Delaware , States

Delaware Umbrella Insurance: What To Know

October 7, 2025

One serious accident or lawsuit could wipe out your entire business if your standard policies fall short. Whether you operate in Wilmington, Dover, or Rehoboth Beach, Delaware umbrella insurance gives your business the extra protection it needs when base limits aren’t enough.

This guide breaks down who needs coverage, what it includes, the real risks in Delaware, and how much you can expect to pay.

WHO NEEDS THIS COVERAGE IN DELAWARE?

Umbrella insurance isn’t legally required under Delaware insurance laws, but most businesses can’t afford to go without it. The Delaware Department of Insurance (DOI) regulates insurance under Title 18 of Delaware Code, which governs insurance practices in the state.

To qualify for umbrella insurance coverage, your base policies typically must include:

Auto Liability: $250,000 per person / $500,000 per accident

Property Liability: At least $300,000 for homeowners or rental properties

High-risk industries often need more:

Construction Firms – Must carry general liability and workers’ comp. Many contracts require umbrella insurance coverage for added protection

Healthcare Providers – Usually carry malpractice insurance and often add personal liability insurance Delaware businesses use to expand limits

Even when not required, umbrella coverage is often requested by lenders, landlords, and clients to finalize contracts or licensing.

COVERAGE TYPES AND KEY BENEFITS

An umbrella policy expands your protection beyond what standard policies cover. If your general liability, auto, or homeowners policy is maxed out, the umbrella plan kicks in.

What it covers:

Extended Liability Limits – Adds $1–$10 million (or more) in protection

Legal Defense Costs – Covers court and attorney fees—even if you aren’t found liable

Personal and Advertising Injury Liability – Covers claims such as libel, slander, false arrest, and copyright infringement.

Worldwide Incidents – Applies globally, ideal for international trade or business travel

For example: A client slips outside your office after a snowstorm and sues for $800,000. Your base liability covers $500K—Delaware umbrella insurance covers the rest.

The DOI ensures insurers provide consistent protections under the Unfair Insurance Practices Act. While business owners can’t sue under this act, regulators can step in to investigate complaints and enforce compliance.

Learn more about the essential insurance policies contractors need in our full guide here.

REAL-WORLD CLAIMS & RISKS IN DELAWARE

Delaware has one of the highest attorney densities in the country—and lawsuits are common. A single claim can easily exceed your policy limits.

Examples of common claims:

Auto Accidents – A delivery driver causes a five-car pileup near Newark. Damages exceed basic limits by hundreds of thousands

Slip-and-Falls – A customer falls outside your storefront after snowmelt freezes. Medical bills and lost wages add up fast

Defamation Lawsuits – One employee’s social media post harms a competitor’s reputation—leading to a libel claim

Rental Property Injuries – A fire caused by faulty wiring injures tenants at a home owned through your LLC. Each sues for $700K+

Local risk factors that increase liability exposure:

Tropical Storms & Hurricanes – Wind damage or flooding near coastal areas like Rehoboth Beach can trigger injury lawsuits

Pools, Trampolines, & ATVs – Many insurers require added review before umbrella coverage applies to these high-risk items

High Legal Costs – Even minor claims can balloon into six- or seven-figure settlements

UMBRELLA POLICY COST DELAWARE: WHAT TO EXPECT

You might expect this coverage to be expensive—but it’s surprisingly affordable.

Typical costs:

$1 million in coverage: $150–$300/year
Each additional $1 million: ~$75/year

Your rate depends on:

Number of Vehicles and Drivers – More exposure increases your premium

Rental Properties Owned – Especially those under LLCs or in coastal zones

Recreational Risks – Pools, trampolines, and boats increase costs slightly

Base Policy Limits – The higher your base coverage, the lower the umbrella premium

Compared to neighboring states like Pennsylvania and Maryland, umbrella policy cost Delaware remains competitive.

CLAIMS PROCESS AND REGULATORY FRAMEWORK

When a serious incident happens, timing is critical. Here’s how to file a claim:

Report Immediately – Notify your carrier as soon as the incident occurs

Document Everything – Submit police reports, medical records, and photo evidence

Cooperate Fully – Be available for inspections and provide all requested materials

Let Base Policies Pay First – Your umbrella policy activates only after those limits are exhausted

Use DOI Mediation if Needed – Delaware offers free dispute resolution to avoid drawn-out court battles

Delaware insurance regulations continue to evolve to protect consumers and ensure fair practices. The DOI maintains oversight of insurance companies and handles complaints from policyholders.