We understand working hard to build your family lifestyle and we are happy to help you protect what matters most. Whether it’s a home in Traverse City, a cottage near Suttons Bay, a boat on Grand Traverse Bay, or a growing investment portfolio, many households have accumulated assets that deserve considered protection.
Despite this, one of the most valuable insurance coverages available remains one of the least understood: umbrella insurance.
Many people assume their homeowners and auto insurance policies provide all the protection they need. While those policies are essential, they also have purchased and maximum limits. If a serious accident or lawsuit exceeds those limits, you could be responsible for paying the remaining costs out of pocket.
That’s where umbrella insurance comes in.
What Is Umbrella Insurance?
Umbrella insurance is an additional layer of liability protection that sits above your existing homeowners, auto, rental property, watercraft, and recreational vehicle insurance policies.
If you’re found legally responsible for injuries, property damage, or certain lawsuits that exceed the liability limits of your underlying policies, an umbrella policy may provide additional financial protection.
Think of it as a safety net designed to help protect your savings, investments, future income, and other assets when a major claim occurs.
How Does Umbrella Insurance Work?
Let’s say you’re involved in a serious auto accident and are found responsible for injuries to multiple people.
Your auto insurance policy may provide liability coverage up to its policy limits. However, medical expenses, legal fees, lost wages, and other damages can quickly exceed those limits.
Without umbrella insurance, you could be responsible for paying the difference yourself.
In Michigan this has become so much more prevelant since the passing of the No Fault reform in July of 202. Previous to the reform, all Michiganders with an active auto insurance policy had ‘unlimited’ medical benefits provided to them by that policy. Now that drivers are not required to choose unlimited, we are seeing record lawsuit cases and judgements for serious injuries; whether caused by a medical condition or not.
This is new to Michigan, which historically had low lawsuits for injuries since the auto policy provided the broadest health benefits available in the United States.
Now, purchasing an umbrella policy is more important than ever. With an umbrella policy in place, additional coverage is available after your underlying policy limits have been exhausted, subject to policy terms and conditions.
Common Situations Umbrella Insurance May Help Cover
Many people are surprised by the range of situations that can lead to large liability claims.
Serious Auto Accidents
Auto accidents remain one of the most common sources of liability lawsuits. Medical costs and legal settlements can reach hundreds of thousands, or even millions of dollars.
Families with teen drivers may face increased exposure simply because inexperienced drivers are statistically more likely to be involved in accidents.
Injuries on Your Property
Slip-and-fall accidents, dog bites, swimming pool injuries, and other incidents occurring on your property can result in costly claims.
Even homeowners who carefully maintain their property can face unexpected liability situations.
Yet again, a new revision in Michigan law has seen increases in this area as well. Before, if you knew it was icy and snowing, and you fell, the homeowner or business owner was only held responsible to use diligent care. However, following a landmark 2023 Michigan Supreme Court ruling, the previous ‘open and obvious’ defense has been abolished. Property owners are now held to a higher standard of care, and cases involving visible hazards are more likely to reach a jury rather than being dismissed outright
Recreational Activities
Northern Michigan residents often enjoy:
- Boating
- Snowmobiling
- ATV riding
- Personal watercraft
- Seasonal recreational vehicles
While these activities are part of the Northern Michigan lifestyle, they also increase liability exposure.
Defamation and Personal Liability Claims
Some umbrella AND homeowner policies may NOT provide any coverage for certain personal liability claims such as:
- Libel
- Slander
- Defamation
In today’s digital world, these risks are more relevant than ever. Comments, posts, reviews, and other content shared online by you or members of your household can potentially lead to legal action. Coverage for these exposures varies significantly by insurer and policy, making it important to review your protection with your insurance advisor to ensure you have the coverage you need.
You should check with your agent to make sure that BOTH your homeowners or renters insurance policy as well as your umbrella cover this exposure.
Who Should Consider Umbrella Insurance?
A common misconception is that umbrella insurance is only for wealthy individuals.
In reality, many middle-income families can benefit from the additional protection.
You may want to consider umbrella insurance if you:
- Own a home
- Have savings or investments
- Own rental property
- Have a boat or recreational vehicle
- Have a swimming pool
- Employ household staff
- Have teenage drivers
- Volunteer on nonprofit boards
- Have significant future earning potential
Even if your net worth isn’t exceptionally high today, a lawsuit could potentially affect future income and assets.
Why Umbrella Insurance Makes Sense in Northern Michigan
Northern Michigan families often have unique liability exposures that may not exist in other parts of the state.
Multiple Properties
Many local residents own:
- Primary homes
- Vacation cottages
- Lakefront properties
- Seasonal cabins
Additional properties often create additional liability risks.
Recreational Lifestyles
Residents of Traverse City, Elk Rapids, Williamsburg, Suttons Bay and surrounding communities frequently enjoy boating, snowmobiling, ATV use, and other outdoor activities.
These activities are a wonderful part of life in Northern Michigan, but they can also increase the likelihood of accidents and liability claims.
Growing Property Values
Home values throughout Grand Traverse, Leelanau, Benzie, and Antrim Counties have increased significantly in recent years.
As personal wealth grows, so does the importance of protecting those assets from unexpected lawsuits.
How Much Umbrella Coverage Do You Need?
Umbrella policies commonly begin at $1 million in coverage, with higher limits available depending on individual circumstances.
The appropriate amount depends on factors such as:
- Assets
- Income
- Property ownership
- Recreational exposures
- Family circumstances
- Potential liability risks
Rather than selecting a limit based solely on cost, it’s often beneficial to evaluate the amount of protection needed to help safeguard your overall financial picture.
We assist clients in using an Umbrella calculator to begin and then have them consult with both their Attorney and Financial Planner to set the limit they are comfortable with purchasing.
Is Umbrella Insurance Expensive?
One of the reasons umbrella insurance is frequently overlooked is that many people assume it is expensive.
In reality, umbrella coverage is often surprisingly affordable compared to the amount of protection it can provide.
The cost varies based on factors such as:
- Number of vehicles
- Drivers in the household
- Property ownership
- Recreational vehicles
- Prior claims history
- Coverage limits selected
What we are seeing is that most umbrella policies that 3 years ago were costing around $120 per million (discounted after the first million) are now costing an average of $200 per million (2 adult drivers, 2 vehicles, clean records).
The increase in umbrella costs is directly tied to the larger number of umbrella claims we have seen in the past 2 years as well as the higher judgements that are coming out of court cases.
Because every situation is unique, obtaining a personalized quote from your trusted agent is the best way to understand your options.
Common Misconceptions About Umbrella Insurance
“I Have Good Auto Insurance. I Don’t Need It.”
Even strong auto liability limits can be exhausted in a severe accident involving multiple injuries.
“I’m Not Wealthy Enough.”
Many lawsuits target future earnings, retirement savings, and other financial assets—not just current wealth.
“Nothing Like That Will Happen to Me.”
Most major liability claims involve ordinary people facing unexpected circumstances. Umbrella insurance is designed for the events that are difficult to predict.
The Importance of an Insurance Review
Life changes quickly.
A recent home purchase, new boat, teen driver, rental property, or growing investment portfolio can significantly change your liability exposure.
Regular insurance reviews can help identify potential gaps and ensure your protection aligns with your current lifestyle and financial goals.
Protecting What You’ve Worked Hard to Build
Umbrella insurance may not be the most talked-about coverage, but it can be one of the most important tools available for protecting your financial future.
For many Northern Michigan families, the combination of homeownership, recreational activities, multiple vehicles, and growing assets creates liability exposures that deserve careful consideration.
A comprehensive insurance review can help determine whether umbrella insurance makes sense for your unique situation.
If you have questions about umbrella insurance or would like to review your current liability protection, the team at Cardinal Insurance Group is here to help.
Contact Cardinal Insurance Group today to schedule a personalized insurance review and learn whether umbrella insurance could help strengthen your overall protection strategy.
Cardinal Insurance Group | Trusted Guidance. Personalized Service.
Written by Linda M. Fisher, AAI, CIC, CPRIA, CPRM, LIC – Agency Founder & Owner