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How an umbrella policy works

If an accident occurs, the liability portion of your policy covering the incident (auto, home or recreational vehicle) will be used first to cover any claims and any excess claim costs will be paid by your umbrella policy. So, if you have an auto policy with a $250,000 liability limit and a personal umbrella policy with $1,000,000 limit and are involved in an auto accident causing serious injury to another person resulting in a jury award of $1,000,000, your auto policy would pay the first $250,000 and then your umbrella policy would cover the remaining $750,000. 

Most insurance companies require a minimum level of liability coverage on your auto, home or other primary liability policies before you can be eligible to purchase umbrella policy protection.

how much protection is enough

There is no exact formula to determine exactly how much coverage is right for you. Deciding how much coverage you “need” is a personal decision that you must make. None of us can predict the future and what might happen, but you can assess what you have at stake and what unique factors of your life may cause increased exposure to risk.

Answering the following questions can help you determine what level of protection seems appropriate.

  • What is the value of the assets, i.e. your home, money in the bank, stocks, bonds, other assets, available funds from 401(k) or retirement plans?
  • What is the value of your future assets, i.e. future salary, inheritance, investment income, etc?
  • How much liability coverage do you have on your auto, home or boat policies?
  • If your job involves greater exposure to risks, do you need your own protection if you are sued personally because of a work related incident?
  • Do you participate in recreational activities that put you at greater risk?
  • Do you have teenage drivers in your household?

A Murphy Insurance trusted associate can help you estimate what you might need and provide you with a quote for your situation. Ultimately, you make the decision as to how much insurance is enough. 

eligibility, premium & discounts


To be eligible for personal umbrella insurance, your auto, home and other policies protecting you from liability must have protection limits at certain required amounts, which can vary between insurance companies. Also, there are other qualifications that must also be met.

it’s less than you might think

You may assume that an umbrella policy is extremely expensive; however, it often costs less than you might think. An average umbrella policy with a $1 million coverage limit can cost less than $400 a year. Generalizing is difficult because there are many factors that impact the final cost, so you really should speak with us to get a quote customized for your specific situation. We do everything possible to make it simple, and the feeling of knowing deep-down that you have even better protection is invaluable.

ways to save money

In many cases you may receive a discount if your car, home or boat policy is insured by the same company. Your trusted associate always strives to find you the best combination of price and protection.

NOTE: This information is only a general description of the available coverages and is not a statement of contract. All coverages are subject to all policy provisions and applicable endorsements. Some coverage may be subject to individual insureds meeting underwriting qualifications and to availability within a state. For further information contact a Murphy Insurance Agency Associate.