There are at least three reasons for an individual to buy a personal umbrella policy.
To begin with, the primary policies otherwise available generally do not provide liability limits commensurate with the exposure such individuals may face.
Second, the cost of this excess coverage is comparatively cheap.
Third (and perhaps most importantly), umbrella policies not only provide coverage when losses exceed the available primary limits, but add coverage for certain types of losses, such as “personal injury” claims that are generally not covered by primary policies.
Although the limits of homeowners insurance and other forms of personal primary insurance have increased, most only provide coverage with “per occurrence” limits of $300,000 or $500,000. Substantial as that sum may seem, it is hardly sufficient to satisfy the liability an insured may face due to a serious accident.
Umbrella coverage is also surprisingly affordable. As a result, umbrella insurers are willing to quote coverage of $1 million to as much as $10 million at rates that are proportionally cheaper than primary insurance. Umbrella carriers can quote coverage with confidence that statistics show their insureds are unlikely to be sued, and any resulting suits are likely to be resolved within the limits of the insured’s primary coverage.
Umbrella insurance not only boosts available coverage limits at a relatively advantageous cost compared to dollar limits on primary policies, but it does so with respect to a portfolio of primary risks. Thus, an insured has excess coverage available for serious auto or premises liability claims without having to pay to increase limits on primary insurance policies that would insure these separate risks.
Umbrella policies not only provide insurance coverage once the primary limits are exhausted, but they drop down to provide primary coverage for certain types of losses that may not be covered under the insured’s primary policy.
Personal umbrella policies can help customize insurance coverage by filling gaps in a client’s coverage profile and raise the limits of coverage to safer levels. In short, the answer to the question of whether an insured should buy personal umbrella insurance is not “yes, you should” but rather, “why on earth would you not.”
IIAT Advantage Offers Stand-alone personal umbrella program through RLI Insurance Co.
IIAT offers a standard market program for stand-alone personal umbrella policies through RLI. It is a perfect solution for hard to place personal lines accounts.