An umbrella insurance policy – an “umbrella” covering homeowners and auto policies – protects you when other insurance policy coverage limits may not be enough.
Umbrella policies are offered in million-dollar increments. Use CarInsurance.com’s umbrella insurance policy calculator to help you figure out whether you need an umbrella insurance policy and for how much.
CarInsurance.com Insights
- A personal umbrella policy pays out when the underlying coverage has reached its limits.
- A $1 million umbrella insurance policy costs a few hundred dollars annually.
- An umbrella policy is ideal if you have many assets or need additional lawsuit protection.
How much umbrella insurance do I need?
To determine whether you need an umbrella insurance policy, input information about your financial assets and liabilities into the calculator below.
Remember, you must increase the liability limits of your homeowner and auto insurance policies before you qualify for an umbrella policy. Check with your insurance company to see what underlying limits are required.
Umbrella insurance calculator: Estimate your liability risk
To use this calculator, first enter information about your assets:
- Real estate value: Estimate how much your property is worth. Use your primary home and add the value of any additional real estate, such as vacation homes or investment properties. Consider your state’s exemption limit for real estate, which is the amount excluded from judgments such as bankruptcy.
- Personal property: Total the value of your personal property, such as vehicles, jewelry, fine art and other valuables.
- Investments/retirement accounts: Enter the total value of the brokerage accounts, 401(k)s, traditional and Roth IRAs and other investment accounts you own. Note that your employer-sponsored retirement plans are typically exempt, and non-qualified accounts like Roth IRAs may also be exempt, depending on your state.
- Bank accounts: Add up the balances of your bank accounts, such as checking, savings or money market accounts, and enter them here.
- Next, list your liabilities, which are debts you owe, such as:
- Mortgage: Enter your remaining mortgage balance.
- Auto loan balance: How much you owe on your vehicles.
- Credit card debt: Enter your total balance across all credit card accounts.
- Other loans: If you owe money on a student loan, personal loan, RV loan, or any other liability, enter it here.
You’ll also need to enter your liability coverage limit for homeowners insurance and bodily injury liability limit for auto insurance.
Risk factors that could increase your desired coverage limits include owning rental property, serving on the board of a nonprofit, owning certain breeds of pets or having a teen driver in the home.
Please note: This tool provides ballpark estimates based on general coverage benchmarks. Actual policy needs and rates will vary by insurer and individual circumstances.
How umbrella insurance protects your assets
Umbrella insurance helps protect you against high-cost legal claims or settlements resulting from accidents or property damage caused by you or your family members.
“Umbrella insurance is a type of insurance coverage that adds an additional layer of protection for insureds against exposure from claims that exceed the underlying coverages,” says attorney George Salinas of George Salinas Injury Lawyers, a law firm in San Antonio, Texas.
It extends an “umbrella” of coverage that extends the limits of your primary coverage, such as what you have through your homeowners or auto insurance. If your net worth exceeds the coverage offered by auto and homeowners policies, umbrella insurance can provide extra security, allowing you to keep more of your assets safe from potential lawsuits.
Who needs umbrella insurance?
An umbrella policy can benefit almost anyone. It provides an extra layer of protection for you and your assets and coverage when you reach the limits of your primary policies. It can also be ideal if you have many assets or need additional lawsuit protection.
“Umbrella insurance will be particularly useful for people who meet two conditions: They have a large net worth and strongly dislike extreme risk,” says Michal Zator, assistant professor of finance at the University of Notre Dame’s Mendoza College of Business.
“Umbrella insurance protects you against a catastrophic risk — some very unlikely event that can create a huge liability and turn your life upside down. For some people, even a very remote chance of such an event occurring, and their life savings being wiped out to cover the liability, is very stressful,” he said. “If you are this kind of person, umbrella insurance with a limit close to your net worth may be right for you.”
“Umbrella insurance is ideal for those with high net worth and low risk tolerance.”
Michal Zato – Assistant Professor
University of Notre Dame’s Mendoza College of Business
A personal umbrella policy may be worth investing in if you:
- Are a homeowner or rental property owner
- Are a public figure
- Coach sports
- Have a teen driver in your home
- Have significant savings
- Host parties in your home
- Own a boat, pool, trampoline or guns
- Own certain dog breeds
- Serve on a nonprofit board
Remember, a personal umbrella policy pays out when the underlying coverage has reached its limits. If you decide to purchase umbrella insurance, most insurers will have requirements on how much liability you already have before they sell you a policy.
When should you buy umbrella insurance?
You can purchase umbrella insurance at any time. However, if you are at risk of lawsuits or personal liability incidents, such as owning a trampoline or having weekend pool parties, consider investing in coverage sooner rather than later.
In general, umbrella insurance provides peace of mind and financial protection and can benefit anyone who wants additional coverage.
“I personally don’t believe there is ever a situation where umbrella insurance isn’t necessary,” said Meghan Kelly, wealth insurance advisor at Rockland Trust. “How much coverage you get depends on a number of factors,” she said. These include:
- Net worth and current annual income
- Risk tolerance
- How much you are willing to pay out of pocket
- Risk exposures such as whether you have young drivers in the household, rent property to others or host events frequently
What additional protections does umbrella insurance offer?
In addition to personal liability, umbrella insurance provides lawsuit protection against slander and libel; false arrest, detention or imprisonment; malicious prosecution; and shock/mental anguish.
No insurance policies will cover you for criminal or intentional actions that result in bodily injury or property damage.
How much does umbrella insurance cost?
The cost of umbrella insurance varies depending on the coverage amount and your personal factors. According to Progressive, a $1 million umbrella insurance policy costs a few hundred dollars a year – the company offers policies up to $5 million.
“The cost of umbrella coverage varies based on the size of the umbrella, but the price is minimal relative to the added security it provides and much lower than the cost of primary coverage,” Salinas says.
How to choose the proper umbrella coverage amount
Ideally, you’ll want enough umbrella coverage to protect your net worth, or the amount of your assets minus your liabilities.
You can exclude certain retirement accounts or some of the equity in your primary residence – talk to your insurance representative about the laws that apply to your state to see whether you qualify.
“Typically, I recommend at least $1 million for those with little to no assets,” Kelly said. “For those with net worth under $10 million, I generally recommend carrying a limit equal to their net worth.”
If your net worth is low, but your annual income is “significantly higher than the average jury member,” Kelly typically recommends higher limits.
Protect your future with confidence
Umbrella insurance provides liability protection beyond your car and home insurance policies. Choose a lower umbrella coverage amount if you have a lower net worth and fewer risk factors. A larger umbrella policy would make more sense if you have significant net worth and high risk.
FAQ: Umbrella insurance calculator
What factors should I consider when choosing an umbrella insurance limit?
The main factors to consider are your net worth and risk exposure. Aim for enough coverage to protect you from losing your assets in the event of a lawsuit or other event, and keep in mind that some circumstances place you at higher risk for loss.
Can umbrella insurance cover costs after an auto accident lawsuit?
Yes, umbrella insurance can protect you financially if you’re sued after a car accident. It can help cover costs you’re liable for, including if the other party sues you for lost wages or medical costs.
Does umbrella insurance kick in after my car insurance limits are exhausted?
Yes, umbrella coverage kicks in for additional protection after you’ve exhausted the limits of your auto insurance policy. For example, if your bodily injury limit is $250,000 but you’re liable for $1 million, the umbrella policy helps with the $750,000 difference.
Can umbrella insurance help protect my personal assets?
Absolutely. Umbrella insurance can protect your bank accounts, investments, even real estate and personal property. Without umbrella insurance, you could be forced to liquidate your assets to cover the costs that your auto or homeowners policy doesn’t.

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