What Happens If You Exceed Your Umbrella Insurance Coverage Limits?

Insurance Services Tips 

As a responsible adult, you understand the importance of having insurance. You have car insurance, homeowner's insurance, and an umbrella insurance policy. You feel confident that you are fully covered in case of an accident or lawsuit. But what happens if you exceed your umbrella insurance coverage limits?

Understanding Umbrella Insurance

Before we dive into what happens if you exceed your coverage limits, let's review what umbrella insurance is and how it works. Umbrella insurance is a type of liability insurance that provides additional coverage beyond what your other insurance policies offer. It's designed to protect you from financial ruin in case of a lawsuit or accident where you're found liable for damages.

For example, let's say you're involved in a car accident that results in $500,000 in damages, but your car insurance policy only covers up to $300,000. Without umbrella insurance, you would be responsible for the remaining $200,000. However, if you have umbrella insurance, it would kick in to cover the remaining amount, up to the limits of your policy.

Exceeding Your Coverage Limits

So, what happens if you exceed your umbrella insurance coverage limits? Unfortunately, the answer is not a simple one. It depends on the circumstances of the situation and the terms of your policy.

If the damages or liability exceed your coverage limits, you could be responsible for paying the remaining amount out of pocket. This could be a significant financial burden, especially if the damages are in the millions of dollars.

However, some umbrella insurance policies have an "excess" provision, which means that the policy will kick in once the limits of your other insurance policies have been exhausted. For example, if your car insurance policy covers up to $300,000 and your umbrella insurance policy has an excess provision, it would kick in to cover any damages beyond that amount, up to the limits of your policy.

The Importance of Adequate Coverage

The key takeaway here is the importance of having adequate coverage. You don't want to find yourself in a situation where you're responsible for paying millions of dollars out of pocket because you didn't have enough insurance.

When choosing an umbrella insurance policy, it's important to consider your assets and potential liability. You want to make sure that your coverage limits are high enough to protect you in case of a worst-case scenario.

It's also important to review your policy regularly and make adjustments as needed. If your assets have increased significantly since you first purchased your umbrella insurance policy, you may need to increase your coverage limits to ensure that you're fully protected.

What to Do If You Exceed Your Coverage Limits

If you find yourself in a situation where you exceed your umbrella insurance coverage limits, there are a few steps you can take.

First, contact your insurance company to discuss your options. They may be able to negotiate a settlement or payment plan with the other party involved.

If the damages or liability are significant, you may need to consult with a lawyer. A lawyer can help you navigate the legal system and protect your assets.

It's also important to remember that umbrella insurance policies typically have a duty to defend provision. This means that your insurance company will provide legal representation if you're sued for damages that are covered under your policy.


In conclusion, exceeding your umbrella insurance coverage limits can be a scary and expensive situation. It's important to have adequate coverage to protect yourself from financial ruin. If you do find yourself in this situation, contact your insurance company and consider consulting with a lawyer.

Remember, insurance is there to protect you and your assets. Don't skimp on coverage to save a few dollars in the short term. It could end up costing you much more in the long run.

At the end of the day, the peace of mind that comes with knowing that you're fully protected is priceless. So take the time to review your insurance policies, make adjustments as needed, and rest easy knowing that you're covered in case of a worst-case scenario.