When a $1M umbrella isn't enough

What an umbrella actually does

A personal umbrella sits on top of your auto, home, and watercraft liability limits. When those underlying policies are exhausted by a claim, the umbrella picks up. It's the cheapest insurance per dollar of coverage you will ever buy — typically $200–$400/year for the first $1M, and $75–$150 per million after that.

The "$1M is plenty" assumption is usually wrong

A $1M umbrella was a reasonable default when median household net worth was lower, jury awards were lower, and medical costs were lower. None of those things are true now.

Three forces have pushed liability awards up:

1. Medical cost inflation — a single serious auto accident now routinely produces $400k–$800k of medical bills before lost-wages and pain-and-suffering are calculated.
2. "Nuclear verdicts" — jury awards over $10M in personal-injury cases doubled between 2015 and 2023.
3. Plaintiff's attorneys discovery your policy limits early. Settlement offers tend to come in just under the limit. If you have $1M, the offer is $950k. If you have $5M, the offer is not $4.95M — but it's often $2–3M. Higher limits don't proportionally raise your exposure.

How to size your umbrella

A rough framework we use with clients:

• Start with net worth — total assets minus liabilities, including retirement accounts (which are not fully judgment-proof in every state).
• Add 10× annual income — future earnings are reachable by judgment.
• Round up to the nearest million.

Then layer in risk multipliers:

Real example

A client family of four in Coral Gables: ~$2.4M net worth, two professional incomes (~$420k combined), 17-year-old driver, swimming pool, one rental condo in Orlando.

Framework: $2.4M + $4.2M = $6.6M, +$1.5M teen, +$1M pool, +$1M rental = ~$10M of recommended coverage.

Their previous $1M umbrella cost $310/year. The $10M policy we placed costs $1,640/year — about $4.50/day for nine extra millions of asset protection.

What underlying limits the umbrella requires

Most umbrella carriers won't sit over you unless your auto BI is at 250/500 and your home liability is at $300k or $500k. Bumping those underlying limits is usually a small premium increase and qualifies you for substantially cheaper umbrella pricing.

Want a free liability audit?

Send us your current auto, home, and umbrella dec pages and a one-line description of your household (kids' ages, properties, toys). We'll come back with a sizing recommendation and quotes from three carriers — no obligation, no pressure.