How Much Does a $5 Million Umbrella Policy Cost? (2024)

FAQs

How Much Does a $5 Million Umbrella Policy Cost? ›

A $5 million umbrella policy costs around $375 to $525 per year, on average. Every policyholder's umbrella insurance premium will vary based on their personal risk factors, so individuals who own more cars or properties will be more expensive to insure, as will people who are particularly likely to be sued.

The cost of umbrella insurance can range from $200 per year on the low end to over $1,000 for a high limit, such as $10 million worth of umbrella liability coverage. How can you determine how much the umbrella policy will cost?

Key Takeaways. Umbrella insurance is the defensive part of your wealth-building plan. Anyone with a net worth of $500,000 or more should have umbrella insurance. Your umbrella policy limit should be equal to or greater than your net worth.

Umbrella insurance doesn't cover your own injuries or property damage — you'll need other types of coverage for that (such as health insurance or collision coverage on your auto insurance). Nor will it cover liability associated with your business unless you have a business umbrella policy rather than a personal one.

Value of your assets: An umbrella policy should cover at least your net worth—this is generally what you stand to lose in a lawsuit. Potential future income loss: Your future income could also be at risk in a big lawsuit.

A $3 million umbrella policy costs around $275 to $425 per year, on average. Every policyholder's umbrella insurance premium will vary based on their personal risk factors, so individuals who own more cars or properties will be more expensive to insure, as will people who are particularly likely to be sued.

Personal umbrella insurance typically doesn't cover other business-related liabilities such as a malpractice lawsuit, or losses in connection with your paid position as an officer or member of a governing board of a for-profit organization.

In fact, only about 20% of homeowners carry an umbrella policy ¹. Many that do are sold a $1 million policy though their assets and earnings greatly exceed that number.

As a general rule, it's recommended to have umbrella insurance coverage equal to your net worth. For example, if your net worth is $1 million, you should have at least $1 million in umbrella insurance coverage. Also, evaluate your insurance providers—they aren't all the same.

Never underestimate the peace of mind and potentially invaluable protection offered by umbrella insurance. However, if the liability insurance limits on your homeowners, renters, and motor vehicle policies offer enough coverage to protect your assets, then you don't need umbrella insurance.

Is state farm umbrella policy worth it? ›

What State Farm Umbrella Policies Cover. State Farm's umbrella policies are a good choice for customers with a high net worth who want extra coverage for property damage, injuries, and possible lawsuits that could result from various types of incidents. To be eligible, you will also need an auto policy from State Farm.

The cost of an umbrella liability policy depends on how much coverage you purchase, the state where you live (insurance rates vary by state) and the risk that insuring you presents to the insurance company. The more homes or cars you own, and the more household members your policy must cover, the more it will cost.

Umbrellas don't work well during high winds. They can blow away, turn inside-out, or just fail to protect very far below the rim. Since they require an arm to hold them, they don't work well when you need both hands, such as when carrying things.

With policies of $1 million of coverage starting at as little as $20 a month, financial experts agree that an umbrella policy offers the best value for the dollars you spend on insurance to protect your family and assets.

A $1 million umbrella policy costs around $150 to $300 per year, with the cost increasing by $50 and $75 for every additional million. As with any insurance policy, your exact price will depend on individual risk factors, including the number of people in your household and how many cars and properties you own.

A personal umbrella insurance policy allows you to select a liability limit that best protects your assets, up to $5 million. Umbrella insurance coverage may include the following: Personal injury coverage: For claims of libel, slander, defamation of character, and more.

With policies of $1 million of coverage starting at as little as $20 a month, financial experts agree that an umbrella policy offers the best value for the dollars you spend on insurance to protect your family and assets.

A good umbrella is affordable to anyone, Groux says: You really only have to pay about $30, which is the starting price of Rain or Shine umbrellas. For most people, that's an adjustment. We expect umbrellas to be, if not a couple of dollars, maybe $10 or $15.