Umbrella and Excess Liability as the First Line

Umbrella insurance is treated above (section “Umbrella Insurance”) as a cheap top-up over auto and homeowner’s coverage. Once net worth runs into eight figures, the limits discussed there — $1M to $5M — are wrong. They are the limits for a household whose total net worth is $1M to $5M. Above that, the umbrella should match or exceed net worth, and the structure changes.

• Primary umbrella of $5M is the floor for any household with meaningful liquid assets. Pricing scales modestly: a clean-record household pays a few hundred dollars per million up to $5M, with the marginal cost rising past that.
• Excess liability (sometimes called “excess umbrella” or “personal excess liability”) sits above the primary umbrella, often through a different specialty insurer (Chubb, PURE, AIG Private Client). Adds $5M to $50M of coverage in tranches. Private-client carriers underwrite separately and often require higher underlying limits on the auto and homeowner’s policies. Annual cost in the low thousands for $10M of additional coverage.
• Specialty coverage for non-routine risk: a household with significant household staff needs Employment Practices Liability (EPLI) coverage; a board director needs D&O coverage; a private aircraft owner needs aviation liability written above the umbrella; a yacht owner needs hull-and-P&I coverage.

The discipline: identify every realistic mechanism by which a third party could sue you for an amount above your existing primary limits, and stack policy limits above each. The cost of being underinsured at this layer is paid out of the rest of the balance sheet — the layer the umbrella was supposed to protect.