What Does an Umbrella Policy Cover?

Jun 12, 2020 2 min read

Imagine you’re a few short years away from retirement: Your home and your car are paid for, and your retirement accounts are the result of years of careful planning and saving. Suddenly, you get into an accident, and you’re responsible for the serious damages suffered by the passengers of the other car. Between medical bills and lost wages, you owe a large sum of money. Without exhausting the resources you have worked a lifetime to build, how do you cover your liability? 

Umbrella insurance may be the answer. Home and auto insurance are designed to cover property damage to the insured home and vehicle, as well as provide liability coverage — but they do have limits. Umbrella insurance supplements these policies with additional liability coverage. 

In many cases, umbrella insurance is written for amounts of $1 million or more, but owners generally find the coverage is quite affordable for the peace of mind it provides.

Here’s how umbrella insurance can protect you financially.

What Does Umbrella Insurance Cover?

Most insurance is written to protect one aspect of your life; umbrella insurance, also called excess liability insurance, works differently. Umbrella insurance can help protect multiple aspects of your financial well-being, for example by covering legal liability that’s not covered by traditional policies.

For example, if you’re in a car accident and your liability for damages exceed your auto liability limits, personal umbrella insurance can cover the extra expense. Likewise, umbrella insurance can pay the additional expenses beyond the liability limits of your homeowners insurance.

Umbrella liability coverage can be useful in many different situations, including these lesser-known scenarios.

Social Media

Children and teens have more access to screens and the internet than ever before. With so much of the world at their fingertips, there’s also potential for harm. Even though you’re doing your best to keep your children safe on social media, you could become the subject of a lawsuit if an online comment was thought to be damaging to another person’s reputation. Umbrella coverage can protect you in the event that damages exceed the limits of your underlying liability coverages.


We love our four-legged friends, but did you know they can also be a liability? Liability claims related to dog bites and other dog-related injuries amounted to $797 million in 2019. If your dog bites someone, you could be responsible for paying substantial damages. An umbrella policy can help cover damages (up to your policy’s limits).

Backyard BBQs

Any time you invite guests onto your property for a social event like a barbecue, a pool party or a garage sale, you could be at risk. Imagine someone stumbling on a crack in your driveway and injuring themselves. If they have large medical bills, you could be the one paying. Adding umbrella insurance to your home's coverage can protect you if someone is injured at your home.

Vacant Land

You’d think empty land wouldn’t be an issue. But did you know that, whether you’re actively using the land or not, you’re the one responsible if something happens on that property? If, for example, someone wanders onto your property (invited or not) and gets seriously injured, your umbrella policy can help cover damages up to your policy’s limits.

Why You Need an Umbrella Policy

People spend a lifetime building assets and accumulating wealth, whether through savings or retirement planning. Since umbrella insurance is designed to protect your assets from a lawsuit, it makes sense to purchase an umbrella policy when you have assets to protect. 


Curious to learn more? Contact your local Farm Bureau agent who will help you weigh your options so you’re prepare for any kind of rainy day. 

Want to learn more?

Contact a local FBFS agent or advisor for answers personalized to you.