Umbrella Insurance
How to buy an umbrella liability Insurance policy?
Homeowners who insure their homes and cars with the same Insurance Company can often buy an “umbrella” policy that covers everything beyond their homes and vehicles.
Although I don’t own a home, I have substantial financial asset (stocks and bonds) that I want to protect. If possible, I want to avoid renters’ Insurance because I don’t have much valuable stored at home. What is the best way for me to protect my financial asset against lawsuits that aren’t from car accidents?
I want the Insurance Company to provide good lawyers in case I’m hit by a frivolous lawsuit, such as sexual harassment and discrimination although my profession doesn’t expose me to medical malpractice suits.
What are my options and how should I choose?
An umbrella liability policy has an “underlying limit requirement”. For homeowners, it’s usually $300,000. That means, that you have to have personal liability (found on a renters policy or homeowners policy) with limits of at least $300,000 before the umbrella policy “kicks in”.
The renters policy costs $150 a year, give or take. You WILL have to purchase it in order to get a personal umbrella policy, which should run you around $250 a year for $1,000,000.
The truth of the matter is, even if you don’t own your home, you LIVE somewhere, and you have the same liability exposure from living in an apartment as you do living in a home. If a friend trips on your carpet and breaks his leg, he can still sue you!! Your dog can still BITE someone, and you can still hit someone while driving a golf cart at the club!
You CAN find a company willing to write the policy without the underlying renters policy, HOWEVER, it will probably have defense costs WITHIN LIMITS, and have a $500,000 deductible (underlying limit, which you choose to decline) so you’ll have to prove to them that you’ve paid the first half mil before they start paying anything. This would be through an inadmitted carrier in your state, and will probably run you $750 a year. Cheaper to do it the other way.
When Do You Need Umbrella Insurance?