How Much Does an Umbrella Policy Cost in 2025?
Umbrella insurance is affordable, with most $1 million policies costing between $150 and $300 per year.
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Written bySarah Sharkey
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Sarah Sharkey is a personal finance and auto insurance writer who loves diving into the details to help readers make savvy life choices. She has written for numerous publications, including Business Insider, Yahoo! Finance, and Bankrate.
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Edited byLequita Westbrooks
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Lequita WestbrooksSenior Editor
Lequita Westbrooks is an insurance editor at Compare.com. Her writing and editing experiences span several industries, including insurance, personal finance, higher education, and more. She excels at explaining complex topics like auto insurance in simple, easy-to-understand language and is passionate about helping readers save money. Lequita graduated from the University of South Florida, where she earned her Bachelor’s degree in English.
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In This Article
Umbrella insurance helps protect your assets from unexpected liabilities. It typically costs a few hundred dollars per year for every $1 million in coverage. For example, someone with a home, two cars, and two drivers will typically pay less than $1 per day for coverage for a $1 million policy.[1]
Factors like your location, assets, coverage amounts, and risk profile can affect your actual costs. Here’s what you should know about umbrella policies and the associated costs.
Key Takeaways
Umbrella policies provide an extra layer of liability protection beyond your home insurance and auto coverage.
An umbrella policy typically costs between $150 and $300 per year for $1 million in coverage.
Your umbrella coverage should be equal to or greater than your net worth for the most protection.
How Umbrella Insurance Works
Umbrella insurance offers additional financial protection on top of your primary insurance, such as homeowners insurance or auto insurance. Think of it as a backup plan — it’s not your first line of defense. Your umbrella coverage comes into play once you exceed your existing insurance policy limits.[2]
For example, let’s say you cause a car accident that leads to $500,000 in damages, legal fees, and court settlements. If your car insurance policy has a $300,000 liability limit, you’d be on the hook for the remaining $200,000.
An umbrella policy allows you to cover the extra damages. Without it, you’d have to find another way to pay for the damages you caused.
Average Umbrella Policy Costs
Umbrella insurance costs can vary dramatically depending on the insurance company, your location, and your personal situation. In many cases, umbrella coverage is surprisingly affordable. In fact, it gets cheaper per $1 million as you increase your coverage.
The table below breaks down how much you can expect to pay for different levels of umbrella coverage, according to a recent report from ACE Private Risk Services.
Coverage Limit  | Average Monthly Premium |
|---|---|
| $1 million | $32 |
| $2 million | $40 |
| $5 million | $51 |
| $10 million | $83 |
The bottom line is that your exact costs will depend on your situation. But in many cases, a $1 million umbrella policy averages just over $30 per month. That’s less than what many people spend on some streaming subscriptions.
And coverage gets a bit cheaper as you add coverage, too. For example, a $5 million policy costs around $50 per month. That’s around $10 per month for each million dollars in coverage, while a $1 million policy costs nearly three times as much per million dollars.
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Factors That Affect Umbrella Policy Costs
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Like other types of insurance policies, umbrella coverage involves insurance companies considering many factors when determining your premiums. These include your underlying coverage, location, and risk profile.
Let’s explore each in more detail below.
The coverage you choose
The coverage amount you choose directly affects your premium. Generally, umbrella policies start at $1 million and increase in $1 million increments. Naturally, the more coverage you add, the higher your premium.
Keep in mind that the cost per million is relatively low compared to other insurance types.
Your overall risk profile
Insurers look at your risk profile to determine your likelihood of filing a liability claim. The higher your risk potential, the more you’ll pay for coverage.
Here are some common risks that can increase your umbrella insurance premiums:[3]
Rental properties
Swimming pools
Pets, such as dogs
Teenage drivers
Risky items, like trampolines, ATVs, and other recreational items
Dangerous activities, like skiing, hunting, or boating
For example, if you own multiple rental properties, have a swimming pool, or have dogs, your premiums might be higher than someone without those added risks.
Your location
Where you live can influence the cost of your umbrella policy. For example, if you live in a state with more friendly litigation laws, you might face higher premiums. Even neighboring ZIP codes can have different rates due to varying local risks, such as crime rates, weather events, and traffic accidents.
Other factors
Insurance companies may also consider your driving history, your past claims, and the types of assets you own. For example, if you filed a homeowners insurance claim or own multiple boats or high-value vehicles, your umbrella insurance premiums may be higher than someone with fewer claims.
What to Consider Before You Buy Umbrella Insurance
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Umbrella insurance provides valuable extra protection, but it isn’t a stand-alone policy. Most insurers require you to have certain coverage limits on your auto and homeowners policies first.[4]
For example, if you own a home and a vehicle, some insurers will expect you to have at least $250,000 in liability coverage on your auto insurance policy and $300,000 in liability insurance on your homeowners policy before you can purchase an umbrella policy.
If your current limits fall below these minimums, you might need to increase them before you qualify for umbrella coverage. In some cases, you may need to raise your auto liability limits above your state’s minimum requirements.
Keep in mind that your total insurance costs will increase as you raise your other coverage limits, so make sure you factor that in before trying to buy an umbrella policy.
How to Choose the Right Amount of Umbrella Coverage
If you decide to purchase an umbrella policy, you’ll have to determine how much coverage you need. As a general rule of thumb, consider purchasing a policy with coverage limits equal to your net worth. This ensures you’re protected if you’re ever held liable for damages beyond your existing coverage.
To estimate your net worth, add up your home equity, savings, investment accounts, and other assets. For example:
$150,000 in home equity
$100,000 in savings
$200,000 rental property
$550,000 in taxable investments
Your total net worth would be about $1 million, which means you’d need an umbrella policy with at least $1 million in coverage.
That said, some financial experts recommend getting a policy with more coverage than your net worth. Ultimately, the right amount of coverage depends on your personal risk exposure and assets.
Ways to Save on Umbrella Insurance
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Umbrella insurance offers valuable protection, but that doesn’t mean you have to overpay for it. Here are a few ways to save on your coverage costs:
Raise your deductible. Opting for higher deductibles on your underlying policies can often result in lower umbrella insurance premiums.
Ask for a discount. In some cases, you can find discounts to lower your costs. For example, some insurers offer a bundling discount if you purchase multiple types of policies through the same company.
Lower your liability risk. Insurance companies consider your risk exposure when pricing your umbrella policy. Consider eliminating high-risk factors, such as trampolines or hosting pool parties.
Shop around. Insurance rates can vary widely between insurers. Spend some time comparing quotes across insurance companies to find the most affordable umbrella premium for your situation.
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Umbrella Policy Cost FAQs
If you have questions about umbrella policy costs, the following answers may help.
How much does a $1 million umbrella policy cost?
On average, an umbrella policy costs $32 per month for $1 million in coverage. Keep in mind that your costs will vary depending on what you own, where you live, and other risk factors, such as your claim history and risk profile.
Is umbrella insurance worth it?
Yes, umbrella insurance can be worth it if you want extra protection beyond what your home and auto policies provide. It’s especially valuable if you have substantial assets to protect. But even if you don’t have significant assets, purchasing an umbrella policy could help protect your finances from potentially costly lawsuits.
Who really needs an umbrella policy?
Generally, you’ll need an umbrella policy if you have significant assets or increased liability risks. Homeowners, high earners, and landlords often need an umbrella policy. You might also benefit from one if you own items like trampolines, pools, guns, or certain dog breeds that could lead to injury or lawsuits.[5]
Can you get umbrella insurance without homeowners insurance?
Yes, you can purchase umbrella insurance without a home insurance policy. For example, renters can likely purchase an umbrella policy without a homeowners insurance policy. But, generally, homeowners must have an underlying home insurance policy before they can purchase an umbrella policy.
Do umbrella policy costs increase over time?
It’s possible. As with most insurance policies, umbrella policy costs can rise over time. The exact cost increases you’ll face depend on your situation and broader market factors.
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Sources
- NW Insurance Council. "What is an Umbrella Policy?."
- III. "What is an umbrella liability policy?."
- III. "Should I purchase an umbrella liability policy?."
- Department of Financial Services. "Gap and Umbrella Policies."
- Texas Department of Insurance. "Umbrella policy: What is it and when do you need one?."
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Sarah SharkeyAuto Insurance Writer
Sarah Sharkey is a personal finance and auto insurance writer who loves diving into the details to help readers make savvy life choices. She has written for numerous publications, including Business Insider, Yahoo! Finance, and Bankrate.
Lequita WestbrooksSenior Editor
Lequita Westbrooks is an insurance editor at Compare.com. Her writing and editing experiences span several industries, including insurance, personal finance, higher education, and more. She excels at explaining complex topics like auto insurance in simple, easy-to-understand language and is passionate about helping readers save money. Lequita graduated from the University of South Florida, where she earned her Bachelor’s degree in English.