If your family has a teen driver, rents out a home after a PCS move, or hosts frequent gatherings on base, you’re carrying more liability risk than you might realize. To protect yourself financially, a military umbrella insurance policy could be a good investment.
An umbrella policy doesn’t pay for your own injuries or property damage. Instead, it kicks in when someone else sues you and the damages exceed what your home insurance or auto insurance covers.
Here’s what umbrella insurance covers, who can benefit from umbrella insurance, and how much it typically costs.
What Umbrella Insurance Covers
A personal umbrella policy is extra liability protection on top of what your existing homeowners, renters, or auto insurance policy provides. If you have a claim, umbrella insurance extends the coverage limits beyond what your other policies include.
Umbrella insurance generally covers:
- Bodily injury liability: Medical bills and legal costs if you’re found responsible for injuring someone, on or off your property.
- Property damage liability: Damage you cause to someone else’s property, including in a car accident.
- Landlord liability: Claims from tenants if you own a rental property.
- Personal liability claims: Libel, slander, defamation, and false arrest claims made against you.
- Legal defense costs: Attorney fees and court costs, even if the lawsuit is eventually dismissed.
Most umbrella policies start at $1 million in coverage and go up from there in $1 million increments. You might be able to get up to $5 million or more depending on the insurer.
Here’s what umbrella insurance doesn’t cover:
- Your own injuries
- Damage to your own property
- Business liability
- Intentional or criminal acts
It’s also not a replacement for adequate liability limits on your underlying car and home insurance policies. Most insurers require you to carry a minimum amount of liability coverage on those policies before you can get umbrella insurance.
Why Military Families Have Unique Liability Risks
Some military families can benefit from an umbrella insurance policy. Here are several examples of the unique risks that military families face that could warrant an umbrella policy.
Frequent moves mean more exposure. Every PCS is a chance for something to go wrong, whether it’s a moving truck backing into a neighbor’s fence or a teen driver getting used to a new commute in an unfamiliar city.
Rental properties are common. Many military families buy a home, then rent it out instead of selling when they get new orders. That turns you into a landlord, and landlords face liability risks that go beyond what a standard homeowners policy covers.
Housing near installations can bring extra foot traffic. Homes near a base or post often see more visitors, from fellow service members to extended family staying during deployments. More people on your property means more opportunity for an accident.
Rank and income can raise your profile in a lawsuit. Attorneys sometimes view a household with steady dual income, a military pension on the horizon, or an officer’s salary as a more attractive target for a large settlement.
Frequent entertaining and command events. Hosting unit gatherings, hail and farewells, or holiday parties at your home increases the odds of a guest getting hurt accidentally.
Example Liability Scenarios for Military Families
Umbrella insurance is designed for the rare but expensive claim. Some examples that illustrate why military families carry it include:
- Your teen driver causes a multi-car accident and injuries exceed your auto policy’s liability limit.
- A guest slips on your icy driveway during a holiday party and sues for medical costs and lost wages.
- Your dog bites a neighbor’s child while you’re stationed at a new duty station.
- A tenant in your rental home is injured due to a maintenance issue and sues for damages beyond your landlord policy’s limit.
- You’re involved in an accident while driving a POV overseas or on an installation, and the other party’s injuries exceed your auto liability limit.
- Something you post publicly is considered defamatory, and you’re sued for libel.
In each case, your underlying home or auto policy pays out to its limit, and the umbrella policy covers the rest, up to the umbrella’s own coverage limit.
How Much Umbrella Coverage Do Military Families Need?
The amount of umbrella coverage you need depends on your assets, income, risk tolerance, and family situation. Here’s a general framework you can use to determine how much coverage might be necessary for your needs.
|
Household Situation |
What to Consider |
|---|---|
|
Single service member, no dependents, renting |
Lower asset exposure; some still carry $1 million as a low-cost safety net |
|
Married couple, dual income, no teen drivers |
Combined income and savings often push families toward $1 million to $2 million |
|
Family with teen drivers |
Higher accident risk often means $1 million to $2 million or more |
|
Family with a rental property |
Landlord liability adds risk; many pair umbrella coverage with landlord insurance |
|
Senior officer or warrant officer nearing retirement with significant savings or TSP balance |
Higher net worth may call for $2 million or more |
A common rule of thumb in the insurance industry is to carry umbrella coverage equal to your net worth, including savings, home equity, and investments like your Thrift Savings Plan (TSP). Ideally, you want to protect your financial assets that could be at stake in a lawsuit.
Keep in mind that this isn’t financial advice, so it’s worth talking through your specific situation with a licensed insurance agent or financial advisor.
Umbrella Insurance and Teen Drivers
Adding a teen driver to your policy is one of the biggest factors that can affect your umbrella insurance rate. Teen drivers are statistically more likely to be involved in accidents, and if an at-fault accident results in injuries that exceed your auto policy’s liability limits, you’re personally on the hook for the rest without umbrella coverage.
Umbrella Insurance for Rental Properties
If you’ve PCS’d and kept your previous home as a rental instead of selling, you’ve taken on landlord responsibilities. A standard landlord or homeowners policy has liability limits, and a serious injury claim from a tenant or their guest can exceed those limits quickly. Umbrella insurance can extend liability protection for:
- Tenant injuries on the property
- Injuries to a tenant’s guests
- Legal defense costs if a tenant sues
How Much Does Umbrella Insurance Cost?
A $1 million umbrella insurance policy typically costs between $150 and $300 per year. Each additional $1 million in coverage generally adds $50 to $75 per year. However, rates depend on factors including:
- Driving records
- Coverage limits
- Claim history
- Personal assets
- Location
- Insurance company
To find the most affordable umbrella insurance policy, it’s a good idea to compare rates from several insurance providers. Consider getting quotes from traditional insurance companies and military-specific insurers, like USAA and Armed Forces Insurance.
Who Doesn’t Need Umbrella Insurance
Umbrella coverage isn’t necessary for every military family. Below are some examples of individuals who may not benefit from umbrella insurance:
- Your total assets, including savings, home equity, and investments, are low enough that your existing home and auto liability limits already cover them.
- You live in a state with strong asset protection laws that shield certain assets from judgment, such as some retirement accounts.
- You’re a junior enlisted service member with minimal savings, no dependents, and no rental property or teen drivers on your auto policy.
FAQ
Is $1 Million in Umbrella Coverage Enough for a Military Family?
For many military families, $1 million in coverage is a good starting point. Whether it’s enough depends on your total assets, income, and risk factors like teen drivers or rental properties. Families with a higher net worth or higher-risk exposure often carry $2 million or more. Talk to a licensed agent about your specific situation before deciding on a coverage amount.
Does Umbrella Insurance Cover Incidents on Base?
It can, depending on the circumstances and your policy’s terms. Umbrella insurance generally follows you and your household, rather than your home address. It can apply to incidents that happen on an installation, such as an at-fault car accident or an injury during a gathering at on-base housing.
Does Umbrella Insurance Cover Rental Properties?
Yes, in most cases. If you rent out a home after a PCS move, umbrella insurance can extend liability coverage beyond your landlord policy’s limits for things like tenant injuries. Make sure to disclose any rental property to your insurer, since it can affect your rate and your coverage
How Much Does Umbrella Insurance Cost for Military Families?
A $1 million umbrella policy generally costs between $150 and $400 per year, though your actual rate depends on factors like your driving record, number of vehicles and homes, whether you have a teen driver, and where you’re stationed. Each additional $1 million in coverage typically adds $75 to $150 per year.
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