If your auto or homeowners liability policy limits are exceeded in a lawsuit, you’re exposed to significant financial risk. That’s where Michigan umbrella insurance provides protection. These policies add an extra layer of protection when standard limits are exhausted.
This guide explains who needs it, what it covers, and the factors that affect costs in Michigan—and the consequences of going without it.
Who Needs This Coverage in Michigan
Umbrella insurance isn’t legally required under the Michigan Insurance Code. However, most insurers require minimum underlying coverage limits before issuing an umbrella policy. Common requirements include:
Auto Liability: Most insurance companies require minimum underlying liability limits of $250,000 per person / $500,000 per accident for bodily injury and $100,000 for property damage
Homeowners Liability: Usually $300,000 personal liability minimum
You must meet these thresholds before qualifying for umbrella coverage, though specific amounts vary by insurance company.
Certain professionals and property owners face greater liability exposure and should consider umbrella coverage:
- Construction firms with general liability and workers’ compensation exposure
- Healthcare providers who often combine malpractice and umbrella insurance due to liability risks
- Property owners including landlords and business owners with multiple properties
The Department of Insurance and Financial Services (DIFS) regulates insurers to ensure proper practices. Companies that fail to comply face regulatory action.
Learn more about the essential insurance policies contractors need in our full guide here.
Key Benefits & Coverage Details
Umbrella insurance provides comprehensive liability protection beyond your primary policies.
Here’s what’s typically included:
Excess Liability Protection: Pays after your primary policies reach their limits
Legal Defense: Covers attorney fees—even if you’re not found liable
Additional Claims: Often includes coverage for slander, libel, and false imprisonment
Global Coverage: Protection extends worldwide for business or leisure travel
With Michigan’s auto insurance reforms in 2020, all drivers now face significantly increased liability risk if they cause a serious car accident.
The biggest change is that an ‘at-fault’ driver can now be sued for ‘excess’ medical expenses when an injured party’s medical bills exceed their chosen PIP coverage limits.
Common Claims in Michigan
Most umbrella claims stem from common risks. Examples that often exceed primary coverage include:
Auto Accidents: A teenage driver causes a multi-car crash with medical bills that exceed basic liability limits
Slip-and-Fall Injuries: A delivery person falls on icy steps requiring surgery, with costs exceeding standard policy limits
Online Defamation: An employee posts content that results in a lawsuit
Landlord Liability: A tenant sues over property conditions, and the legal payout exceeds policy limits
Michigan’s frequent winter storms, snow, and ice increase risk exposure. Trampolines, pools, and recreational vehicles add to personal liability concerns.
Michigan Umbrella Insurance Costs
Umbrella insurance costs in Michigan are influenced by several factors rather than fixed amounts:
Factors that affect your premium:
- Number of Properties and Vehicles: More assets typically mean higher risk assessment
- Driving Records: Households with teens or traffic violations may see higher premiums
- High-Risk Features: Pools, trampolines, or certain dog breeds can increase costs
- Claims History: Previous lawsuits or large claims can affect eligibility and pricing
- Coverage Amount: Higher coverage limits result in higher premiums
- Location: Geographic risk factors within Michigan
- Credit History: Your credit score may impact premium calculations
On average, a $1 million umbrella policy in Michigan costs between $150 and $300 per year, though individual rates vary significantly based on the factors above.
Claims Process & Legal Requirements
If an incident occurs, proper documentation and prompt notification are essential:
Immediate Steps:
- Notify Your Insurer: Contact your carrier immediately. Delays can lead to denied claims
- Provide Documentation: Include police reports, medical records, and photos
- Cooperate Fully: Be available for interviews or inspections
DIFS provides oversight to ensure fair claims handling and offers mediation services to help resolve coverage disputes without court battles.
Frequently Asked Questions
Q: Is umbrella insurance required in Michigan?
A: No, but you must meet base liability thresholds on your underlying policies to qualify.
Q: Does umbrella coverage include professional mistakes?
A: No. You’ll need Errors & Omissions or malpractice insurance for professional liability.
Q: Can I use a personal umbrella policy for my business?
A: Not typically. You’ll need a commercial umbrella policy tailored for business operations.
The Bottom Line
Michigan umbrella insurance provides essential protection when lawsuits exceed your standard policy limits. One severe claim could impact your business, savings, or home.
The relatively low cost of umbrella insurance compared to the potential financial exposure makes it a valuable consideration for asset protection, especially given Michigan’s recent changes in auto insurance liability laws.
If you’re unsure about your exposure, consult with insurance professionals who can assess your specific risk factors and coverage needs.
