Umbrella Insurance in California - how Much is it?

Although northern and southern California may seem like different worlds, most residents have the same abundance of liability insurance policies available for them. However, sometimes, the maximum liability coverage for these policies isn’t high enough to cover a liability lawsuit’s costs. 

If you get sued for damages that exceed your primary insurance liability limit, everything you’ve worked hard for, including your car, home, savings, and success, will be gone. Fortunately, having the right personal umbrella insurance can help pay what you owe and protect your valuable assets from the unexpected.

Umbrella policies provide additional coverage over the liability limits of different policies. These include auto insurance, home insurance, personal injury insurance, landlord insurance, and renters insurance. An umbrella policy provides extra protection in $1 million increments up to $10 million, with $1 million of insurance liability coverage costing less than $1 per day.

To learn more about umbrella policies, here’s everything you need to know about umbrella insurance to help you get the protection you deserve.

What Is Umbrella Insurance?

The umbrella insurance policy is a type of personal liability insurance that usually acts as a ‘fail-safe’ for your savings and other valuable assets when someone files a liability claim against you that’s larger than what your homeowners’ insurance or auto insurance can cover.

Besides that, umbrella policies can provide funds for liability claims regarding a false spoken statement (slander), a false written statement (libel), and false imprisonment. It’s a cost-effective way of keeping your savings and other valuable assets safe from the unexpected.

It’s also worth noting that a personal umbrella insurance policy may be identical to excess liability insurance, where both provide higher liability limits on your existing liability coverage. The only difference between the two is that the umbrella policy provides even more additional coverage not included in your base insurance policies, like paying out for legal fees and damage if you get accused of slander or libel.

How Umbrella Insurance Works

Personal umbrella insurance is extra insurance that protects you beyond your existing liability limits and coverage of other insurance policies. Umbrella insurance provides coverage for a liability lawsuit, property damage, and injuries. If you’re looking for a better insight into how an umbrella policy works, here are some of the ways it can help when certain ‘covered’ events threaten your financial security: 

Here are different ways umbrella insurance can help you deal with specific events that are threatening your financial security:

  • Your Friend Gets Injured Inside Your Home

If your friend trips over a toy left by your kids, fall over and gets severely injured, she may not be able to work for a certain period. Your homeowners’ insurance should cover this, but when temporarily crippling a person, you may be faced with higher fees. Your liability limits may not be enough to cover your friend’s hospital bills and other compensations. Having umbrella insurance can help you pay for all the damages. 

  • You Accidentally Hit Someone With Your Car

If you were driving and accidentally injure a person that required serious medical attention, your auto insurance liability limits might not be enough to cover their hospital bills. Umbrella insurance goes over those limits and provides the appropriate funds you need. 

In essence, umbrella insurance provides the extra protection you need when your existing insurance policies don’t provide enough liability coverage or when claims against you exceed your liability limits. 

What Umbrella Policy Covers

Umbrella insurance covers expenses beyond the limits or coverage of your existing insurance policies and for claims that may not be covered by your liability insurance policies. Umbrella coverage typically includes injuries, property damage, lawsuits, and personal liability. These are the same with standard policies like the auto insurance policy, with the only difference is that umbrella coverage provides funds above the limits of those policies. 

Here’s a more in-depth insight into each umbrella coverage: 

Bodily Injury Liability 

Umbrella coverage covers the cost of most damages to another individual’s body that regular policies don’t, including medical bills or claims due to injuries, including: 

  • A serious car accident where you are the one at fault
  • A person getting injured because of your dog
  • A guest in your home falls from the balcony while in your property 
  • A neighbor’s child falls on a slide or monkey bars while playing within your property 

Although auto insurance and homeowners’ policy cover most of these, they don’t provide enough coverage for the severe injuries mentioned. 

Property Damage Liability 

The umbrella policy covers the cost of damage or loss to another individual’s tangible property. Examples for this include the cost associated with damages to cars or other properties caused by a vehicular accident where you are the one who’s at fault. It goes higher than the standard coverage that auto insurance policies provide. 

Landlord Insurance

If you own rental units, having umbrella coverage helps you ensure you have enough funds to face the numerous liabilities that you may encounter as a landlord. Here are examples that umbrella policy covers:

  • A passerby trips over while walking on the sidewalk of your property and sues you for damages
  • One of your tenant’s dog biting someone within the property can sue you 

Other umbrella coverage options include slander, libel, false arrest, detention, imprisonment, shock, mental anguish, malicious prosecution, and other personal liability situations. 

What is Not Covered by an Umbrella Policy?

An umbrella policy doesn’t cover personal injuries, damage to property, liability associated with your business. You’ll need to have health insurance for your injuries, auto insurance for property damage, and a commercial umbrella insurance policy for your company. 

Here are the other coverage options that the umbrella policy don’t include: 

Criminal or Intentional Actions 

A personal umbrella insurance policy will not protect you from the financial and legal consequences you may face when you do unlawful activities or harm someone else intentionally. For instance, the restitution you owe will not be funded by the umbrella policy if you are convicted of a crime or intentionally damaged a property. 

Damages to Your Personal Property 

Although personal umbrella insurance provides insurance coverage when you’re held responsible for damages to another person’s property, that coverage won’t apply if you cause any damage to your personal property regardless if it’s intentional or not. For instance, if your bathtub accidentally overflows and destroys your wooden floors, umbrella insurance coverage won’t provide funds. However, if it somehow destroys some of your neighbor’s property, the personal umbrella insurance policy you’re covered. 


The personal umbrella insurance policy coverage won’t protect you from liabilities arising from oral or written contracts you’ve signed. For instance, if you find yourself battling against someone you have hired to work on your house, umbrella insurance won’t provide protection when hired workers accidentally damage your home. 

Business Losses

Any loss associated with your business’s operation or damage to your commercial property isn’t part of a personal umbrella insurance policy’s coverage. The exclusion also applies if your ‘business’ is home-based. For instance, if you make a living by offering daycare services in your home, any injuries or damages resulting from that aren’t included in the coverage.  It also doesn’t cover other business-related liabilities, including malpractice lawsuits, losses associated with your position as an officer or board member of a for-profit organization. 

Who Needs Umbrella Insurance Policy

Many are hesitant to purchase umbrella insurance because the policy intends to provide additional coverage when you’re dealing with an expensive claim or lawsuit, but how likely is an average person going to face such a scenario? It’s best only to get umbrella insurance when you need it.

Here are the instances where having an umbrella policy is a must. 

  • Wealthy Individuals 

For wealthy people are a common target for liability lawsuits, and juries tend to provide a too high award when they believe defendants can provide the costs. Having umbrella insurance can help protect your wealth by giving extra liability coverage when facing these cases. 

  • You Own a Large Dog

When your dog gets too excited or deems someone dangerous, their first intentions may be to attack the third-party and having a large dog hurting a person can lead to expensive claims. That’s why it’s best to have umbrella insurance added to your coverage to ensure your dog and wallet’s protection. 

  • You Own Many Valuable Assets 

You may notice many insurance companies encouraging you to purchase an umbrella policy if your assets’ total value is more significant than your standard auto and homeowners’ limits. These include checking or savings accounts, retirement savings, college savings, investment accounts, and home equity. It helps you ensure you have enough coverage to protect your assets so you can’t lose them in lawsuits. 

  • You Own a Rental Unit

Owning a rental property comes with many challenges as you are housing several tenants and responsibilities. That’s because when your tenants do something to injure third-parties, such as having guests injured at your property or someone getting injured within the premises of your units can lead to expensive lawsuits. Having umbrella insurance ensures you have enough coverage.

Generally, if you think you have higher chances of being sued, the more you should consider buying umbrella insurance. However, anyone that’s risk-averse can sleep better at night knowing their finances, assets, and themselves are protected by the umbrella policy.

How Much Does Umbrella Insurance Policies Cost?

Like with any other insurance, umbrella policy costs depend on how the coverage you buy, the state you live at, and the risk that insuring you presents to an insurance company. Generally, the more houses or vehicles you own, and the more family members you have, your policy covers, the more expensive it gets.

However, umbrella insurance is relatively cheaper than other insurance despite the massive coverage it provides. According to the Insurance Information Institute, most $1 million umbrella policies can cost around as little as $50 to $300 per year. If you want to make it $2 million, you’ll have to pay at least $75 more per year and another $50 for every extra $1 million you add after that.

The minimum that most insurance companies offer umbrella insurance starts at $1 million in liability coverage up to $10 million. It’s cheaper than other policies because you’ll need to have pre-existing homeowners’ and auto insurance before an insurance company issues you an umbrella policy. You also need to have the maximum coverage that insurers offer under these standard policies before you can buy umbrella insurance.

Most individuals already have at least $100,000 in homeowners’ insurance coverage, auto insurance of $25,000 to $500,000, and personal liability of $500,000. If you don’t have this much liability coverage, your premium costs may go up, and it may leave you thinking twice about that additional $1 million from the umbrella policy.

How Much Umbrella Insurance Do You Need?

It’s smart to have adequate liability coverage to cover your net worth, but how much should you purchase? One quick method that can help calculate how much umbrella insurance you need is summing up all of your assets’ value, including your properties, savings, and investment accounts. After discovering the total, take a look at the existing liability insurance under your policies and buy enough umbrella insurance to cover the gaps.

According to the Insurance Information Institute, insurers typically offer umbrella insurance in $1 million increments, meaning the cheapest policy they have gives you $1 million in coverage, with the next cheapest one coming at $2 million. You can add up your $1 million into $10 or over if you’re at risk of facing lawsuits. It’s best to buy more of the policy if you’re an influential individual, such as a politician, singer, or actor, as most of them are susceptible to face accusations.

How to Buy Umbrella Insurance

Most major insurance companies umbrella insurance, but most require that you have all the standard policies, including vehicles, homeowners, landlord, or renters insurance, before being eligible for the policy. You need to have a minimum amount of liability insurance on each one before buying the policy. The ‘minimum’ varies per insurer.

For example, if you’re looking to add the policy to your auto insurance, your coverage may need to have $500,000 on bodily injury liabilities and $100,000 on property damage.

However, some companies offer a stand-alone version of his policy, while others have higher limits. For instance, although most start at $1 million, most policies stop at $5 million, while others can go up to $100 million.

Although the chances are slim that you’ll be facing a lawsuit for a sum higher than what your pre-existing liability policies cover. Still, even the most careful individual can end up in less than ideal situations, and if you ever find yourself in an expensive lawsuit, you may end up losing it all. That’s why it’s smart to invest and protect yourself with umbrella insurance, saving you from a potential financial loss and ensuring financial security.