Most people assume that nothing bad will ever happen to them. But when it comes to protecting yourself and your future,
“ignorance is bliss” simply doesn’t hold up. A single accident could wipe out an individual’s savings and assets. Many times,
it’s the result of settling or losing a lawsuit.
The personal injury litigation market is big business. The number of civil lawsuits filed in U.S. federal court has increased by 24.6% since 2015.4 The market is currently valued at more than $61 billion, and around 90% of civil lawsuits result in a settlement.2,3
It’s impossible to predict the amount that could be awarded to the plaintiff after an auto collision or accident on your property. But there is a solution. Purchasing a personal umbrella policy is an easy way for individuals or families to protect themselves from financial devastation after a tragedy.
WHO NEEDS UMBRELLA COVERAGE
Many people think umbrella policies are meant to protect the wealthy, but you don’t have to be wealthy to benefit from personal umbrella insurance. Anyone, regardless of how many assets are owned, should consider purchasing a personal umbrella policy.
Why? Because its primary purpose is to provide protection in the event of a lawsuit. In fact, even those without assets could have wages garnished to satisfy a legal judgment.1 Incidents that typically fall under an umbrella policy are much more commonplace than most might expect.
For instance, if homeowners insurance coverage were exhausted, umbrella coverage would help pay a neighbor’s medical bills, lost wages, or other damages if attacked by your dog. Or, if you caused a 5-car pile-up and the auto insurance or personal liability coverage wasn’t high enough to pay for the other drivers’ medical bills, then umbrella coverage would kick in to make up the difference up to the limits of the policy.
WHAT DOES A PERSONAL UMBRELLA COVER?
In worst-case scenarios, umbrella policies serve as an added layer of protection on top of other forms of insurance. A personal umbrella policy provides excess coverage above what is provided by auto insurance or a homeowners’ policy.
For example, let’s assume the driver who causes an auto accident has an auto insurance policy that pays $300,000 in medical expenses after an accident and has a $1 million umbrella. If that driver were sued for $900,000, the auto insurance would pay $300,000 of the damages and the umbrella policy would potentially cover the remaining $600,000. Also, umbrella policies will generally cover legal expenses on top of the policy amount.1
Individual policy language, terms, and conditions can vary. In addition to providing coverage for accidents that occur on your property or at-fault car accidents, an umbrella policy can also cover accidents occurring at a rental property or on a watercraft.
They protect dependent children responsible for an accident or injury, and they can cover personal injury lawsuits arising from libel, slander, character defamation, and malicious prosecution, among others.1
WHAT IS EXCLUDED FROM UMBRELLA COVERAGE?
While the image of an umbrella can make it seem like the coverage is a catch-all, it doesn’t cover everything. It is rare for a personal umbrella to lay on top of a personal aircraft policy.
Umbrella insurance also doesn’t protect against illicit activities like drag racing or other high-risk vehicle use. In addition, if a policyholder commits a crime, an umbrella policy won’t cover restitution payment.
Similarly, intentional acts like discrimination, sexual harassment, intentional property destruction or bodily injury, and other willful or malicious acts are excluded from coverage.1
HOW MUCH DOES UMBRELLA COVERAGE COST?
Personal umbrella policies usually provide $1–$5 million of additional coverage, but it’s possible to obtain higher limits for those that have more assets or elevated risk.
Rating is based on exposures, including driving history, driver age, and number of properties, automobiles, boats, or other vehicles per household. As the level of exposure rises, so does the price. For those with average risk, the cost is reasonable.
Since 2023, personal umbrella pricing has continued to trend upward, with rates increasing year over year through 2025 as underwriting standards tighten. While umbrella coverage remains relatively affordable given the protection it provides, averaging approximately $383 annually for $1 million in coverage and $608 for $5 million, placement of higher limits has become more challenging.7
Some carriers have exited the market or reduced maximum limits, driven by the increasingly litigious nature of U.S. personal umbrella exposures. As a result, insurers are requiring higher underlying auto limits, imposing surcharges for policies with youthful or elderly drivers, and limiting excess capacity.
Admitted carriers may still offer higher limits, but typically only when bundled with primary home, auto, watercraft, or collections policies.
While prices are still affordable overall, brokers are seeing some tightening around who is considered a preferred operator, and fewer carriers are offering this type of insurance. Youthful and elderly drivers are challenging to place as well as those with prior claim history. The likelihood that a $500K/$500K/$100K split limit will be required for auto is also much higher than
it was a few years ago. In addition, underwriting is scrutinizing higher-profile individuals more closely. Auto and watercraft accidents remain the primary claim drivers for umbrella coverage, and any account with an open liability claim will continue to be very challenging to place.
HOW CAN AGENTS HELP IN TODAY’S MARKETPLACE?
Agents can help protect clients by making sure they understand the importance of maintaining required underlying limits to avoid a coverage gap. The amount of underlying insurance needed will vary from carrier to carrier, but typically includes minimum limits of:
- $250,000 in auto insurance bodily injury coverage per individual and $500,000 per accident
- $300,000 in homeowners insurance personal liability coverage
- $100,000 in auto insurance property damage coverage per accident
It’s vital that coverage submissions be accurate. When requesting an umbrella quote for a higher-profile individual or an account with greater exposure, more detailed information about underlying limits, driving history, occupancy for all properties, and other factors will be needed.
Most umbrellas won’t be quoted unless the submission is complete. When it comes to renewals, agents should start the process 45–60 days out because there are only a handful of non-admitted umbrella carriers in the marketplace writing on a mono-line basis.
BOTTOM LINE
You may not think you’re at a high risk of being sued, but most people don’t see it coming until it’s too late. Even for those that are very careful, the safest course of action is to carry personal umbrella insurance.1 It serves as a valuable layer of added protection in today’s litigious society.
CRC’s seasoned producers have the industry expertise, product knowledge, and wholesale market access to provide individuals and families with a variety of prices, terms, and conditions. Contact your local CRC Specialty producer to learn how we can help protect your clients in the event of an unforeseen accident or injury.
CONTRIBUTORS
+ Claire Willis is the National Personal Lines Practice Leader located in CRC’s Jackson, MS office.
+ Eric Crouse, CPCU, is an Underwriter with CRC’s Personal Lines Team in Altamonte Springs, FL.
END NOTES
1. What is Umbrella Insurance, and How Does it Work?, NerdWallet, January 5, 2026. https://www.nerdwallet.com/insurance/homeowners/learn/umbrella-insurance
2. Personal Injury Lawyers and Attorneys in the US - Market Size, IBISWorld, July 2026. https://www.ibisworld.com/united-states/market-size/personal-injury-lawyers-attorneys/4812/
3. Personal Injury Settlement Amount Examples, Forbes, August 6, 2024. https://www.forbes.com/advisor/legal/personal-injury/personal-injury-settlement-amounts/
4. Judicial Caseload Indicators, United States Courts, 2024. https://www.uscourts.gov/data-news/reports/statistical-reports/federal-judicial-caseload-statistics/judicial-caseload-indicators-federal-judicial-caseload-statistics-2024
5. 2025 Personal Injury Law Statistics: What the Data Reveals, Clio, October 22, 2025. https://www.clio.com/blog/personal-injury-law-statistics/
6. Typical Car Accident Settlement Amounts, Forbes, April 29, 2025. https://www.forbes.com/advisor/legal/auto-accident/typical-car-settlement-amounts/
7. What Is Umbrella Insurance and How Much Does Umbrella Coverage Cost?, Bankrate, June 3, 2025. https://www.bankrate.com/insurance/homeowners-insurance/umbrella-insurance/