Rainy day, umbrella, suit

You could think of umbrella coverage as the “rainy day” coverage – coverage that is typically used for an unforeseen and/or tragic event. You see, umbrella insurance really has nothing to do with rain at all, it is actually a form of liability insurance.

What does Umbrella Insurance cover?

An umbrella policy provides excess liability coverage above the limits of your underlying policies, such as your home and/or auto policies. Its purpose is to protect you from property damage liability claims and bodily injury liability claims. These policies also typically include a more broad form of coverage which can help to cover legal fees, libel, slander and false arrest.

How does it work?

Your umbrella coverage kicks in if you need to pay damages or legal defense costs – even if you are not found to be responsible. Umbrella coverage only pays out once your basic liability limits have been exhausted from underlying policies or a claim is excluded from the basic liability coverage available within your underlying policies.

When a claim is made against you, the policyholder, on behalf of the wronged party, your insurance company will pay the settlement up to the limits of your coverage. If the settlement amount surpasses your coverage limits, you are then responsible for paying the remaining amount out of pocket!

A Real-Life Example

You are involved in a car accident in which you are at fault, injuring another driver. Your personal auto policy may cover the injured driver up to the limit you selected, say $100,000 – but what happens if the other drivers medical bills exceed $100,000?

If the other driver’s injuries are severe, you could be legally responsible to pay damages beyond your $100,000 limit. Additionally, if you are sued, your personal assets could be at stake! Suppose the injured driver were a dentist or another highly paid professional and as a result of the accident they were unable to work for several months. All of a sudden, you’re being sued for $1 million to make up for the time he/she is away from work! Although your auto policy covers $100,000, you’ve got to come up with the other $900,000 on your own!

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If you had a $1 million umbrella policy in place, your auto policy would cover $100,000 of the damages, then your umbrella policy would kick in to pick up the additional $900,000. An umbrella policy offers the additional coverage you need to protect your bank account, home and other personal property.

Why is Umbrella Insurance Important?

Your home, car, investment accounts, retirement accounts, checking and savings accounts, and even your future income, are all considered assets. It’s important to understand the amount that all of those assets stack up to, and how exposed to loss they are if they go unprotected. Umbrella insurance can prevent you from experiencing financial ruin as a result of one unforeseen event.

How much does Umbrella Insurance cost?

Every policy is unique, but an umbrella policy with Rockford Mutual typically ranges from $155 to $200 annually for a $1 million policy. That means you could rest easy for less than $13/month! If you increase your coverage, your premium will increase too. However, obtaining twice the amount of coverage by increasing your limit to $2 million doesn’t typically double the cost of your premium.


No one plans for a tragedy, but unfortunately, we are exposed to them every day. Ask your local Rockford Mutual Insurance Agent about how you can protect yourself, your family and your assets with Rockford Mutual Umbrella Coverage.

No one plans for a tragedy, but unfortunately, we are exposed to them every day. Ask your local RMIC Agent about how you can protect yourself, your family and your assets with Rockford Mutual Umbrella Coverage.

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Blog Contributor Amy Ingram
Amy Casey
Social Media & Communications Coordinator
Amy joined Rockford Mutual in January of 2017 with an Associates Degree in Marketing. Amy has a great understanding of insurance in general as she is currently working towards an Associate in General Insurance designation.