The Umbrella Conversation Series - Part I: Why Personal Umbrella Limits Are So Hard for Clients to Understand
For the average person, insurance can be a hard topic to wrap one’s head around. Sure, there are basic insurance products everyone knows they need - car insurance, property insurance, maybe even pet insurance.
But what about additional, “voluntary” insurance like a personal umbrella policy?
Umbrella insurance isn’t hard because it’s complicated, it’s hard because it’s abstract. Once made aware of the option for an umbrella policy, clients don’t struggle with what it is. They struggle with why the limits matter.
And it’s understandable. As an AE, you know that an umbrella policy provides excess liability, defense costs, and broader coverage, but to your client it might sound like another policy they have to pay for but probably won’t use.
Client Objections to Umbrella Insurance
Client hesitation around umbrella coverage isn’t usually about distrust. It’s about how people naturally make decisions about risk.
Most clients rely on mental shortcuts or quick ways of processing complex information. When liability limits are abstract and the risk doesn’t feel immediate, those shortcuts tend to minimize the perceived need for additional coverage.
Generally, clients fall into one of five buckets:
- Unaware: “I didn’t know this existed.”
Umbrella insurance isn’t a required purchase like auto or homeowners. If a client hasn’t been exposed to the concept before, there’s no mental category for it. Without familiarity, the policy feels optional rather than foundational.
This is familiarity bias at work. People tend to trust and prioritize what they already understand. - Undereducated: “I already have good auto and home limits.” or ”I did not know my existing insurance had gaps and limits.”
Clients often assume their primary policies fully protect them because those policies feel comprehensive. But, what they may not realize is that every policy has limits, and those limits cap the insurer’s obligation, not their own liability.
In this case, it’s easy for clients to make assumptions: If the base policy feels substantial, it must be sufficient. - Underestimating Exposure: “The likelihood of getting sued/getting into an accident is too low for me to consider an umbrella policy.” or “I’m not rich enough to need additional coverage.”
For clients, liability claims can feel rare and extreme, even though statistically large verdicts and lawsuits have become more common. Because clients don’t see claims unfold the way AEs do, the exposure feels theoretical rather than realistic.
This is optimism bias at work, or the natural human tendency to believe that serious, negative events are unlikely to happen to us personally. - Anchored on Premium: “It feels like extra cost for nothing.”
When presented with coverage options, clients often anchor on the most immediate and tangible number: the premium.
This is anchoring bias, and it occurs when the first concrete number introduced becomes the reference point for decision-making. Because umbrella limits are abstract but the premium is concrete, the cost feels more “real” than the protection. Without reframing the conversation around exposure, the premium dominates the decision. - Overwhelmed: "This is too complicated and there are too many options out there."
When faced with complex choices, people often default to inaction or simplification. If umbrella coverage feels layered on top of already complicated policies, clients may disengage rather than process additional details.
The challenge for personal lines AEs isn’t just explaining excess liability. It’s recognizing the psychology at play and guiding clients through it clearly and calmly, then shifting the focus from abstract limits and premiums to realistic exposure and long-term protection.
The AE Mindset Shift: From Limits to Liability
Working in this industry and seeing claims firsthand, AEs know that umbrella insurance is a good idea for most people owning any kind of property or earning an income.
Before talking limits, AEs should reframe what umbrella coverage actually protects. This reframes umbrella coverage as comprehensive income and asset protection.
In a serious liability claim, a client’s financial exposure doesn’t arrive all at once. Medical costs, legal fees, lost wages, and settlements can accumulate over time. Underlying auto or homeowners policies cover the initial expenses but once their limits are exhausted, the claim (and costs) simply shifts to the individual.
At that point, any additional damages, legal defense costs, or judgments become the client’s responsibility unless excess coverage is in place. This is where umbrella limits matter: not as a worst-case hypothetical, but as a continuation of a process that has already exceeded primary coverage.
Clients often assume that insurance limits cap the problem should a claim arise. In reality, limits only cap the insurer’s obligation, not the client’s liability.
Clients might be aware that an umbrella policy increases liability limits. What they often don’t realize, and what AEs need to make explicit, is that umbrella coverage also extends legal defense and fills liability gaps their primary policies don’t touch. This gap coverage in particular is what a lot of clients aren’t aware of.
Selling personal umbrella policies doesn’t have to be about instilling fear of the worst case scenario, it’s about helping clients understand their realistic exposure, what they stand to lose, and how an umbrella policy protects their income and assets over time.
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Before we talk about how to make specific coverage recommendations, clients first need to understand how umbrella coverage actually works in real life. In our next post, we will dive into how to make personal umbrella coverage resonate with clients.
