Umbrella insurance is a type of insurance policy that provides additional liability coverage beyond the limits of an underlying policy. Umbrella insurance is primarily designed to protect you against major claims and lawsuits, which can be financially devastating. It can help cover legal fees, damages that you are liable for, and other related costs beyond the limits of your existing policy. Umbrella insurance is an optional coverage, but it is something to consider if you have significant assets that could be at risk in the event of a lawsuit.

Who is the umbrella insurance primarily for?

It's important to note that standard landlord insurance policy will provide general liability coverage which for most landlords will be sufficient. That being said, landlords who owns multiple rental properties or have very high-value properties may want to consider umbrella insurance in order to protect all their assets should they be liable in a lawsuit.

For example, imagine you have liability insurance under your landlord insurance policy with a per-occurrence liability limit of $1 million and an annual aggregate limit of $2 million. This means your insurance company won’t pay more than $1 million for a single claim nor more than $2 million total in a year for multiple claims. However, if you have umbrella insurance, your excess limits coverage will kick in if you have claims that exceed these limits. Your umbrella insurance policy may also cover claims not covered by your landlord insurance policy, therefore providing you with an extra layer of protection.

Tenants can also carry personal umbrella insurance in addition to their renters insurance policies. Personal umbrella policies are generally recommended for high net worth individuals and for those with unique exposures such as teenage drivers or home-based businesses.

What is already covered by standard rental property insurance?

Unlike a standard homeowners policy, a landlord insurance policy typically provides both property and general liability insurance coverage. The property insurance coverage provides protection against damages caused by water damage, wind and hail, and other perils. The liability insurance coverage provides protection against certain types of lawsuits – for example, if a guest or tenant is injured on your property and sues you. Landlord insurance may also provide business income loss coverage. 

In addition to standard commercial insurance, landlords may need to secure additional coverages, depending upon their unique exposures. For example, some landlords with older buildings may want to add an ordinance or law endorsement and those with employees may want to purchase employment practices liability insurance. An umbrella insurance policy is another type of coverage most landlords should consider.

How much does umbrella insurance typically cost?

The main disadvantage of umbrella insurance is the relatively high cost. Over the last few years, mainly due to inflation and increased living costs, insurance costs in general are on the rise.

The cost of umbrella insurance will, as with landlord insurance in general, always vary depending on factors such as the location and value of the property, the coverage limits desired, and the insurer's underwriting guidelines. According to roofstock, an umbrella insurance will cost you an additional $150 - $300 on top of the cost of your standard landlord insurance policy.

Alternatives to umbrella insurance:

If you're looking for ways to protect your assets other than umbrella insurance, there are several alternatives to consider:

Increasing the limits on your existing policy

If you think the current limits on your existing rental property insurance policy aren't enough, you can talk to your current insurer or explore other insurance companies to see who can offer you the highest limits. There are also a number of additional coverages you can add on to your existing policy such as employee benefits liability and ordinance or law. 

LLC vs umbrella insurance

Some landlords create an LLC, or limited liability company, for their rental business. This can be a smart move because the business structure helps shield your personal assets from your business risks. However, even with an LLC, a lawsuit that is not fully covered by insurance could still put your rental business in jeopardy. 


By setting a significant amount of savings aside, you will have some extra financial security in case of a lawsuit. That being said, this option requires careful financial planning and a substantial amount of money set aside.


A liability waiver is a legally binding document in which an individual or organization, in this case the tenant, releases another party (landlord) from responsibility or liability for any potential injuries, damages, or losses that may occur during a specific activity or event. That being said, it's really not recommended to rely on such wavers as they are generally not enforceable in cases of gross negligence or intentional harm, and this is subject to the interpretations of the courts.