Umbrella Insurance – Do I Need It?

Umbrella liability insurance is a type of liability insurance available to individuals and companies protecting them against claims above and beyond the amount covered by their primary policies. If your liability coverage isn’t enough to cover the damages of an accident or an incident on your property, a personal umbrella insurance policy kicks in when your other liability underlying limits have been reached. In other words, an umbrella policy can protect you when your automobile or homeowners liability insurance is not enough.

Keep in mind that an umbrella policy requires you to have a specific amount of underlying coverage on all other policies. In most states, you will need to have a homeowners policy with a minimum of $300,000 in personal liability coverage, plus an auto policy with limits of $250,000 or $500,000 for bodily injury coverage and $100,000 for property damage coverage and uninsured motorist coverage.

When an insured has a liability claim, they are covered up to their underlying policy limits, but any additional amount will be covered by the umbrella policy. The policy can protect future income as well as possibly cover legal fees. For example, if you have a car accident and your current auto policy has liability limits of $300,000 but the claim is $500,000, your personal assets would be at stake for $200,000 if you have no umbrella policy.

Or, if you are required to have $300,000 worth of liability on your homeowners or car insurance but only have $100,000, but you have a $2 million umbrella policy, you will still be liable for the “doughnut hole” of $200,000 before the umbrella will start paying. 

The required limits for underlying policies can vary by insurer, so it’s important that you speak with your insurance agent regarding the limits on your primary policies, and determine how they correlate with the umbrella coverage you are considering purchasing.

How is excess liability coverage different from umbrella insurance?

Although you can get excess liability coverage on an existing policy, the main difference between excess liability and an umbrella policy is that the umbrella extends to automobile or other broader protections.

For example, if you only have excess liability on your homeowners policy and then you have a car accident, the excess liability policy on your home will not cover the additional liability for your car accident.

Umbrella coverage can also extend to other vehicles, boats, personal injury or director/officer liability, depending on the policy. Also, umbrella policies tend to be more cost-effective, because you can spend less on coverage but receive greater insurance protection.

Do I need an umbrella policy?

If you are a high net worth individual — generally someone with $1 million or more in liquid financial assets — or are exposed to more than normal risk, it makes sense to look into this coverage.

  • Do you spend a lot of time driving?
  • Do you have a boat or RV?
  • Do you entertain frequently in your home?
  • Do you have a pool?
  • Pets?
  • Do you have a vacation home?
  • Do you have teenagers who have just started driving?
  • Do you own a small business?

Umbrella liability is fairly inexpensive and can protect you and your property from lawsuits. If you have assets to protect in the event of a lawsuit, it makes sense to have this type of policy. The policy coverage amounts usually start around $1 million and cost around $150 to $300 per year. They are available in million-dollar increments – each additional million usually costs marginally less. Cost may vary by location, credit history and driving records of the people in your household.

Have you evaluated your current policy recently?

You may already have an umbrella policy in place but as assets grow over the years, you may need to consider raising the limits to cover your current exposure. In general, your policy should be equal to or greater than your net worth.

Note: We are not licensed P&C insurance agents and can only give you a broad overview of the advantages and disadvantages. Please discuss this with your agent before making any changes to your existing policies. 

Senior Financial Adviser, Evensky & Katz/Foldes Financial Wealth Management

Roxanne Alexander is a senior financial adviser with Evensky & Katz/Foldes Financial handling client analysis on investments, insurance, annuities, college planning and developing investment policies. Prior to this, she was a senior vice president at Evensky & Katz working with both individual and institutional clients. She has a bachelor’s in accounting and business management from the University of the West Indies, she received an MBA at the University of Miami in finance and investments.


What Insurance Companies Are Doing During the COVID-19 Pandemic

Insurance companies have stepped up over the last year as Americans have waded through the COVID-19 pandemic, from providing partial COVID refunds by way of premium paybacks because we drove less to donations for communities that they serve.

While the paybacks have all but ended, insurance carriers are encouraging customers to get in touch if they need support. Here, we provide updates that insurers are providing as the pandemic appears to wane somewhat.

In this article

How are the largest insurers responding to coronavirus?

State Farm

State Farm’s COVID refund program was announced in May 2020 with an effort toward reducing auto rates across the country, totaling about $2.2 billion. Customers were to see rate cuts when they renewed their policy.

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“Combined with the dividend, this totals approximately $4.2 billion in savings for our auto customers,” State Farm stated in a press release. The company also confirmed it has altered its leave policy to ensure customers and employees are safe while providing financial security to employees affected.

If you’re having trouble making your insurance payments, the insurer recommends reaching out to your State Farm agent. You can also reach out on State Farm’s mobile app or by phone.

Update to State Farm’s pandemic policy

State Farm has found that driving has increased, and therefore there have been more claims. As a result, rates were adjusted beginning in January 2021. The timing and amount varies by state and when your renewal occurs.

“Even with these changes, auto rates remain below pre-COVID-19 levels. Our approach is to make incremental adjustments based on driving behaviors to help minimize the impact to customers,” State Farm reports.


Geico’s COVID refund program saw an update to the automatic Giveback Credit: “GEICO is providing a 15% credit to our auto and motorcycle policyholders as your policy comes up for renewal between April 8 and October 7, 2020. The credit will also apply to any new policies purchased during this period.”

Geico included a Giveback Credit Estimator on its website, but be aware that the full 15% credit for your policy term would have been applied at the time of renewal.

If you need to get in contact with Geico, it is recommending you reach out via the Geico app “as call wait times may be longer than usual.”

Update to Geico’s pandemic policy

Geico’s pause on cancellations ended May 2020, although Washington, D.C., has extended the pause on cancellation for its residents through June 20, 2021. 

“The Geico Giveback has also ended but we understand everyone’s financial situation may not be back to normal,” says Geico. “We’re dedicated to working with you, including flexible payment plans and/or special payment plans now that normal billing has resumed.”


Allstate’s COVID refund response entailed an automatic program, its Shelter-In-Place Payback. “On average, personal auto insurance customers will receive 15% money back based on their monthly premium in April and May” of 2020. This program was extended through June 2020.

Allstate also offered free identity protection and automatically covering “customers who use their personal vehicles to deliver food, medicine and other goods for a commercial purpose during the COVID-19 emergency period.”

Update to Allstate’s pandemic policy

Allstate has reported that it paid back $1 billion to customers through the Shelter-in-Place Payback. The carrier also says it has contributed millions of dollars in community relief and recovery efforts. 


Progressive’s COVID refunds were offered to customers as an automatic credit of 20% for April and May 2020.

Now that the grace period Progressive originally offered is over, the remaining protection is based on state billing guidelines for the pandemic. “We’re abiding by all state-specific requirements, which means we won’t cancel or non-renew any policy due to non-payment during the leniency period.”

Update to Progressive’s pandemic policy

Progressive reports that through the Apron Relief Program, it has committed over $1 billion to assist customers, employees, communities and agents during the pandemic.


USAA’s COVID refunds were announced in 2020: “Every member with an auto insurance policy in effect as of March 31, 2020, will receive a 20% credit on two months of premiums in the coming weeks.”

Since then, USAA has given auto insurance customers three dividends, the latest of which was in August 2020 for an additional $270 billion, bringing the total to $1.06 billion.

USAA’s website confirms its response to COVID-19:

  • USAA announced it plans to help mitigate the pandemic’s impacts for military families. “USAA is donating $30 million to two dozen nonprofit organizations to offer relief and support through the Military Family Relief Initiative.”
  • Expanded auto insurance coverage for members who use their personal vehicles to deliver food, medicine and other goods for commercial purposes.”

Update to USAA’s pandemic policy

USAA reports it has donated more than $47 million to support pandemic relief for military families and local communities through a series of programs specific to the different military branches.

Policy cancellations for non-payment have resumed, except in states where non-payment cancellations are prohibited. However, USAA encourages customers to contact the provider if you are behind on your premiums.

Liberty Mutual

Liberty Mutual’s COVID refunds were announced: “From March 23 through June 15, 2020, we automatically waived all late fees and continued insurance coverage for customers with overdue payments.” Depending on the state you live in, these terms may be extended. 

Liberty Mutual also announced steps to keep claims adjusters, employees, and customers safe during this time, limiting in-person contact to emergency scenarios only.

Update to Liberty Mutual’s pandemic policy

If you are facing hardship during the pandemic and have changed your driving patterns, you can contact Liberty Mutual to review coverage, deductible and other policy changes, including options to update mileage.


Farmers COVID refunds of 25% were given in personal auto premium credits from April 1 until June 2020. It provided “additional time to pay while still maintaining your coverage,” but cautioned that any deferred payments will accumulate if unpaid and become due “when normal billing operations resume.” 

Farmers has also implemented customer assistance for California wildfires, tropical storms and Hurricane Sally. 

Farmers is urging customers to file claims and manage policies digitally, either online or on the Farmers Mobile App. “If you are unable to make your payment on time as a result of COVID-19, please call 1-888-327-6335 to discuss your options.”

Update to Farmers’ pandemic policy

Signal app discounts will remain in effect, even if you are not driving during the pandemic, but you must keep the app activated. The 10-trip minimum has been waived.

How can you find help with your insurance bills if you’re impacted by COVID-19?

If you don’t see your insurer on this list, we recommend visiting your insurance company’s website to see if they have a COVID-19 update. This may be posted as a banner on the homepage of the site, or you may be able to find it by googling the insurance company’s name along with “pandemic.”

You can also reach out to your insurer directly by phone, but we have seen that many insurance companies are receiving a higher call volume than normal, so be prepared for what may be longer than normal wait times.