Should I Get an Umbrella Insurance Policy?

Written by |

Welcome to Ask Clark, a column designed to answer your financial questions, by money expert Clark Howard.

What Do You Think About Umbrella Insurance?

Wayne from Connecticut asks: “Your recent article addressed which insurance products you should and shouldn’t buy but it didn’t mention an umbrella policy. What are your thoughts?”

Clark’s Take on Umbrella Insurance

Clark says: “Umbrella policies are important generally for people who are pretty wealthy. It’s people who have a lot of what are known as “uncovered assets”: assets you own free of any debt.”

Umbrella insurance is a type of liability insurance that kicks in when your primary coverage has reached its limit. An umbrella policy covers you “beyond what you have from auto or homeowners insurance,” Clark says.

He adds that major insurance companies including Allstate, State Farm, USAA and Geico all offer umbrella policies “because the risk to the insurance company is so low, the cost of coverage is very cheap.”

For $1 million in umbrella coverage, typically you’ll pay $200,” Clark says. “Each million you add after that is cheaper than the prior million, because the risk that a claim would ever get into those kinds of numbers is so unlikely.”

But again, umbrella insurance is not for everyone.

“It is a very cheap form of insurance,” Clark says, “and highly recommended to anyone who owns their home free and clear and has meaningful other assets.”

To hear Clark’s full take on this question, listen to the segment:

Do you have a question for Clark? Use this form to ask him! And remember that you can listen to the Clark Howard Podcast at any time here.

If you have a question but don’t want to go on-air, contact Clark’s Consumer Action Center for free money help.


More Resources From

Welcome bonuses can be a great way to boost the value of a credit card. Best Credit Card Welcome Bonuses for 2023 - If you're in the market for a new credit card in 2023, you may be hoping to cash in on the hundreds of dollars in sign-up bonuses offered to new customers. Welcome bonuses and offers are a marketing tool that…
The best cell phone plans include Tello, Mint Mobile, Visible, T-Mobile, Consumer Cellular and more Best Cell Phone Plans in 2023: The Cheapest Plan for Every Need - Team Clark ranks the best cell phone plans and deals! See our favorites for unlimited data, families and cheap plans starting at $10/month.