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A $1,000,000 liability limit sounds like a lot, but in 2026 it often is not enough. The right amount of liability insurance depends on what you could lose in a lawsuit, which for many families and small organizations is far more than a single million dollars. An umbrella policy is the affordable way to stack an extra $1 million to $5 million or more on top of the liability you already carry on your home, auto, boat, or business, and it is worth a serious look for anyone with assets, a board seat, or a lakefront property that draws visitors.
Every property, household, and organization is different, which makes it hard to picture how a claim could ever reach seven figures. Real claims show how fast it happens. The scenario below is an illustrative example widely shared in the association-insurance world, offered here to make the numbers concrete rather than as an account of a specific client.
Why would $1 million not be enough?
Serious injuries generate serious costs, and they add up faster than most people expect. A single traumatic brain injury, near-drowning, or fall can produce medical bills, lost income, long-term care, and legal expenses that climb into the millions. Jury awards have grown right alongside those costs, a trend the insurance industry often calls social inflation. When the damages exceed your limit, the difference does not disappear. It comes out of your assets.
What does a large liability claim look like?
Consider an illustrative case involving a condominium association with about 80 units and a small playground. A swing set had recently been repaired by a resident rather than a licensed contractor. While a young man was using it, a metal attachment failed and struck him in the head, causing a severe closed-head injury. In this scenario:
- Medical costs passed $300,000 in the first ten days of intensive care alone
- The injured man faced long-term rehabilitation to relearn how to walk and speak
- A lawsuit against the association resulted in a $7.2 million judgment
- The association carried $1 million in general liability and $1 million in directors and officers coverage, which were quickly exhausted
- With no further insurance, a lien was placed on every unit owner's property, and owners were left personally responsible for more than $5 million
The unit owners then sued the board for failing to obtain adequate coverage, which exhausted the directors and officers limits too. Everyone in that community was underinsured and did not know it until it was far too late.
Who carries this kind of exposure?
It is not only condo boards. The same math reaches:
- Families with a cottage on Torch Lake or Higgins Lake, a boat, a dock, and guests all summer
- Homeowners with a pool, a trampoline, or teenage drivers
- Small business owners and landlords whose customers or tenants could be injured
- Volunteer board members of associations, churches, and nonprofits, who can be named personally
Anywhere people gather on property you own or govern, a liability claim can follow.
How do you decide how much is enough?
There is no single right number, but you can reason your way to a sensible one. Think through:
- The total value of what you would need to protect, including home equity, savings, and investments
- Your future income, which a judgment can reach through garnishment
- Higher-risk features such as pools, docks, hoists, playgrounds, or short-term rental guests
- How many people regularly use your property or your organization's common areas
- Any board or officer role that exposes you personally
A common guideline is to carry liability limits at least equal to your net worth, then add an umbrella to cover the gap between your underlying home, auto, or business limits and the amount you actually want behind you. Umbrella coverage is often surprisingly affordable for the protection it adds, though every policy is subject to underwriting and nothing is bound or altered until confirmed by an authorized representative.
What can you do next?
Insurance cannot undo a tragedy, but the right limits keep one accident from taking a home, a retirement account, or a community's finances with it. If you serve on a board, own a lakefront place near Petoskey, or run a small business, a quick review of your liability limits is worth the time. Our umbrella insurance page explains how the layers fit together. To talk it through, call Top O' Michigan at 800-686-8664, stop by our Petoskey office, or email Service@TheSpireTeam.com. You may also want to read our post on protecting a business at an owner's death and our business continuity guide, or see how we serve the area on our Petoskey insurance page.