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Understanding Umbrella Insurance Costs: Factors & Rates

Umbrella insurance costs depend on a number of factors, which, for the most part, are similar to factors that influence the rates of other types of insurance.

Coverage and Costs

Umbrella insurance provides protection beyond what a policyholder's home, automobile or watercraft insurance policy provides. Should you suffer a major financial loss or face a lawsuit, for loss someone suffers in an accident, for instance, umbrella insurance can cover you when your other policies fall short.

Umbrella insurance  usually covers 1 to 2 million dollars' worth of expenses, but some policies go as high as 5 million. The premiums are usually $200 to $300 per year, and deductibles seldom go below $300,000. Still, compared to other types of insurance, umbrella insurance is fairly affordable.

Factors Determining Rates

Factors that determine your umbrella insurance rates include these:

  • Which company issues the policy-Regardless of other factors, different companies will issue different rates. If you already have home insurance or vehicle insurance with the company from which you get your umbrella insurance, you will get lower rates.
  • Amount of coverage-The rates increase in proportion to how much coverage you pay for.
  • Personal risk factors-Any economic and health factors that make you a risk in the eyes of the insurance company can raise your rate. These can include your credit history, your driving record, your age and the location of your property.
  • Location-Insurance rates often differ from state to state. Rates can also vary depending on the city or even the neighborhood where you reside.
  • Number of liability exposures-If you already have your home and vehicles insured, you will get lower rates.

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