"If you do not have at least a $1,000,000 umbrella you do not have adequate coverage". The umbrella is the number one coverage we push our clients to carry in our agency. We think it is critical.
It is the only item that will protect you in the event of a large liability loss, most commonly in a bad car crash.
If you ever find yourself in a situation where you cause severe injury to another person in a car crash and exceed your liability limits, you will have a huge financial crisis on your hands. If you own property, assets, or earn a paycheck, each of those things are in jeopardy every time you drive your vehicle. What if you cause substantial damage while operating your watercraft or don't see another boater or a swimmer while operating your vessel? We have seen motorcycles cause total damage to private passenger vehicles before. Someone can slip and fall on your property and seriously injure themselves.
In our own agency, we have witnessed worst case scenarios. These losses are unfortunate for everyone including those that are injured, the insured who is being deemed responsible, us as the agents, and the company. We have seen liability claims just over the past year exceed $1,000,000 in BI payouts. Having an umbrella can't change the loss, but it can offer a peace of mind knowing you are protected.
If you have young drivers on a policy, it is especially important to carry an umbrella as your children gain experience as a new driver.
The umbrella works just like it sounds. You can place your other policies under the umbrella to gain additional liability protection. Here are some of the items you can add to a personal umbrella.
Motorcycles & Recreational Vehicles
Dwelling Fire / Rental Properties
An umbrella strictly covers liability arising from the use and or ownership of these items and functions as excess liability above and beyond what your other policies offer. You can typically purchase an umbrella in amounts from $1,000,000 to $5,000,000 with most carriers. We also have access to excess liability beyond the $5,000,000 limit through a number of carriers if your asset portfolio exceeds that amount. Some carriers will allow you to add additional UM/UIM coverage to an umbrella.
Umbrellas cover liability only. They do not add any additional physical damage coverage to any of your policies.
You will also be required to carry a certain amount of underlying coverage on each of the policies you add to the umbrella as a prerequisite. For instance, if you want to add your personal auto policy to your umbrella, you need to carry at least $250,000/500,000/100,000 split limits, or $300,000 Combined Single Limit in most cases. In certain scenarios, a carrier may require the underlying limit is higher. If you are someone with multiple accidents or have younger drivers on a policy, the carrier may want to see that the required underlying limit is higher.
Also, many times on rental exposures, a company wants to see you have at least $500,000 of underlying liability on a dwelling fire policy. If the house is built before 1978, the company may require lead certificates to be completed before you can add the rental exposure. We have stand alone umbrella carriers like Markel & USLI who will not require these certificates.
Personal Vs. Commercial
We have flexibility to find you any amount of additional liability coverage you may need. Keep in mind that personal umbrellas cover items written on personal lines forms. If you have insurance policies that are written on commercial paper such as a business auto or commercial property, those items will need to be written on a commercial umbrella. However, they function in the same manner. If your underlying liability is exhausted on the underlying policy, your umbrella picks up the remainder.
Umbrellas are rated on a per item basis. Generally you will have a base rate such as $100 for a $1,000,000 umbrella. As you add items, the cost will increase.
If you are covering your owner occupied house and two cars, you may only be paying around $200 a year. If you have four cars, a boat, rental property, and a motorcycle, your rate might be double that.
On a commercial umbrella, your particular industry can change the rating as well.
If you are adding youthful drivers to an umbrella, there may be a surcharge. A company can also surcharge as you grow older. Past 79 years of age, some carriers won't accept you! Also, if you are a public official or have a flagged occupation, you may not fit every company's appetite.
No worries, though. We have a wide range of marketplaces regardless of your age or occupation. Also, if you were denied umbrella coverage due to past driving history (even major violations such as DUIs) we can help!