How Does Umbrella Insurance Work With Car Insurance
An umbrella policy sits on top of your car insurance and takes over once your auto liability limits run out.
It pays after your car insurance limit is used up
Your car insurance has a liability limit, the most it will pay if you're found responsible for someone else's injuries or property damage. If a claim costs more than that limit, you're responsible for the rest. An umbrella policy picks up where your car insurance stops.
To buy umbrella coverage, your insurer usually requires you to carry a certain liability limit on your car insurance first. The umbrella doesn't replace that coverage. It adds a second layer behind it.
Your auto liability limit has to meet the umbrella insurer's requirement
Before an insurer will sell you an umbrella policy, they check what liability limit you carry on your car insurance. If it's below what they require, they'll usually ask you to raise it before the umbrella policy takes effect. This protects the insurer from having to pay out from the first dollar of a claim.
If you're thinking about umbrella coverage, call your current insurer and ask what liability limit they require to qualify. Raising your auto limit to meet that number is often the first step, and it may cost less than you'd expect since it's one part of one policy.
Some insurers only sell umbrella policies to customers who already hold both their home and auto coverage with them. Ask whether that applies to you, since it can affect whether you need to move a policy to get the umbrella coverage you want.
If you let your auto liability limit drop below what the umbrella policy requires, the umbrella coverage can lapse too. Check your renewal notices on both policies together, not just the umbrella one.
What counts as a claim the umbrella will cover
An umbrella policy generally only responds to liability claims, meaning claims where you're responsible for someone else's injury or damaged property. It doesn't pay for damage to your own car or your own injuries. Your car insurance, or your health insurance, handles that.
A lawsuit after a serious accident is the situation umbrella coverage is built for. If someone is badly hurt and sues you for more than your auto liability limit covers, the umbrella can pay the difference, up to its own limit.
Some umbrella policies also cover legal defense costs if you're sued, even if the claim is eventually found to be without merit. Ask your insurer whether defense costs come out of the umbrella's limit or are paid separately, since that detail varies by policy.
If you're not sure whether a specific situation would be covered, ask your insurer to walk through it before you need the coverage, not after.
Questions people ask about this
Do I need umbrella insurance if I already have good car insurance?
It depends on how much you have to protect and how high your current auto liability limit is. If a lawsuit could claim more than your car insurance would pay, an umbrella policy covers that gap. People with savings, a home, or other assets a court could require them to pay out of are the ones who usually consider it.
Does umbrella insurance cover a car accident I caused?
It can, but only for the liability portion, meaning what you owe to the other person for their injuries or damage. It steps in once your auto policy's liability limit is reached. It won't pay to repair or replace your own car.
How much does umbrella insurance cost on top of car insurance?
The cost depends on your insurer, your state, and how much auto and home coverage you already carry. Ask your insurer for a quote once you know what liability limit you'd need on your car insurance to qualify.
Will my car insurance company sell me an umbrella policy?
Many insurers offer umbrella policies, but not all of them, and some only sell one to customers who hold other policies with them too. Ask your current insurer directly, and if they don't offer it, ask what liability limit you'd need to qualify elsewhere.
Does an umbrella policy cover a car I rent or borrow?
This depends on the specific policy and how it defines who and what is covered. Ask your insurer directly whether rented or borrowed vehicles are included, since the answer varies by company.
See what it would take to raise your auto liability limit to where an umbrella policy could sit on top of it.
Pull out your current auto insurance declarations page and find your liability limit. Call your insurer, or the one you're considering, and ask what limit they require before they'll sell you an umbrella policy. Ask whether you need to bundle your home and auto coverage with them to qualify. If your limit is too low, ask what it would cost to raise it, since that number affects whether the umbrella coverage makes sense for you. Once you have both numbers, you can compare the full cost of carrying both policies together.
