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December 17, 2021

Do you need personal umbrella insurance? 10 Reasons to obtain a policy today

Imagine it’s the first snowfall of the year and you’re heading home from a long day at work. The roads are very slippery, and visibility is far from ideal. By the time you see the brake lights up ahead, it’s too late…

Perhaps you’d been driving just a bit too fast. Or maybe it had been too many years since you’d had your tires replaced. Whatever the reason, you’re eventually found to be at fault for a 10-car pileup.

The worst part is—your auto insurance coverage isn’t nearly large enough to pay for the damages to the other 9 vehicles. Not only that, but your personal liability coverage won’t cover even a fraction of the medical bills.

It’s a nightmare scenario that many of us have imagined—and a few of us have experienced firsthand. So, what do you do?

Well, if you were wise enough to prepare for the worst—or fortunate enough to have a great personal insurance advisor on your side—all those claims would be covered under your umbrella policy.


Umbrella insurance is a type of personal liability insurance that can be a real lifesaver—or rather, life savings-saver—if you ever find yourself liable for a claim that’s more than what your regular liability insurance will cover. Essentially, it means that if you get sued for a large sum, your umbrella insurance will pick up where your homeowner’s, auto, or other personal property insurance leaves off.

You may think your current coverage is more than enough, but with the costs of medical expenses, extended lawsuits, and other legal fees being what they are, you may be surprised how quickly things can add up. By investing in an umbrella policy, you will gain peace of mind knowing your current assets—as well as any future earnings—are fully protected.


When it came to buying umbrella insurance, the old rule of thumb was that you should purchase a policy if the value of your combined assets—including your savings and checking accounts, retirement and college funds, home equity, and other personal investments—is greater than your total liability coverage.

In today’s lawsuit-happy world, though, that advice is no longer applicable. The truth is, since accidents that result in high costs can happen to anybody, obtaining an umbrella policy is recommended for everybody as well.

The good news is, since umbrella insurance typically extends to cover every member of the household, you only need one policy to protect your whole family. Even if your spouse or children don’t have auto or property insurance in their own names, they’ll stay “dry” under your big, family-sized umbrella.



While we recommend that most people at least take out a small umbrella policy, there are some situations where that recommendation is more of an insistence on our part. Here are the top ten reasons to invest in a quality umbrella insurance policy.

1. You have inexperienced drivers in your household

If you’ve ever handed over a pair of car keys to a teenage driver, then you’d know that no amount of insurance coverage is going to make you feel fully at ease. With that said, if your teenager does get into an accident and injures another driver or damages their vehicle, an umbrella policy can pay out above the liability limits of your auto policy, which will go a long way toward you eventually forgiving them.

2. You have significant savings or other assets

There’s a common saying that ‘those with the most have the most to lose.’ While that’s unequivocally true, the sad truth is that those in the most fortunate situations often have a big, red target painted on their backs. You can certainly afford the extra coverage, so don’t let the lawsuit-happy individuals out there ruin you financially.

3. You want to protect against potential losses of income

We won’t sugarcoat it—fear plays a big part in why many people choose to purchase umbrella policies, but that’s not necessarily a bad thing. If you’re living paycheck to paycheck, for example, it wouldn’t be a bad idea to ensure those paychecks keep coming in—no matter what happens.

4. You own property (especially investment property)

It should come as no surprise that the more property you own, the higher the chance something bad happens on your land. If you’re a social drinker and like to entertain friends and neighbors, that comes with extra risk too. If your guests leave the party and injure others while driving under the influence, you could be included in the negligence lawsuit as well.

5. You own a business

If you own a company or are on the board of directors, you are at risk if anyone sues the business for things like workplace accidents, harassment claims, or slander. While most companies have ample business insurance coverage, it’s a good idea to look into your particular coverage and limits and see if an additional umbrella policy would be good to have.

6. You own certain dog breeds

Even man’s best friend can have a bad day from time to time. Unfortunately, those unexpected mistakes can result in serious injuries and significant payouts. The fact that some insurance companies will deny you coverage if you own a Doberman, Rottweiler, Pit Bull, or dozens of other surprising breeds—is all the more reason to opt for an umbrella policy.

7. You coach youth sports

While volunteering to be a youth coach may seem innocent enough, should a foul ball shatter a car windshield in the parking lot or one of the kids on your team gets seriously injured during a game, you could be found at fault. Of course, some leagues do have liability insurance, but not all of them, so don’t let your community service ruin your financial security.


8. You are a landlord

If you’ve ever watched a reality courtroom show on TV, you’d know just how common it is for landlords to have to show up to court. Whether one of your tenants slips and falls on your icy walkway or the faulty wiring in your building leads to a fire that destroys thousands of dollars in personal property—an umbrella policy would ensure you’re fully protected.

9. You participate in activities that could easily injure others

Let’s face it—accidents can happen in any recreational activity. With that said, there are some sports and pastimes where the risks are much higher than others. For instance, boating and golf come with the additional risk of causing property damage or personal harm to others in your vicinity.

10. You own items that could lead to injury lawsuits

Backyard pools, trampolines, and other similar items are known in the insurance industry as “attractive nuisances,” meaning they may attract others in your neighborhood to want to use them—even without your permission. The risk of serious and long-term injury is so great with these items, some insurance companies will require you to install a fence to limit access or simply ban them altogether.


While you’re much less likely to ever need it (fingers crossed), compared to other forms of insurance, an umbrella policy can be a very cost-effective form of coverage. For about $150–$350 a year, you can add up to $1 million of extra coverage, with each additional million costing only $75–$150.

Considering it could save you millions one day, that’s not a bad trade-off.


No matter your net worth, umbrella insurance can serve as a vital failsafe to protect your savings, assets, and way of life. At Christensen Group, we’ll help identify your potential property and liability exposures, and present focused solutions you can depend on.

As an independent agency, we represent a multitude of insurance companies to ensure that you have the best insurance program that meets your needs. When accidents happen, we'll help pick up the pieces. Connect with a member of our team today to find your best solution.

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