The 6 Best Umbrella Insurance Options of 2020

Protect yourself and your business with an extra liability policy

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If you're unfamiliar with umbrella insurance, you may have several questions; what is it? What does it cover? Do I need it? To start, umbrella insurance is an extra layer of protection added to your other insurance policies (or in some cases, you can purchase a stand-alone policy). Umbrella insurance offers further protection against property damage, incidents/injuries involving non-household members that occur at your home, libel/slander, malicious prosecution, landlord liability and business liability. 

If you have valuable assets you want to protect against liability claims in court, an umbrella policy adds extra protection. If you have a large net worth — $1 million or more — you may want to consider purchasing an umbrella policy. Most basic home and auto liability policies do not offer more than $500,000 in liability coverage, but umbrella coverage usually begins at a limit of $1 million and can go up to $10 million or more. Likewise, personal injury liability lawsuits can award settlements of $1 million or more.

The Insurance Information Institute estimates a $1 million umbrella policy costs between $150 and $400 per year. To purchase an umbrella policy, you must meet coverage requirements. In other words, you can’t have the bare minimum of liability limits on an underlying policy (home or auto) and expect to purchase additional umbrella coverage.

There are two types of umbrella policies you can purchase; that which is added to an existing policy (some insurers only sell this kind of umbrella coverage) or a stand-alone umbrella policy. Read on for the best of both options. 

The 6 Best Umbrella Insurance Options of 2020

  • Liberty Mutual: Best for Personal and Business Coverage
  • Chubb: Best for Mid-Size to Large Business Owners
  • Travelers: Best for Small Business Owners
  • USAA: Best for Members of the Armed Services
  • Allstate: Best for Recreational Vehicles/Watercraft
  • GEICO: Best for Vacation Rentals

Best for Personal and Business Coverage: Liberty Mutual

Liberty Mutual
Courtesy of Liberty Mutual

Liberty Mutual offers both personal umbrella and business umbrella policies. If you need coverage for yourself and your business, the sound company — with excellent financial strength ratings — is a great option. Liberty Mutual’s personal umbrella policy offers liability limits of $1 million or higher for your auto, home or recreational vehicle policy. It includes payments for defense costs, attorney's fees, and other legal expenses. It also includes coverage for you and residents of your household. The business umbrella policy offers a limit of up to $35 million over your existing liability coverage and up to $25 million over another carrier’s primary liability policies.

Best for Mid-Size to Large Business Owners: Chubb

Courtesy of Chubb

Chubb is a highly reputable business insurer that also offers personal insurance products. Founded in1895, the company offers insurance in the U.S and 120 other countries. Chubb has an “A++” Superior financial strength rating from A.M. Best. The umbrella and excess casualty policy from Chubb ​is geared toward smaller and mid-size companies but also offers coverage for larger global and national companies. No matter the size of your business, Chubb has an umbrella policy that will fit. Specialty umbrella policies are also available for the energy and construction industry. Policy limits are $50 million for large and mid-size businesses. Both the energy and construction industry umbrella policies offer $25 million in excess liability coverage with higher limits available.

Best for Small Business Owners: Travelers

Courtesy of Travelers

Travelers Insurance is the second-largest property and casualty insurer in the U.S. and all Travelers Companies are rated “A” or higher by A.M. Best in financial stability. Travelers Insurance offers both a personal and business umbrella insurance policy with limits that begin at $1 million and go up to $10 million (depending on eligibility requirements). Coverage is worldwide and applies to the following: watercraft/aircraft liability, coverage for professional employees, newly acquired organizations, defense costs and liquor legal liability.

Best for Members of the Armed Services: USAA

Courtesy of USAA

USAA (United Services Automobile Association) has been providing insurance to members of the U.S. military and their families since the 1920s. USAA has an “A++” Superior financial strength rating and has won numerous customer service awards from insurance rating organizations such as J.D. Power & Associates. Its personal umbrella insurance is offered in policy term limits of one year and has a limit of up to $1 million. To be eligible for a personal umbrella insurance policy, you must have an existing USAA home or auto policy and be a member of the U.S. military or a family member of someone who is. Coverage is worldwide and applies to all members of your household. 

Best for Recreational Vehicles/Watercraft: Allstate

Courtesy of Allstate

Allstate is one of the biggest personal insurers in the U.S. and has been offering insurance coverage since 1931. It is a financially sound company with an “A+” Superior A.M. Best financial strength rating. The personal umbrella policy from Allstate adds additional liability to your underlying policies for primary and secondary residences, residential rental property, automobiles, motor homes, recreational vehicles, watercraft, personal watercraft, and motorcycles. Allstate offers personal umbrella policy limits from $1 million to $5 million. Your excess liability coverage is worldwide and the policy will also pay for lost wages if you must appear in court.

Best for Vacation Rentals: GEICO

 Courtesy of GEICO

At its inception, GEICO (the Government Employees Insurance Company) offered insurance only to government employees. Of course, GEICO insurance is now available to everyone and it is one of few insurers that cover vacation rentals under its umbrella policy. GEICO is a subsidiary company of Berkshire Hathaway and has an “A++” Superior financial strength rating from A.M. Best. The company offers an additional $1 million in umbrella coverage to policyholders who have underlying auto or homeowners policies. For owners of vacation rentals, the policy covers liability claims resulting from personal injury and incidents involving a tenant (say if a tenant's dog bit someone). 

What is Umbrella Insurance?

Umbrella insurance provides protection above and beyond your regular policy. It can be a separate policy or an addition to your current policy and covers property damage, injuries that occur on the property, libel, and certain lawsuits involving business and landlord liabilities. 

It can’t be purchased in lieu of your regular insurance policy, and you usually need to have more than the minimum insurance coverage to qualify for an umbrella policy. 

How Does Umbrella Insurance Work?

Umbrella insurance covers claims in excess of your current policy, such as a homeowners or watercraft policy. It covers the policyholder and other family members at the same residence. It can be used to protect you from being sued above and beyond your policy limits. 

Who Needs Umbrella Insurance?

Umbrella insurance is typically needed by:

  • High net-worth individuals: More than $1 million
  • Real estate investors
  • Those with valuable assets such as exotic sports cars 
  • People who own dogs or dangerous pets
  • Boat owners
  • Youth sports coaches
  • People who often host events at their home

How Much Does Umbrella Insurance Cost?

Stand-alone policies typically are more expensive than adding coverage with your primary insurance company. Average umbrella insurance costs are $150-$300 per year for a $1 million policy, another $75 for the next million, and another $50 for every million after that.

How We Chose the Best Umbrella Insurance Options

We chose these top contenders based on the financial strength ratings of the companies, types of coverage and policies they offer, eligibility requirements, coverage amounts, and more.

Article Sources

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  1. Insurance Information Institute. "Should I Purchase an Umbrella Liability Policy?" Accessed Sept. 10, 2020.