Michigan umbrella insurance requirements usually start with your auto and home policies: many umbrella carriers require auto liability of at least $250,000 per person and $500,000 per accident, and home liability commonly starting at $300,000, underneath the umbrella. If your underlying limits are lower than required, the umbrella pays as if they were there, and you pay the difference.
The short version: An umbrella is usually the most cost-effective way to add $1 million or more of liability protection, but it sits on top of your auto and home policies. If you chose Michigan's lower 50/100 auto limits to save money, your umbrella may have a hole in it. Check that every policy underneath matches your umbrella's schedule.
What umbrellas require underneath
Requirements are set by each umbrella carrier, not by law, but they cluster around the same numbers: auto liability of $250,000/$500,000, home liability of $300,000 or more, and matching limits on boats, RVs and rental properties. Those auto numbers line up with Michigan's default liability limits. Since July 2, 2020, Michigan auto policies default to $250,000/$500,000 unless you sign a state form choosing lower limits, which can go as low as $50,000/$100,000 (MCL 500.3009).
The gap if your limits are too low
Umbrella policies are written to pay only above the required underlying limits. One carrier's umbrella form puts it bluntly: failure to keep the required primary insurance "will result in a gap in coverage." Here is how that plays out:
- Your umbrella requires $250,000 per person on auto. You signed down to $50,000 to save premium.
- You cause a crash and a judgment of $400,000 is entered for one injured person.
- Your auto policy pays $50,000. The umbrella pays only above $250,000: $150,000. You owe the $200,000 in between.
The exact mechanics depend on the policy, but the lesson doesn't. When your auto and umbrella are with different companies, nobody may notice if you sign down your auto limits at renewal or move your auto to another company. Keeping them coordinated at one agency is the simplest protection. For households with real assets or teen drivers, we generally recommend auto limits above the 250/500 default, matched to the umbrella, and umbrella limits above $1 million.
Why umbrellas matter more in Michigan now
- Excess medical claims. Since the 2019 no-fault reform, drivers can choose limited PIP medical coverage. If someone you injure chose a limited PIP level, they can sue you for medical bills above their limit (MCL 500.3135). That is a larger exposure than in the unlimited-PIP era.
- Teen drivers. Michigan's owner's liability law makes the vehicle owner liable for a permitted driver's negligence, and consent is presumed when the driver is an immediate family member (MCL 257.401). A parent who owns the car their teenager drives owns that liability.
- Dog bites. Michigan imposes strict liability on dog owners for unprovoked bites to people on public property or lawfully on private property, including the owner's, regardless of the dog's history (MCL 287.351).
- Teens and parties. Michigan makes it a crime to knowingly allow a minor to drink at a gathering in your home, and courts have allowed civil claims against hosts who furnish alcohol to minors.
What umbrellas commonly don't cover
Exclusions vary by company, but commonly include business and professional activities, aircraft, larger watercraft above a size or horsepower threshold, rental properties you haven't listed, intentional acts and damage to your own property. Paid board service usually needs its own coverage; unpaid nonprofit board service is often covered or can be added.
Two Michigan-specific points: an umbrella is liability coverage, so it does not replace your PIP choice; and uninsured and underinsured motorist coverage, which protects your family when another driver seriously injures you, is optional in Michigan and is usually not part of an umbrella unless it is added. With 50/100 elections now legal, the driver who hits you may carry only $50,000. Ask whether your umbrella can include excess uninsured/underinsured motorist coverage.
For who needs an umbrella and what it costs, see our guide to Michigan umbrella insurance.
Frequently Asked Questions
What auto limits do I need for an umbrella policy in Michigan?
Many umbrella carriers require auto liability of at least $250,000 per person and $500,000 per accident, which matches Michigan's default limits since July 2020. If you signed a form choosing lower limits, you may not qualify for an umbrella or may have a gap in coverage. Requirements vary by carrier.
What happens if my underlying limits are lower than my umbrella requires?
The umbrella generally pays only above the required limit, as if that coverage were in place. You would personally owe the difference between your actual limit and the required one. Keep your auto, home and umbrella coordinated so a change you make to one policy doesn't create a gap.
Does an umbrella policy cover uninsured motorists in Michigan?
Usually not unless it is added. Michigan does not require uninsured or underinsured motorist coverage, and many umbrellas include excess UM/UIM only by endorsement, often requiring matching UM/UIM limits on the auto policy. Ask your agent whether it is available.
Does an umbrella cover my teenage driver?
Generally yes, for liability, as a resident family member driving a covered vehicle, subject to your umbrella's terms and the required underlying auto limits. Under Michigan's owner's liability law, the owner is presumed to have consented to a family member's driving, and so is liable for that family member's negligent driving, which is one of the strongest reasons parents of teen drivers carry an umbrella.
What does an umbrella policy not cover?
Common exclusions include business and professional activities, aircraft, larger boats, unlisted rental properties, intentional acts and damage to your own property. They vary by company, so review the exclusions with your agent.
The bottom line
An umbrella is only as good as the policies beneath it. The most common gap we find is not a missing umbrella; it is an umbrella sitting on auto limits that were lowered to save a few dollars.
J. Jacobs & Associates is an independent agency in Lake Orion that has insured Michigan families for more than forty years. We represent more than ten preferred personal lines carriers, and we place the umbrella, auto and home together so the limits match. Send us your declarations pages and we'll check your schedule for gaps. Call (248) 693-6455 or visit our umbrella insurance page.