Why Your Plan Flagged This
Your MoneyOnFIRE plan identified that your assets or income create meaningful liability exposure. An umbrella policy extends your liability coverage beyond your auto and homeowners limits, protecting everything you have built. It is one of the simplest steps in the checklist: coverage typically costs $150 to $300 per year per $1 million, requires no medical exam, and can usually be set up with a single phone call.
How Much Coverage to Get
Your MoneyOnFIRE action card shows your exposure level, calculated as the greater of your gross assets or twice your annual income. Your plan also recommends a specific coverage amount, rounded up to the nearest standard increment. Policies are available starting at $500K, then in $1M increments ($1M, $2M, $3M, etc.).
Typical Costs
- $1M policy: $150 to $300 per year
- $2M policy: $200 to $400 per year
- Each additional $1M: roughly $50 to $100 per year
Multi-policy discounts from your existing insurer often reduce these figures by 10 to 15 percent.
How to Get an Umbrella Policy
Most people can have a policy in place within a few days. Follow these steps in order.
Call your existing auto or home insurer
Start with the company that already carries your auto or homeowners policy. Bundling gives you a multi-policy discount, typically 10 to 15 percent off. Most major insurers (State Farm, GEICO, Allstate, USAA, etc.) offer umbrella policies.
Ask about minimum underlying liability limits
Before issuing an umbrella, your insurer will require minimum liability limits on your existing policies. Typical requirements are $300K/$500K on auto and $300K on homeowners. Ask what they require so you know what needs to change.
Increase your underlying limits if needed
If your current auto or homeowners liability limits are below the minimums, raise them first. This is usually a quick change on the same call and costs relatively little — often $50 to $150 per year. The umbrella multi-policy discount may offset part of this increase.
Get the umbrella policy
Once your underlying limits meet the requirements, the insurer can issue the umbrella on the same call. No medical exam, no home inspection. You will answer a few questions about your household (number of drivers, properties, boats, etc.) and choose your coverage amount.
What It Covers
Covered
- Auto accidents that exceed your auto policy limits
- Injuries on your property beyond your homeowners coverage
- Certain lawsuits: defamation, libel, slander
- Legal defense costs, even for claims that are dismissed
Not Covered
- Business or professional liability
- Intentional or criminal acts
- Your own injuries or property damage
- Workers' compensation claims
The Most Common Mistake
Not meeting underlying policy requirements
Your umbrella insurer requires minimum liability limits on your auto and homeowners policies before issuing the umbrella. If you buy the umbrella but your underlying limits are too low, there is a coverage gap between where your auto or home policy maxes out and where the umbrella kicks in. That gap comes out of your pocket. Always confirm your underlying limits meet the insurer's requirements at the time of purchase, and check again if you ever switch auto or home insurance carriers.
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