Glossary

Umbrella policy

Extra liability coverage, typically sold in $1 million steps, that applies above your home and auto liability limits and may cover some claims they exclude.

Also called: personal umbrella policy, umbrella insurance, personal excess liability

An umbrella policy is a personal excess liability policy. It starts paying when the liability limit on your homeowners, auto or watercraft policy is used up, and limits are commonly offered in million-dollar steps. It can also respond to some claims the underlying policies leave out, such as certain personal injury offenses like libel, slander or false arrest, usually after a self-insured retention.

Insurers require you to keep minimum underlying limits, which they state in the application. Say the requirement is $300,000 of home liability, and a guest falls on your steps and wins a $900,000 judgment (hypothetical). The homeowners policy pays its $300,000, and the umbrella pays the remaining $600,000 up to its limit.

Know what it does not do. It does not pay for your own property damage or injuries, intentional acts, or most business activities, and any judgment above the combined limits is yours to pay. Cost depends on the limit, the number of drivers and vehicles, and exposures such as a pool or a dog. Treat the umbrella as protection for your assets, then use the umbrella insurance calculator to size it. The guide on umbrella insurance for homeowners: what it adds and where it stops covers when the coverage is worth buying.

Last reviewed October 10, 2026

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Related terms

Personal liability (Coverage E) Coverage that defends you and pays damages if you are legally responsible for injuring someone or damaging their property, at home or away from it. Medical payments to others (Coverage F) No-fault coverage that pays the medical bills of a guest hurt on your property, whether or not you were at fault, up to a small per-person limit. Bodily injury Physical harm to a person, including sickness, disease and resulting death, that triggers liability and medical payments coverage under a homeowners policy. Premises liability The legal duty of an owner or occupier to keep property reasonably safe, and the exposure when a visitor is hurt by a wet step, loose railing or icy walk. Property damage liability Coverage that pays when you are legally responsible for physically damaging someone else's tangible belongings or building, or for taking away their use.

Related guides

Bundling home and auto insurance: when it pays A bundle pays only if the combined price beats the cheapest separate policies at equal coverage. How multi-policy discounts work, and Texas's 2025 ban on tying. Dog bites, breed lists and homeowners liability Liability coverage usually pays when your dog bites someone, unless the insurer excluded the dog. How breed lists, bite history and state law work. Farm and ranch homes: when you need a farmowners policy A homeowners policy insures a house, not a working farm. How the HO-3 treats barns, animals and equipment, and when a farmowners policy is the better fit. Golf carts, boats and ATVs under a homeowners policy A standard HO-3 pays almost nothing for damage to golf carts, ATVs and boats, and its liability cover has speed, horsepower and location limits. Know the gaps. High-value home insurance: what changes above $1 million Above $1 million, standard homeowners limits, valuation rules and underwriting stop fitting. Here is what changes, what to ask for, and where state plans stop. Running a business from home: the insurance gaps A homeowners policy caps business property, excludes business liability and lost income, and skips work vehicles and staff. Where the gaps are and the fixes.

Related insurers

Berkley One W. R. Berkley's personal lines unit for affluent households, selling home, auto, valuables and excess liability through independent agents in 30 states and D.C. Cincinnati Insurance Ohio insurer founded in 1950 that sells home and auto only through independent agents in 45 states; about 60% of its personal lines premium is high-net-worth. Donegal Insurance Group Marietta, Pennsylvania insurer founded in 1889, sold by independent agents; it has been shrinking its personal lines book since 2024 to protect margins.

Related tools

How much liability and umbrella coverage do I need? Size your homeowners liability limit and an umbrella policy to the assets and income a lawsuit could reach, and to exposures like a pool, dog or teen driver.