Should Military Families Carry Umbrella Insurance?

Do you have enough insurance? What happens if the cost of an accident exceeds the limits of your liability policy? Would you be forced to sell your home and other assets? Is there anything military families can do to protect themselves? Umbrella insurance is designed for this very scenario. 

Umbrella insurance covers you when your auto and property insurance policies fall short. It can provide a high degree of financial protection when faced with exorbitant liability claims. But these days, budgets are tighter than ever. While umbrella insurance would be great to have, do you need it? Can you afford it?

Let’s get into it.

What Is Umbrella Insurance?

An umbrella policy is a low-cost way to extend the coverage of primary insurance policies. This insurance unites multiple policies under a single “umbrella”. This offers extra coverage if a liability claim exceeds the limits of the underlying policies.

Imagine you have a $25,000/$50,000/$25,000 auto insurance policy, common minimum limits. That means your policy insures you for up to $25,000 in bodily injury per person, up to $50,000 total per accident, and $25,000 in property damage. But if you cause an accident that injures three people, whose total medical expenses exceed $500,000, where will that extra $450,000 come from?

If you have it, your umbrella policy will kick in, paying the remaining amount you are liable for and possibly legal fees related to the accident. Otherwise, you could be forced to cover the rest from savings, wage garnishments or even having to sell your house.

Umbrella insurance policies require you to maintain certain minimum limits on your underlying insurance. For instance, GEICO requires you to carry $300,000 in liability on your homeowners policy and either $250,000/$500,000/$100,000 or $300,000/$300,000/$100,000 on your automobile policy before you can qualify for their umbrella insurance. Other companies have different requirements. And some companies, like USAA, stipulate that your underlying policies be maintained through them, making your umbrella policy an add-on.

What Umbrella Insurance Covers…

Umbrella insurance pays liability claims in excess of what primary insurance policies cover, according to the National Association of Insurance Commissioners (NAIC). These policies are based on underlying auto and property (homeowners or renters) insurance policies, extending coverage in catastrophic liability scenarios that could otherwise financially break you. 

Umbrella coverage accomplishes this in two ways. First, it increases the maximum your insurance will pay out, often several times more, as discussed in the previous example of the catastrophic car accident.

Second, umbrella insurance also expands the scope of covered claims. Umbrella insurance frequently covers these types of liability claims, according to Capital Insurance Group:

• bodily injury or wrongful death caused by an accident, or negligence
• property damage to others for which you are legally responsible
• personal injury and liability claims such as libel, slander, defamation, wrongful eviction, or invasion of privacy
• legal defense for the above

Standard homeowners policies don’t always cover the items in the last two bullets, unless additional endorsements are added.

…And What Umbrella Insurance Doesn’t Cover

As great as it is, umbrella insurance doesn’t cover all of the potential reasons you could find yourself on the receiving end of a liability lawsuit. It’s important to understand the limits of your policy.

For instance, USAA’s umbrella insurance specifically prohibits coverage related to “rideshare and homeshare” commercial activities.

They also don’t cover claims related to these types of home business activities:

• food delivery
• day care
• massage therapy
• salons
• farming
• professional services, such as photography

And they won’t cover:

• purposeful criminal acts and omissions
• loss assessment payments
• contract disputes

And USAA isn’t the only one whose umbrella policies may not cover these situations. If you need to get insurance for these types of activities, you can seek out commercial liability policies that specifically cover these instances. An umbrella policy likely won’t.

Why Military Families Should Consider Umbrella Insurance

Sometimes, being in the military feels like living in a protective bubble, and we may underestimate our risk of being held financially liable for accidents and negligence. 

According to GEICO, people who should consider umbrella policies include those who: 

• own valuable assets (such as a house)
• host guests frequently 
• insure teen drivers
• own dogs, trampolines, or swimming pools
• coach youth sports
• volunteer regularly
• are active on social media (due to libel/slander lawsuit risks)
• a high net worth

Plenty of military families fall into one or more of these categories. And while an insurance company will always urge you to err on the side of caution, considering these categories is a great starting point for assessing your lawsuit risk. 

Military families also have some additional reasons to consider umbrella insurance.

PCS Rental Scenarios

Basic insurance policies cover liability claims for people living in their own homes, but what if you rent out your home to others when you PCS to a new location? This turns you into a landlord, opening your family up to new kinds of liability. 

For instance, if a tenant falls on your property and injures themselves, they can sue you for negligence if they can link their fall to a maintenance issue. Negligence lawsuits represent 36% of liability claims against landlords, according to claims data released by Hylant, an insurance brokerage firm. 

Other claims against landlords, as noted by Hylant, included lawsuits for unintentional data disclosure, breach of contract, and unauthorized contact, none of which your standard policy would cover unless you have a specific endorsement.

Deployment Risks

Everyone in the military is subject to being deployed on short notice, which means that you may have to leave your property unattended while serving your country overseas. With fewer eyes on your home, there is a greater risk of something happening on your property for which you could be held financially liable. 

For instance, if someone injures themselves on your property–even if they do not have your permission to be there–you could be held liable for their injuries. The same applies to people working on your property during your absence, such as landscapers and other maintenance contractors, which is also known as premises liability, according to Rose, Klein & Marias LLP, a law firm.

Around 7% of fires occur in vacant buildings according to data from the U.S. Fire Administration, a government agency. 

Multi-State Living

And even if you are not deployed or renting your house out, living in more than one state can multiply your legal liability, such as in the case of a geographical separation between a service member and family. Maintaining more than one household increases your risk of accidents due to empty-property hazards, such as fire, which can damage others’ property and injure neighbors.

Living in more than one state also often requires adherence to complex insurance requirements and liability laws that vary by state, according to Farm Bureau Financial Services. Umbrella insurance provides an extra layer of coverage when liability limits are exceeded in high-risk scenarios that many military families face. 

How Much Coverage Do You Need?

Experts recommend umbrella insurance when your assets or earning potential exceed the limits of your existing policy. If you don’t want to lose money in a potential liability scenario, it is recommended to have the amount of the umbrella insurance coverage equal the value of your assets, including your house and savings. 

Most personal umbrella policies are written for amounts between $1 and $5 million, according to Experian, a credit reporting agency. By matching your coverage amounts to your total net worth, you can protect some or all of your assets in the event of a liability suit.

But your personal assets could still be at risk if you are liable for more than your underlying and umbrella policies cover. The larger your “umbrella” is, the more it protects you from the turbulent events of life. Your relative risk level and the affordability should also be factors in determining the amount of umbrella coverage you need. 

How Much Does Umbrella Insurance Coverage Cost?

The best part about getting an umbrella policy is how cheap it is, given how much protection it offers. The average annual cost of a $1 million umbrella policy in 2025 was $383, according to Experian. 

Your exact cost depends on many factors, as with any insurance, but count on spending a few hundred dollars per year for every $1 million dollars of umbrella coverage you acquire. 

For instance, take a look at Mercury Insurance’s 2026 published umbrella insurance rates:

• $300 to $600 for $1 million total coverage
• $600 to $1,000 for $2 million total coverage
• $1,000 to $1,800 for $5 million total coverage

It is important to note that insurance rates are highly individualized. As with any insurance, shopping around for different quotes can help you find the best rates, but it’s also important to research the reputation and customer satisfaction at these companies. 

When Umbrella Insurance Makes Sense

Umbrella insurance makes the most sense in the following scenarios:

• homeowners with equity
• landlords (including accidental landlords)
• higher income households
• families with significant assets

Given that $1 million in coverage can cost as low as $25 per month, the additional peace of mind an umbrella insurance policy provides is worth it for many military families. 

When It May Not Be Necessary

If you’re 19 years old, living in the barracks, and don’t have high-value possessions or savings, then umbrella insurance may not be worth it. 

It also might not be necessary if you are older but have a low risk of being held financially liable for accidents or negligence, such as if you don’t drive and/or don’t own a home or rental property.

Common Mistakes

If you decide not to get umbrella insurance, make that decision carefully and consider double-checking with a financial advisor. One of the biggest financial mistakes people make is being underinsured. Things happen in life, and once your primary insurance is exhausted, a court can hold you personally financially responsible for liability claims. That could mean losing your house, your possessions, or even having your future wages garnished. 

Not understanding the ways you are exposed to high liability claims, such as being a landlord, can be a costly mistake. 

Bottom Line

For many military families, umbrella insurance is worth it. It expands the scope and liability coverage of underlying auto and property insurance policies for a few hundred dollars per year, the cost of a weekly cup of coffee at Starbucks. 

If you own anything of high value, including a house, you want to make sure your insurance can cover liability claims at least up to that amount, so you won’t end up literally homeless in the aftermath of a lawsuit. 

Whether you think of it as peace of mind or a strategic way of protecting your assets, the cost of umbrella insurance is astonishingly low for the ways in which it can protect you.