Do I Need Umbrella Insurance? 7 Questions to Ask Yourself

Evaluating Your Need for Umbrella Insurance

Umbrella insurance isn't for everyone, but it's more affordable than many people think. Ask yourself these questions to evaluate your need.

Question 1: What Are My Total Assets?

Calculate Your Net Worth

• Home equity
• Savings and checking accounts
• Investment and retirement accounts
• Vehicles and other property
• Business interests

Why It Matters

In a lawsuit, your assets are at risk. If you have significant assets, umbrella insurance helps protect them.

Question 2: What Is My Future Earning Potential?

Consider Your Career

• Years until retirement
• Expected income growth
• Potential inheritance

Why It Matters

Courts can garnish future wages. Your future earnings are an asset worth protecting.

Question 3: Do I Have Teenage Drivers?

Increased Risk

Teen drivers are statistically more likely to be in accidents. An at-fault accident with serious injuries can easily exceed standard policy limits.

Consider

If you have teens or will soon, umbrella insurance provides important protection.

Question 4: Do I Own High-Risk Property?

Risk Factors

• Swimming pool
• Trampoline
• Hot tub
• Dock or waterfront
• Rental property

Why It Matters

These "attractive nuisances" increase your liability exposure significantly.

Question 5: Do I Own Dogs?

Breed Considerations

Some breeds have higher bite statistics, but any dog can bite. Dog bite claims average over $50,000.

Consider

If you have dogs—especially multiple dogs or larger breeds—umbrella coverage provides important protection.

Question 6: Am I Active in My Community?

Volunteer Activities

Serving on boards, coaching youth sports, or other volunteer activities can create liability exposure.

Consider

While many organizations have their own insurance, umbrella coverage provides personal protection.

Question 7: Could I Afford a Large Judgment?

Lawsuit Scenarios

• Serious auto accident: $500,000+
• Pool injury: $1,000,000+
• Dog bite with scarring: $250,000+

Consider

If a judgment exceeding your current coverage would cause financial hardship, umbrella insurance is worth considering.

Making Your Decision

When Umbrella Insurance Makes Sense

• Net worth exceeds your current liability limits
• You have risk factors that increase exposure
• You want protection for future earnings
• Peace of mind is valuable to you

When It May Be Less Urgent

• Limited assets and low income
• No significant risk factors
• Other financial priorities

Next Steps

Discuss your specific situation with a licensed insurance professional who can help evaluate your needs.