No. of Recommendations: 2
Just to follow up my own post, there seems to be no good consensus on the level of umbrella insurance to own. I'll summarize my own thoughts and findings in case anyone else may benefit:

I found the best discussions of the topic over at the Bogleheads board, so you can search there if you want some good considerations.

The rules-of-thumb you can find vary wildly from "your net worth", "2-3 times your net worth", to a fraction of your net worth for those wealthier.


Umbrella insurance is quite cheap, a few hundred dollars a year up to around $5M but the cost per million goes up beyond that. It seems to be a tipping point above which the insurers get nervous about the amount and costs and scrutiny increase.

The coverage is less standardized than more traditional home and auto policies, so the exclusions can vary. It makes it difficult to compare and wise to read the policy closely.

The normal advice is to bundle the insurance with a single carrier, and indeed it may be required, as the umbrella kicks in after the other liability insurance is exhausted, and they require the upper levels of liability in your auto and home policy.

A good argument can be made that you carry enough umbrella insurance so that the insurance company will vigorously defend you in your liability case as they have millions on the line.

It is beneficial to see what questions they ask when you pursue the umbrella insurance so you can gauge your risk to liabilities.

Here are some stats from a Forbes story back in 2012 which gives some idea of how many "one percenters" carry umbrella insurance.

"... survey of folks with assets of $5 million and up ... one in five of those surveyed don’t have an umbrella policy, and of those who do have a policy, nearly one in four reported having less than $5 million in coverage."
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