Glossary

Umbrella policy

Extra liability insurance, usually sold in amounts of $1 million or more, that pays after your auto or home liability limits run out.

Also called: personal umbrella, umbrella insurance, excess liability insurance

An umbrella policy is a separate liability policy that sits on top of your auto and homeowners or renters coverage. When a claim against you exceeds your auto liability limits, the umbrella pays the rest, up to its own limit, typically $1 million or more. It can also cover some claims the underlying policies do not, such as certain libel or slander claims, after a self-insured retention.

The umbrella insurer requires you to keep minimum liability limits on every vehicle in your household, called the required underlying limits, such as 250/500/100. If your auto limits fall below that floor, you pay the gap yourself. Example: your auto policy has a $250,000 per-person limit and you carry a $1 million umbrella. A court awards $900,000 to someone you injured. Auto pays $250,000 and the umbrella pays $650,000 (hypothetical figures).

Umbrellas are usually inexpensive for the coverage they provide, because they pay only after large losses such as a nuclear verdict. They suit drivers with significant assets or future income to protect, and households with teenage drivers. They do not cover damage to your own car or your own injuries, and every household driver and vehicle generally must be listed on an underlying policy that meets the requirement. See umbrella insurance: liability protection above your auto policy.

Last reviewed October 4, 2026

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Related terms

Liability limits The most a liability policy will pay for injuries and property damage you cause, usually written as three numbers such as 100/300/100. Bodily injury liability The part of auto liability insurance that pays for injuries or deaths you cause to other people in a crash, plus your legal defense. Nuclear verdict A jury award far larger than the proven economic losses would suggest, most often defined as one over $10 million. Primary insurance The policy that must pay first when more than one could cover the same loss; other policies pay only after its limits are used up. Policy limit The most an insurer will pay for a covered loss under a coverage, stated per person, per accident or per vehicle on your declarations page.

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Related insurers

Private Client Select (AIG) AIG's former Private Client Group, spun into the independent agency Private Client Select in 2023; writes high-net-worth auto on AIG paper via brokers. Berkley One W. R. Berkley's personal lines insurer for high-net-worth households, selling auto, home and collector car coverage through select independent agents. Branch Insurance A Columbus, Ohio, insurtech that bundles home and auto insurance in minutes from just a name and address, via its own reciprocal exchange. Not in California. Chubb Global insurer whose U.S. auto business is built for high-net-worth households, with agreed-value cover, OEM parts and very high liability limits. Encova Insurance A Columbus, Ohio, mutual group formed by Motorists and BrickStreet that sells auto, home and business insurance through independent agents. PURE Insurance Member-owned high-net-worth insurer, part of Japan's Tokio Marine group, insuring luxury, everyday and collector cars for owners of $1 million-plus homes.

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How much car insurance do I need? A starting point for your limits and options, from liability to gap and rental, built from common rules of thumb and your state's minimums.