New Jersey. Coverage limits and requirements vary by state.

Eligibility requirements: You generally must have a Liberty Mutual auto policy with at least the limits below, but requirements may vary by state. The other policy types are optional, but if you have any of them, the liability limit must be at least $100,000.

» MORE: Liberty Mutual home insurance review

States available: Washington, D.C., and all states except Alaska, Hawaii, Louisiana and Oklahoma.

Eligibility requirements: It depends on where you live. In most cases, all vehicles and your primary home must have Nationwide policies with at least the following limits:

» MORE: Nationwide home insurance review

Progressive

States available: All except Alaska, Hawaii, Wyoming and Washington, D.C.

Eligibility requirements: Vary by state.

» MORE: Progressive home insurance review

Coverage limits: $1 million to $5 million, with higher limits available through the USAA Insurance Agency.

Eligibility requirements: USAA policies are available only to veterans, active military and their families. The following limits apply to underlying policies:

» MORE: USAA home insurance review

On a similar note...

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Commercial Umbrella Insurance covers your business when your primary liability insurance limits are exceeded.

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Get a quote on Commercial Umbrella Insurance

If your business faces a costly accident or large judgement, you may exceed the limits of your primary liability policies. Commercial Umbrella Insurance can step in to provide additional coverage on top of your primary insurance and can be a cost-effective way to provide extra financial protection, especially if you operate in a high-risk industry.

What is Commercial Umbrella Insurance?

Commercial Umbrella Insurance helps to protect your business from the financial risk of large lawsuits against your company. It is a form of liability insurance that covers your business when your general liability, auto liability, or other coverages are not sufficient to pay for damages. Although large judgments are rare, they can be financially ruinous for your business, and Commercial Umbrella Insurance provides a relatively affordable way to reduce this risk.

Commercial Umbrella Insurance, also called excess liability insurance, supplements the liability coverage provided by your primary liability insurance policy. Most umbrella policies require that you have underlying insurance coverages in force, such as general liability insurance . Additionally, depending on the nature of your business, commercial auto liability and workers’ compensation insurance may also be required.

If your primary insurance limits are exceeded due to an accident or large judgment against your company, Commercial Umbrella Insurance would pay the remainder of the claim, up to the limit of coverage for the umbrella policy.

• Your general liability insurance has a limit of $1 million, and you carry $10 million of Umbrella Insurance. You face a $3 million lawsuit settlement, and your general liability insurance would pay $1 million, and your umbrella policy would pay $2 million. If you did not have Commercial Umbrella Insurance, your business would be responsible for paying the additional $2 million.

Commercial Umbrella Insurance is a cost-effective way to add to your insurance coverage, as the premiums on Umbrella Insurance are usually lower per additional dollar of coverage than the premiums on your primary policies. The reason for the lower premiums is that the umbrella policy does not pay out until your primary insurance policy is fully exhausted.

What does Commercial Umbrella Policy cover?

Your primary insurance policies provide coverage for certain types of liability, such as general liability , auto liability , or employers liability coverage . Commercial Umbrella Insurance covers the same types of liability and increases the coverage to a higher dollar amount. If your underlying coverage is ever exhausted due to a large settlement or multiple claims in a policy year, then the umbrella policy will cover the rest, up to the coverage limit for the umbrella policy. Additionally, Umbrella Insurance, in conjunction with your primary insurer, may cover parts or all of your legal defense fees in the event your company is sued.

Examples of liability risks that would be covered:

• A customer slips and falls on a wet floor, and he requires long-term medical care as well as compensation for not being able to work at his high-paying job.
• A delivery driver at your company accidentally runs a red light, causing a crash that injures multiple people and results in extensive property damage.
• A supplier is visiting your production site and is injured by a forklift driver who doesn’t see him.
• Your product has a manufacturing defect and seriously injures multiple customers.
• Your business operations cause a fire that spreads to a neighboring building, destroying their valuable inventory and equipment.

It’s important to note that typical umbrella policies do not cover professional liability. To cover this risk, you’d need to secure professional liability insurance .

Drop-down Coverage

Sometimes, a Commercial Umbrella Insurance policy may provide broader coverage or contain fewer exclusions than a primary policy. In the event that a loss is excluded or not covered by a primary policy, but where the loss is covered by the umbrella policy, the umbrella policy may provide coverage starting from the first dollar of the loss without relying upon the underlying primary policy. This is called “drop-down” coverage. Like primary insurance policies, this coverage may be subject to a deductible.

Most Commercial Umbrella Insurance contracts allow the insurer to participate in or take over the legal defense of any claim that may involve the insurance company. If the primary insurance company does not want to appeal in the event of a judgment that exceeds the coverage provided by your primary insurance, your Umbrella Insurance company may reserve the right to appeal the judgment.

Commercial Umbrella Insurance also covers legal fees that you may incur while defending or settling your lawsuit. Some policies include legal fees within the limits of coverage, while other policies do not include them.

• You have an umbrella policy with a coverage limit of $5 million that includes legal fees, and you have a judgment of $4.5 million and legal fees of $1 million. Your Commercial Umbrella Insurance policy will pay $5 million, and your business will be responsible for the additional $500,000. However, if your umbrella policy excludes legal fees from the limit of coverage, the policy will pay the judgment of $4.5 million, plus the legal fees of $1 million.

Multiple Claims in a Policy Year

If you have multiple claims in a policy year, the umbrella policy will pay up to the coverage limit for the year. For example, if your umbrella policy is $5 million, and you have two separate losses within the same policy year of $3 million and $4 million, the most that the umbrella policy will pay is $5 million.

What are the key exclusions to Commercial Umbrella Insurance?

Typical Commercial Umbrella Insurance policies will contain certain exclusions. Common exclusions include:

• Aircraft and watercraft
• Data breaches and hacking
• Product recalls

Umbrella policies also usually exclude punitive damages and personal liability claims. It is important to consult your policy or broker for details on policy exclusions. Many provisions of Commercial Umbrella Insurance are negotiable with the insurer on a case-by-case basis, and insurers will adjust their quoted premium based upon negotiated changes in the insurance contract.

Who needs Commercial Umbrella Insurance?

Commercial Umbrella insurance may be appropriate for:

• Businesses that own substantial assets that they wish to protect in the event of a lawsuit.
• Companies that have high-risk exposures, such as high net-worth clients, or where employee injuries are more likely should consider buying umbrella insurance.
• Retail storefront businesses that are open to the public should buy umbrella insurance. The more interactions with members of the public that your business has, the more likely you will have exposure to an incident that creates liability.
• Your company involves deliveries or requires a lot of driving. Car and truck crashes are a common source of liability claims.

How does Commercial Umbrella Insurance work?

In order to purchase Commercial Umbrella Insurance, your business will be required to purchase primary liability insurance policies such as general liability and auto liability . It is common for Umbrella Insurance companies to require coverage of $1 million in your primary liability insurance policies. If your business is found liable for a loss, your primary insurance will pay up to the coverage limits on the primary policy. If the judgment exceeds the liability limits, then your Commercial Umbrella Insurance will pay the rest of the loss up to the limit of the Umbrella Insurance coverage limit.

• Your business has general liability coverage of $1 million, and umbrella coverage of $5 million. A customer is injured on your property after tripping and falling while visiting your business, and he requires long-term medical care. The customer sues you and is awarded a judgment of $1.8 million. The general liability insurance would cover the first $1 million of the judgment, and the Umbrella Insurance would cover the remaining $800,000.
• Your business has auto insurance coverage with a combined single limit of $1 million, and umbrella coverage of $5 million. One of your delivery drivers is involved in a crash and is determined to be at fault. Multiple people are injured in the crash, and there is also extensive property damage. The sum of the damages and medical care for the injured total $1.4 million. The auto insurance covers the first $1 million of damages, and the Umbrella Insurance covers the remaining $400,000.
• Your business has general liability coverage of $1 million, and umbrella coverage of $5 million. Your business creates a new logo without realizing that another company in the same industry has already copyrighted a similar logo. The other company sues your company and wins $2 million in damages. The general liability coverage would cover the first $1 million of damages, and your Umbrella Insurance would cover the remaining $1 million.

How much Umbrella Insurance should I buy?

Commercial Umbrella Insurance is sold in increments of $1 million. The amount of Umbrella Insurance to buy is ultimately a business decision, as it is not possible to have total foresight into all possible risks that a business may face. However, to properly estimate the amount of Business Umbrella Insurance Policy to buy, you should consider the risk exposures that are common to your industry.

For example, if you operate a jewelry store that caters to high net worth clients, you may want to purchase coverage sufficient to cover a high net worth person slipping and falling. Your company might be liable for lost wages for the customer until they are able to return to work, in addition to any medical expenses necessary to treat the fall. If you consider the amount in damages from this type of risk, as well as other typical risks your business may face, you can estimate the appropriate amount of insurance to buy.

On the other hand, if your company is a wholesale company with most work conducted in a warehouse without heavy equipment or hazardous substances and not a lot of customer foot traffic, you may not need as much coverage as a retail store.

What do I need to apply for Commercial Umbrella Insurance?

In order to get an accurate quote for a Commercial Umbrella Insurance policy, you should provide the following information to the insurance company or your broker:

• Basic financial information and details about your business operations.
• Copies of your existing general liability, auto liability insurance, workers’ compensation, and any other liability insurance policies your company carries. These may include employment practices liability , liquor liability , or professional liability insurance .
• Information about any insurance losses or claims your business may have sustained in the past.
• A biography of the company’s officers and owners showing their titles and experience.
• Annual payroll information along with the number of full-time and part-time employees and contractors.

How much does Commercial Umbrella Insurance cost?

AdvisorSmith found the average cost of Commercial Umbrella Insurance for small businesses was  $883 per year . This cost survey included small businesses with under $500K in revenue in 27 industries, including retail, wholesale, manufacturing, consultants, contractors, and more. Premiums are based upon Commercial Umbrella Insurance coverage of $1 million.

Pricing for Commercial Umbrella Insurance is based upon the unique risks your business faces. Insurers consider factors such as:

• Business size
• Number of employees
• Claims history

Businesses with higher risks will have higher premiums than those deemed lower risk. For example, a construction company will probably have higher liability premiums than a software business. Premiums also rise as you increase the limits of insurance. Different insurance companies have different models for rating risks, so it is worth comparing pricing across different insurers.

In order to get an accurate estimate on pricing, it’s best to get an umbrella insurance quote from a reputable insurance agent or company. Below we’ve highlighted a few of our trusted partners who offer Commercial Umbrella Insurance:

If your business is exposed to a higher level of risks, be it from commercial general liability, auto liability, or employers liability, it may be wise to seek out additional coverage from a Commercial Umbrella Insurance policy. Commercial Umbrella Insurance can provide the extra protection you may need if you exceed your primary liability policy limits in a given year. Though the hope is not to get to that point, accidents and disasters are unpredictable, and having the right financial coverage in place can be an important lifeline for your business.

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Umbrella insurance could help protect you if you're sued — here are the best companies offering it

Umbrella insurance can protect your assets from lawsuits — these are the best companies to consider..

While never required by law, umbrella insurance can be incredibly valuable for individuals and business owners with a lot of assets or those with a significant risk of being sued. This can include households with dogs that might bite, swimming pools that could cause accidents and teenage drivers who pose higher risks.

Umbrella insurance provides additional coverage beyond your underlying insurance policies, like auto and homeowners insurance . It can protect you financially from bodily injury and property damage liability claims, as well as legal expenses beyond your usual insurance limits if you find yourself in a lawsuit.

For example, if you're involved in an auto accident that causes $500,000 worth of bodily injury damages, but your auto insurance policy has a $300,000 limit for these types of damages, an umbrella insurance policy would cover the remaining $200,000. Otherwise, your savings and future earnings could be used to cover the difference. 

Here, CNBC Select rounds up the best umbrella insurance providers based on availability, customer satisfaction and maximum limits. (See our methodology for more information on how we made this list.)

Best umbrella insurance  

• Best for customer satisfaction: Travelers  
• Best for bundling coverage: American Family  
• Best for high net worth families: Chubb  
• Best for military families: USAA   

Best for customer satisfaction  

Travelers umbrella insurance.

The best way to estimate your costs is to request a quote

Maximum coverage

$10 million

App available

Policy highlights.

A Travelers Umbrella Insurance policy comes with all of the protection you need, covering you at home and abroad. These umbrella policies include coverage for libel, slander, and defamation of character, and legal defense costs.

• High enough coverage options for most typical families
• High ratings for customer satisfaction
• Quotes and purchasing not available online

Who's this for?  Travelers can be a good fit for many families and business owners, with $1 to $10 million in umbrella insurance coverage available. It can also help provide coverage for liabilities that happen outside of the U.S.

Standout benefits:  Travelers is highly rated for its underlying policies, homeowners insurance and auto insurance, earning high rankings from J.D. Power for both types of insurance. Additionally, a below-average complaint index helps Travelers stand out.  

[ Jump to more details ]  

Best for bundling coverage

American family umbrella insurance.

Undisclosed

American Family has a wide variety of umbrella policies available, including personal coverage, commercial coverage and coverage for ranches and farms. It's also highly rated for auto and home insurance.

• Wide variety of coverage options available.
• Not available in all 50 states.

Who's this for?  American Family has strong options for auto and homeowners insurance in addition to umbrella insurance. American Family also offers a unique umbrella insurance policy for those with a farm or ranch.

Standout benefits:  American Family's umbrella insurance offers an opportunity to bundle coverage, making it a top choice for those who want simplicity.  

Best for high-net-worth families 

Chubb masterpiece excess liability insurance.

$100 million

Chubb's Excess Liability Insurance offers high coverage limits with a strong track record of customer service and satisfaction. It offers coverage worldwide and at home, and includes defense costs and legal counsel in lawsuits.

• High coverage limits
• Strong scores for customer satisfaction

Who's this for?  Chubb's excess liability insurance is a strong choice for those with lots of assets to protect. It stands out for those who employ staff in their homes, as Chubb provides liability coverage related to employment practices for residential staff.  

Standout benefits:  With up to $100 million in coverage available, Chubb is a top choice for those who may need more than the typical $10 million limit available through other umbrella insurance policies. It covers defense costs for most lawsuits and extends coverage worldwide.

Best for military families 

Usaa umbrella insurance.

While only available to military members, veterans and their families, USAA's Umbrella Insurance could be a good fit for those eligible who already have auto insurance policies through the company (carrying an auto policy is a requirement for this umbrella insurance). Its auto and homeowners insurance offerings are highly rated for customer claims satisfaction.

• Auto insurance through USAA is required, but other insurance companies may be used for other coverages.
• Only available to military members and their families

Who's this for? USAA umbrella insurance is only available to those who have served in the U.S. military and their families. However, those who are eligible may find that USAA's coverage stands out in terms of customer service.  

Standout benefits:  USAA is consistently one of our top picks for auto insurance , which anyone getting umbrella insurance will need to get through the company (except for in New York, Pennsylvania or Hawaii).

More on our top umbrella insurance companies 

Travelers has been in the insurance business for more than 165 years and continues to be highly rated for customer satisfaction and financial strength. It boasts an  A++ financial strength rating by AM Best.

Types of umbrella insurance available  

Personal and commercial 

NAIC complaint index (Average is 1)  

0.79, lower than expected 

Policy requirements  

Not disclosed 

[ Return to summary ]  

American Family  

American Family has been insuring families for 90 years, garnering a reputation for strong coverage and excellent customer service.  

Personal, commercial, farm and ranch 

Not specified  

Chubb has been named one of CNBC Select's top picks for high-net-worth families for homeowners insurance , flood insurance and jewelry insurance. That's for good reason — the company has consistently high marks for customer service and satisfaction. Chubb is also rated highly for financial strength by AM Best.

0.24, lower than expected 

USAA is consistently a top contender in the insurance space, despite only being available to those who are currently serving in the military, veterans and their families. Its homeowners insurance and auto insurance have both been highly rated for customer satisfaction by J.D. Power.  

1.79, higher than average 

Requires auto insurance policy, minimum limits on auto, homeowners and other types of insurance apply 

What does umbrella insurance cover?  

Umbrella insurance can add to your liability coverage, going beyond the limits of your auto insurance, homeowners insurance or other policies and help if you're facing a lawsuit for unintentional damages.  It can provide coverage for legal defense costs that you'd otherwise be on the hook for, including things like attorney fees.  

Who needs umbrella insurance?  

Anyone with assets to protect from legal rulings could benefit from umbrella insurance. Some situations could put you at higher risk of a lawsuit, including:  

• Owning a pool or trampoline  
• Frequently having guests or hosting parties  
• Volunteering or coaching children's sports  
• Having young drivers  
• Being a landlord 

If you find yourself in one of these positions, having umbrella insurance could provide some peace of mind.  

What is not covered by umbrella insurance?  

Since umbrella insurance is designed to cover damages to others, it won't cover your property or belongings. Umbrella insurance also won't cover intentional acts. 

Under a personal umbrella insurance policy, business damages or property won't be covered. Generally, this includes businesses operated out of your home.  

How much umbrella insurance do I need?

Generally, umbrella insurance coverage should equal your taxable assets, including things like investments, homes beyond your primary residence and other assets.  

 Bottom line  

Umbrella insurance can help cover costs beyond the liability limits of your auto, homeowners or other insurance to protect your assets if you're found responsible for damages to others. For the best umbrella insurance coverage, consider the underlying policy requirements, the quality of those underlying policies, the company's financial strength, and any specific features you may need.  

Money matters — so make the most of it. Get expert tips, strategies, news and everything else you need to maximize your money, right to your inbox.  Sign up here .

Why trust CNBC Select? 

At CNBC Select, our mission is to provide our readers with high-quality service journalism and comprehensive consumer advice so they can make informed decisions with their money. Every insurance review is based on rigorous reporting by our team of expert writers and editors with extensive knowledge of insurance products. To research the best umbrella insurance companies, we compiled over 100 data points on more than a dozen insurance companies offering umbrella insurance policies. While CNBC Select earns a commission from affiliate partners on many offers and links, we create all our content without input from our commercial team or any outside third parties, and we pride ourselves on our journalistic standards and ethics. See our methodology for more information on how we choose the best umbrella insurance companies. 

Our methodology  

To determine the best umbrella insurance companies, CNBC Select analyzed dozens of insurance companies offering the coverage and compared them based on customer service ratings, policy requirements, limits, types of umbrella insurance available, quote availability and state availability.  

While narrowing down the best umbrella insurance companies, we focused on minimum and maximum limits, and service ratings from JD Power's Overall Customer Satisfaction Index Rankings for homeowners insurance and auto insurance Overall Customer Satisfaction Index Rankings , which are often prerequisites for an umbrella insurance policy. We also considered complaint index data from the National Association of Insurance Commissioners and financial strength ratings from A.M. Best . Finally, we considered the nationwide availability of umbrella policies and any requirements for underlying policies.  

From there, we sorted our recommendations by the best overall and runner-up, best for military families and best for high net worth families.  

Note that the premiums and policy structures advertised for umbrella insurance companies are subject to fluctuate in accordance with the company's policies.  

Catch up on CNBC Select's in-depth coverage of credit cards , banking and money , and follow us on TikTok , Facebook , Instagram and Twitter to stay up to date.  

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Umbrella Insurance - How it Works & What it Covers

What is umbrella insurance.

Umbrella insurance is extra insurance that provides protection beyond existing limits and coverages of other policies. Umbrella insurance can provide coverage for injuries, property damage, certain lawsuits, and personal liability situations.

How does an umbrella insurance policy work?

An umbrella insurance policy helps protect your assets and your future in two important ways:

• Umbrella insurance may provide coverage when your homeowners , auto , and boat insurance policies limits are exhausted.
• Umbrella insurance provides coverage for claims that may be excluded by other liability policies including claims like false arrest, libel, slander, and liability coverage on rental units you own.

What does umbrella insurance cover?

Umbrella insurance provides coverage beyond the limits of your other insurance policies, or for claims that may not be covered by liability policies. Umbrella insurance generally provides liability coverage for:

• Damage to property
• Certain lawsuits
• Personal liability situations

Who needs umbrella insurance?

You're thinking, "I have auto and homeowners insurance that covers some of these situations." True! But umbrella insurance insures you above and beyond the limits of those policies and covers some situations not covered by the other types of policies. Call us at (866) 272-5192 to get an umbrella insurance quote today – the rates are less than you think!

Umbrella Policy Coverage Examples: Bodily injury liability covers the injuries sustained by another person because of the accident. Examples include the cost of medical bills and/or liability claims due to injuries caused by:

• A serious auto accident where you're at fault
• Harm caused to others by your dog*
• A guest in your home falls
• A neighbor's child falls while playing in your yard

Property damage liability covers the cost of damage or loss to another person's tangible property. Examples include the cost associated with damage to vehicles and other property due to an auto accident where you are at fault.

Owners of rental units help protect against liability that you may face as a landlord. Examples include the cost of liability claims due to:

• Someone tripping over a crack in the sidewalk of your rental property and suing you for damages
• Your tenant's dog* biting someone and you being held responsible for the injuries

Coverage is also provided if you're sued for:

• Slander: An injurious spoken statement
• Libel: An injurious written statement
• False arrest, detention, or imprisonment
• Malicious prosecution
• Shock/mental anguish

What is not covered by an umbrella policy?

An umbrella policy generally does not provide coverage for:

• your injuries or damage to your personal property
• a criminal or intentional action causing damage to someone else
• liability you assume under a contract

How can umbrella insurance help protect you?

Let's look at an example to help you better understand how an umbrella policy would work to protect you. Let's say you cause a car accident and the cost of the injuries you cause to others is $500,000. Let's also say that the bodily injury limits on your auto insurance are $300,000. Your auto policy will cover $300,000 of the injuries. But who will cover the remaining $200,000?

Your umbrella insurance policy will. It will cover the amount above the limit set in your auto insurance policy, up to the limit you choose for your umbrella policy.

Here's a breakdown of total cost, where your auto insurance limits might be exceeded, and how umbrella insurance can help protect you:

Isn't that the peace of mind you want? Get a free umbrella insurance quote by calling (866) 272-5192 .

How much does umbrella insurance cost?

The cost of an umbrella policy depends in part on how much coverage you choose to buy. There are other factors, like your location, the number and types of vehicles you own, if you own multiple houses, and other items, that may affect umbrella policy premiums. Our umbrella insurance agents can help you get a policy that fits your needs.

GEICO requires a minimum bodily injury limit of $300,000/$300,000 and a property damage limit of $100,000 or $250,000/$500,000 and a property damage limit of $100,000 on your auto policy to qualify for an umbrella policy. Homeowners/Renters Personal Liability coverage of $300,000 is also required. Contact us to receive a quote for increased auto insurance limits.

*Restrictions and exclusions apply - not all breeds or animals are covered. See policy contract or contact us for details.

Please Note:

The above is meant as general information and as general policy descriptions to help you understand the different types of coverages. These descriptions do not refer to any specific contract of insurance and they do not modify any definitions, exclusions or any other provision expressly stated in any contracts of insurance. Coverage is subject to policy terms, conditions, limitations, exclusions, underwriting review, and approval, and may not be available for all risks. Rates and discounts vary, are determined by many factors, and are subject to change. For complete details, including exclusions and limitations, please refer to the policy you will receive when you purchase the coverage. We encourage you to speak to your insurance representative and to read your policy contract to fully understand your coverages. Umbrella policies sold by GEICO may be underwritten by either GEICO General Insurance Company, Government Employees Insurance Company, or RLI Insurance Company (https://www.rlicorp.com), an unaffiliated partner. Umbrella insurance claims for policies underwritten by RLI Insurance Company are processed by RLI Insurance Company.

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Umbrella liability insurance explained

Umbrella insurance provides extra coverage that can be tacked onto an existing policy, adding further layers of security to those individuals and businesses that are more likely to be sued for damages to third-party property damage or accidental injury.

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What is umbrella liability insurance?

Benefits of umbrella insurance, what does an umbrella liability insurance policy cover, what does an umbrella liability insurance policy not cover, who needs an umbrella insurance policy, what is the right limit for you, what about your business, save up to 36% on business insurance from thimble..

For small business owners, liability coverage policies are the defense that stands between your business and the various risks it faces on an everyday basis. Should disaster strike and an accident occur, the policy takes on the brunt of the damages. But what happens if a lawsuit occurs and the damages exceed the coverage limits of your current insurance policies? Well, this is where an umbrella liability insurance policy would kick in, providing that much needed additional coverage.

You’ve probably heard about an umbrella policy; but do you know what it is, what it covers, and whether you need it? We’ll answer that and more in this quick guide.

Realistically, few lawsuits pursue damages according to the defendant’s specific insurance policy coverage limits. In fact, in most cases, the sum will far surpass what the existing policy would pay.

This is where an umbrella liability insurance policy would come in.

For an umbrella liability insurance policy to work, you must have a standard policy such as:

• Homeowners insurance
• Auto insurance
• Watercraft insurance

The added umbrella insurance provides supplementary coverage should your original policy not be sufficient in an incident—the equivalent of bringing along an umbrella while you’re already wearing a waterproof poncho.

In the case of a liability suit, the umbrella insurance policy wouldn’t kick in until after the original policy’s coverage limits had been exhausted. This is meant to protect your savings and various other assets, which may be subject to seizure in the case of a liability lawsuit.

Legal fees, bodily injury, and property damages are typical areas that receive more coverage after their limits are exhausted, but umbrella insurance can even offer coverage not encompassed by a basic policy, such as for:

• False arrest

One of the great aspects of an umbrella policy is that there’s very little risk or investment for a ton of potential rewards. Because you already need substantial coverage in order to purchase an umbrella policy, they tend to be rather affordable. According to Investopedia:

“Most $1 million policies cost $150 to $300 per year; you can expect to pay about $75 more per year for $2 million in coverage, and another $50 per year for every extra $1 million in coverage beyond that. Most insurance companies’ umbrella liability policies start at $1 million in coverage, with higher limits available.”

So, it’s quite affordable, especially for the amount of additional coverage you’re receiving—typically between $1 million and $5 million. But what exactly does an umbrella policy cover?

Umbrella liability coverage is meant to shield you from large, devastating liability lawsuits, particularly in cases where you or someone you’re responsible for caused some sort of damage to a third party. For instance, it typically covers:

• Bodily injury – While you’re out on a walk with your dog, it gets in a fight with the neighbor’s dog and then bites the neighbor when they try to intercede. This results in your neighbor going to the hospital. The neighbor could sue you to cover their hospital bills, wages lost, pain, and suffering.
• Personal injury – Your teenager throws a party while you’re away. One of their friends breaks an arm. The parents of the child could attempt to sue you.
• Property damage – You’re responsible for a 5-car pileup on the freeway, and your auto insurance policy doesn’t have the coverage to replace everyone’s vehicles and pay for their medical bills.
• Landlord liability – You rent your home out for the summer. Unfortunately, you forget about the loose handrail you’ve always meant to fix. The summer renter is unaware of the issue, leans on it, and falls through. You’re sued for property maintenance negligence and damages sustained from the fall.
• Legal defenses – A bodily injury trial stretches on for months, causing you to exceed your homeowners policy coverage limits. At this point, the umbrella liability coverage would kick in and cover the continued legal costs.

In many cases, an umbrella policy will also cover third-party damages resulting from libel, vandalism, slander, and privacy invasion.

Although there are several instances where an umbrella insurance policy could be a lifesaver, it’s important to note that it wouldn’t cover the following issues, losses, or damages:

• Business financial losses – Damages to your business’ property or losses tied to the operation of the business are typically not covered. And this applies even if you run a home-based business. (Protect your business with business liability insurance.)
• Contracts – Umbrella policies often don’t cover liability from an oral or written agreement you’ve entered. Be sure to read contracts to check whether you’re being held liable for any incidents.
• Personal property – While an umbrella policy may cover the property damages to a third party, that coverage generally won’t extend to damage you cause to your own property.
• Crimes or intentional actions – Most insurance coverage policies will be voided if you’re found guilty of criminal acts or intentionally commit a harmful act. In such cases, if you owe restitution, you’re on your own.

This question is tied to how much risk you face. The vast majority of people who purchase an umbrella policy will either have considerable assets and savings or engage in activities that significantly increase the likelihood of a lawsuit.

While umbrella insurance is not legally required, it’s highly suggested and popular with individuals who face increased risks, including those who:

• Own property
• Possess a sizable amount of savings or hold valuable assets
• Interact with high-risk variables in their profession (e.g., canines, swimming pools, construction)
• Involve themselves in enterprises that increase the probability of receiving a lawsuit, such as sports, volunteering, reviewing goods, and property management

So, when determining how much to get, you at least want a policy that covers your net worth—including assets, savings, income, and even future income.

Yes, opting for more coverage comes at a higher cost, but you can select the level of security that you need. Before making your selection, consider these three factors:

• Value of your assets – Pool all your resources and assess their monetary worth. If you have a considerable chunk of change, it’s probably worth the extra property and casualty protection.
• Possible income loss – Should you face a lawsuit, the expenses might not only drain your current earnings but could also affect your livelihood in the future. This could include a cut on any increased salary or raise. Therefore, think long-term and not just short-term about potential consequences.
• Potential risks – Does your occupation or do your hobbies come with more dangers than the average person? Are there any risks as a property owner, renter, or driver? If you’re more likely to experience an accident, you should prepare accordingly.

Note: If you purchase your umbrella insurance policy from the insurer you acquired an auto, home, or watercraft insurance from, then the premium may be less expensive. Additionally, the policyholder often must have a base insurance coverage of $250,000 to $300,000 for their homeowners policy and $150,000 to $250,000 for their auto policy.

In addition to protecting your personal assets, if you’re a small business owner or independent contractor you also want to make sure your business is protected. For each business, there are added risks in certain areas and no need for coverage in others. This, unfortunately, is what can make business insurance so tricky to figure out. However, almost every profession can benefit from general liability insurance or professional liability insurance .

Accidents are called just that for a reason. They don’t happen intentionally or come with a sign that says, “WARNING.” Even the most cautious and prepared can be on the receiving end of a personal or professional lawsuit. Protect yourself and your business with the right insurance policies. The life of your business depends on it.

• Investopedia. How Umbrella Insurance Works.  

Terri Hitchcock, JD Chief Insurance Officer, Thimble

Terri has 38 years of industry experience and knows a thing or two about insurance, so she reviewed and approved everything on this page.

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