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Compare Personal Liability Umbrella Insurance Quotes

Add personal umbrella insurance to your existing coverage for the cheapest rate possible.

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Written By Taras Trofimov

Updated

What is personal liability umbrella insurance?

Umbrella insurance is an extension to personal liability coverage that offers protection beyond what’s available in a typical home or auto insurance policy. It comes into effect when the payout from your existing policy isn’t high enough to cover the costs of the damage or injuries caused by your car or property to another individual. Basically, if you are sued for more than your standard insurance can cover, umbrella insurance will make up the difference. Additionally, it protects you from vandalism, invasion of privacy, libel and slander.

To get umbrella insurance, you’ll first need to have your basic car or home insurance policy. Even then, umbrella insurance comes into play only if your regular coverage has been used up.

If you own something that may be hazardous to others, such as a swimming pool, or engage in activities that put others at risk, you may want to consider umbrella insurance.

How does umbrella insurance work?

Umbrella insurance is an add-on to your existing liability coverage. If a liability lawsuit forces you to pay more than your standard policy can cover, umbrella insurance will pay for the rest. The umbrella coverage becomes available only when your standard coverage runs out.

Certain things increase the likelihood of you getting sued. Here are some examples:

  • Owning a dog. Owning a pet, particularly a dog, can increase your liability risk. For example, if your dog runs out of your house and bites someone in the neighbourhood, the victim can sue you for their injuries, and potentially, loss of wages.
  • Frequent driving. The more you drive, the more likely you are to cause a car accident. If you do cause one, it may end up impacting several vehicles at once. In this case, your regular auto insurance coverage may not be enough to pay for all the damages, or the ensuing lawsuits.
  • You have a child. Little children are as unpredictable as pets. If your child damages someone’s property, your regular home insurance could cover the costs, but not in all cases. If the payout from your home insurance is not enough, umbrella insurance will pick up the slack.
  • You’re on a board of directors of a non-profit. If you’re on a board of directors, you’re at risk of being sued for a board-related issue – though the coverage may depend on whether it’s a non-profit board or if you’re paid for your work. Consult with your insurance provider to make sure you’re covered.
  • You rent out properties. If you are renting out either your home or other properties (via Airbnb or Vrbo, for example), there’s a risk of someone getting injured on your premises. If a lawsuit drains your regular insurance funds, the umbrella insurance can cover the rest.

What does umbrella insurance cover and not cover?

While umbrella insurance may, at a glance, seem like a ‘Get Out of Jail Free’ card, it doesn’t cover everything. With that in mind, you should know what it does and doesn’t cover to avoid issues down the road.

What umbrella insurance covers:

  • Damage to someone else’s property. If someone else’s property is damaged or lost due to your actions or the actions of a covered member of your household, umbrella insurance will kick in once your standard insurance funds run out.
  • Injuries to someone else’s body. If another individual gets injured because of your actions or the actions of a covered member of your household, umbrella insurance will provide the payout (if necessary).
  • Rental property liability claims. If any liability claims occur on your property during rental, you’ll be covered.
  • Claims not covered by a typical insurance policy. Umbrella insurance covers lawsuits involving libel, slander, defamation, invasion of privacy, wrongful arrest and wrongful eviction, none of which are covered by standard insurance policies.
  • General lawsuit expenses. Should a lawsuit happen, umbrella insurance will cover attorney fees and similar expenses.

What umbrella insurance doesn’t cover:

  • Damage to your own property. Umbrella insurance provides personal liability coverage only, so any damage to your own property will have to be covered by your home insurance.
  • Your own injuries. If you or a member of your household get injured as a result of your or their actions, umbrella insurance will not cover you. Your auto or home insurance should take care of that.
  • Damage you cause on purpose. If you or a member of your household purposely hurt someone or damage their property, you will not be covered. Your standard home or auto insurance will not cover you either.
  • Liability caused by your business activities. Unless you’re involved in a non-profit, you’ll need business liability insurance to cover your business or professional activities, because umbrella insurance will not cover you in this case.
  • Liability you accepted by signing a contract. If you’ve accepted certain liabilities under a contract, umbrella insurance will not be able to protect you.

When do you need umbrella insurance?

While we would recommend personal liability insurance to everyone, umbrella insurance may not be necessary for you. Here are some of the reasons to consider adding it to your liability coverage:

  • You engage in ‘risky’ activities. If you travel abroad often, participate in dangerous sports (that can result in injuries to others) or operate high-risk machinery (such as a motorboat), you may want to enhance your existing coverage.
  • You’re a high-profile individual. If you are a public figure, or attract a lot of attention, either online or offline, you are more likely to be involved in a libel, slander or defamation lawsuit. As a result, you may want to protect yourself.
  • Your property has potential hazards. If your property contains certain hazards, such as a swimming pool, it’s possible for someone to suffer a catastrophic injury on the premises, which may lead to a lawsuit.
  • You have a child or a pet. Young children and pets can both be unpredictable. If you’re worried that one or the other may do something outside of your control, consider purchasing an umbrella insurance to cover their actions.
  • You want a ‘peace of mind.’ Sometimes that’s all the reason you need. If you can afford to purchase extra coverage and feel better as a result, why not do it? As is the case with all insurance-related investments, you may never require it in your lifetime, but if you do, it’s better to be safe than sorry.

The pros and cons of umbrella insurance

Like other types of coverage, umbrella insurance has its own pros and cons. So, if you’re still undecided whether to purchase it or not, here are some reasons to sway your decision in one direction or another:

  • Pro: Extra coverage. Get additional liability coverage and legal defence funds in case your standard car or home insurance runs out.
  • Con: You must have existing coverage. You can’t purchase umbrella insurance on its own – it only functions as an add-on to your existing home or auto insurance.
  • Pro: Goes beyond your regular insurance. You get coverage for libel, slander, defamation and similar incidents, which is something your typical auto or home insurance won’t cover.
  • Con: Restricts you from securing the best rate. Since your umbrella policy and its underlying coverage will likely have to be under the same insurance provider, you’ll have a tougher time shopping around for the best insurance rate on individual policies.
  • Pro: It’s (relatively) inexpensive. The cost of umbrella insurance is surprisingly low – especially when compared to the cost of your potential payout.
  • Con: Your overall premiums may increase. Since adding umbrella insurance requires a minimum amount of liability coverage, you may have to purchase more liability for your existing policy.
  • Pro: It works everywhere. Umbrella insurance will cover you even when you’re travelling abroad. It often covers things for which you don’t have insurance – whether it’s a boat, a car or a home.

How do I buy umbrella insurance?

Most major insurance providers offer umbrella insurance. However, to purchase it, you need to already have home or auto insurance as well as a minimum amount of liability coverage. In addition, your auto or home insurance provider may require you to purchase the umbrella insurance from them exclusively, rather than another company. Even if there is no such requirement, you may want to do so anyway – to secure a home and auto bundling discount.

Before purchasing your umbrella insurance, be sure to check the maximum limit offered by your provider. Most umbrella policies go as high as $5 million, though some go higher. If you want more, you’ll need to look around.

While you’re at it, you may decide to compare quotes between several different insurers. To make this easier, consider using a comparison tool like RATESDOTCA to find the cheapest rates.

How much does umbrella insurance cost?

Like other coverages, umbrella insurance does not have a set price. It will depend on the amount of coverage you decide to purchase, your province and postal code (since insurance rates vary by location), credit history, driving record (if applicable) and how risky you are to insure. In addition, the more properties or cars you have and the more members of your household you decide to cover, the more expensive your insurance will be.

According to the Insurance Information Institute, a $1 million umbrella insurance policy is likely to cost $150 to $300 per year. If you go for a $2 million coverage, you’ll end up paying about $75 more and $50 for every additional 1$ million. Most coverages start at $1 million and can be increased up to $5 million.

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Frequently asked questions about umbrella insurance

Need more information about personal liability umbrella insurance? We got you covered.

What are the differences between excess insurance vs. umbrella insurance?

On the surface, excess and umbrella insurances are very similar. They both offer protection beyond the limits of a standard liability policy, and they both build on top of existing policies. However, they are decidedly not the same.

Excess insurance does what the name suggests – it expands the limits of a standard policy, by offering additional protection to what’s already on offer. For example, if the damages you cause at your job are assessed at $1.3 million, but your standard insurance covers only $1 million, you’ll have to pay the difference yourself. However, with excess insurance, you’ll be covered beyond this limit. Do note that if your standard insurance stipulates that you must be on site when the damage you inflict occurs, then you won’t receive any coverage at all if you happen to be off site at the time. Excess insurance won’t cover you either in this scenario, as it merely expands what your existing policy already offers.

That’s where umbrella insurance differs from excess insurance. While it also expands the limits of a standard insurance policy, that’s not all it does. It provides coverage for things that your regular policy doesn’t. For instance, in the above-mentioned scenario, the umbrella insurance may cover your at-fault damages even if they occur while you’re off site. Basically, umbrella insurance covers any gaps your standard insurance doesn’t, including libel, slander and defamation incidents. That’s why it’s called an ‘umbrella’ insurance.

So, if you’re looking for more comprehensive coverage, go with umbrella insurance. If you’re looking to merely expand your existing policy, pick excess insurance.

Is it worth to get umbrella insurance?

There’s no legal requirement for anyone to purchase umbrella insurance in Canada. However, if you’re at a high risk of getting sued by someone or you own a lot of assets, then you may want to consider it.

Here are some of the reasons to get umbrella insurance:

  • You rent out a property
  • You have children or pets
  • You are an inexperienced driver or have one in your household
  • You engage in high-risk sporting activities that have a chance of hurting others (such as surfing, hunting or skiing)
  • Your property contains hazards, such as a swimming pool
  • You serve on the board of a non-profit
  • You’re a public figure

Who offers personal liability umbrella insurance in Canada?

Most major insurance providers offer personal liability umbrella insurance in Canada. However, to purchase it, you need to already have an auto or home insurance policy with them, as umbrella insurance can’t be purchased separately. In addition, your existing insurer may require that you purchase umbrella insurance from them exclusively.

Taras Trofimov ,
Content Manager

Taras is a content manager at RATESDOTCA, specializing in home insurance. He has worked at the company for a year and has since collaborated with multiple experts to fully familiarize himself with the intricacies of the insurance industry.

He has over nine years of content marketing experience across multiple industries in B2B and B2C spaces. He has produced thought leadership content for organizations like Constellation Software, Facebook and Yellow Pages as well as outlets like Huffington Post and MSN Canada.

He has graduated from York University with a Bachelor of Arts degree in Film Studies and has also studied Technical Communication at Seneca College – the co-op program that introduced him to the world of content marketing.

Experience
  • Home Insurance
Education
  • Bachelor of Arts at York University

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