Personal Umbrella Insurance

More Protection With An Umbrella Policy
Umbrella insurance is not just for the wealthy. With the common occurrence of lawsuits, it is a must for every home, auto and watercraft owner. As many Americans are finding out, you don't have to be a millionaire to be sued like one. That is why Travelers offers an Umbrella Policy to supplement the basic liability coverage provided by our auto, home and boat policies.

Umbrella Policy Provides: Extra Liability Coverage beyond that provided in your underlying auto, home or boat policy. Travelers Umbrella policy broadens your coverage. And, if you are involved in a lawsuit, you have the security of an extra $1million to $5 million in liability protection.


Get Peace of Mind Without A Large Added Cost:  Umbrella Policy is inexpensive, especially when you consider the added coverage you get. Plus, our umbrella insurance covers your non-business activities anywhere in the world. No one should be without an Umbrella policy!

This material is for informational purposes only. All statements herein are subject to the provisions, exclusions and conditions of the applicable policy. For an actual description of all coverages, terms and conditions, refer to the insurance policy. Coverages are subject to individual insured meeting our underwriting qualifications and to state availability.
 

Umbrella Coverage 101
The more you have, the more protection you need
The more your earning power and assets increase, the more you have at risk, and therefore, the more you need to protect.

If you think you need at least a million dollars of additional protection above your current homeowners or automobile liability limits, you can purchase something called excess liability. Often referred to as an umbrella policy, excess liability is the additional protection you need in case a judgment against you exceeds the liability limits of your existing auto or homeowners policy. Available in amounts ranging from one to five million dollars, excess liability coverage increases your personal liability limits by adding protection to your current auto, boat or homeowners policies.

Why liability coverage from your homeowners and auto policy may not be enough
Homeowners insurance provides a minimum of $100,000 liability coverage (the coverage that protects you when people are injured or property is damaged due to circumstances in which you or your family are responsible). Although it varies widely by state, the typical minimum liability protection for auto insurance is around $25,000 per person and $50,000 per accident.

With both of these coverages you can purchase higher limits (or amounts) of liability protection...but the most that can be purchased is $500,000 for homeowners policies or $250,000 per person, $500,000 per accident for auto insurance. Again, this may not be enough protection in today's lawsuit frenzied environment where million dollar judgments are fast becoming the rule rather than the exception, even for seemingly minor situations.

To understand more about what excess liability coverage is, and how it can help you, please review the following topics:

What is Excess Liability?
Coverage provided
How it works
Some definitions
Exclusions
How much is enough?
Money-saving discounts



What is Excess Liability?
Available in amounts ranging from one to five million dollars, excess liability coverage increases your personal liability limits by adding protection to your current auto, boat or homeowners policies. Also, if something is not covered in your homeowners policy (like libel), and it's not specifically excluded in the excess liability policy, you're covered.


Coverage provided
Excess liability coverage provides:

Protection for covered claims by others for personal injury or property damage caused by you, members of your family/household, or hazards on your property for which you are legally liable
Personal liability coverage for occurrences on or off your premises
An additional layer of protection above your primary auto policy against auto-related liabilities
Protection against non-business related personal injury liabilities such as slander, libel, wrongful eviction or false arrest
Legal defense costs for a covered loss. Lawyer fees and associated court costs are covered
Worldwide coverage- no matter where you go, with the only exception being situations involving foreign ownership of dwellings or cars



How it works
Depending on the type of accident, your homeowners, auto or boat policy liability limits are used up first, then the excess liability policy covers all remaining costs (up to the amounts of coverage you purchased). For example, if your neighbor dove into your swimming pool and broke his neck, your homeowners liability coverage would pay for the first $100,000 in damages. Your excess liability policy would cover the rest (including associated legal fees) up to the one million dollar policy amount that you had purchased.

Most companies require that you carry certain limits on your primary insurance policies (homeowners, auto and boat) in order to receive excess liability coverage. For example, a company may require the following primary liability limits: $100,000 for homeowners, $250,000 per person/$500,000 per accident for auto and $300,000 for boat/yacht coverage.



Some Definitions
Insurance products tend to get loaded down with legal-sounding jargon, especially a product that specifically deals with circumstances for which you are legally responsible. Therefore, a few common definitions might help clear up any confusion:

Personal Liability: Coverage for damages that you are legally liable (responsible) for. This includes incidents occurring at your home and/or caused by you, residents of your household or your pets. Here are some common examples: your dog bites someone, a guest falls down your front steps, your teenage son rough-houses with his buddy and accidentally breaks that friend's leg!

Personal Injury: This all-inclusive definition covers many predicaments. Personal injury can take many forms, including: bodily injury, shock, emotional distress, mental anguish, sickness or disease, or death arising from any of the above. Personal injury also means false arrest, detention or imprisonment, malicious prosecution, wrongful entry or eviction, humiliation, libel or slander, defamation of character or invasion of privacy.

Property Damage: Accidental damage to the property of others caused by you, residents of your household, or your pets.



Exclusions
Often, insurance policies are defined not by what they cover, but by what they don't. This is especially true for excess liability products. If something is not specifically excluded, you're covered. Exclusions vary widely by company. Here are some common exclusions:

damages expected or intended by insured.
damages arising out of business or professional pursuits.
liability assumed under contract or agreement.
liability arising out of ownership, maintenance, use, loading or unloading of aircraft.
liability arising out of ownership, maintenance or use of non-traditional watercraft such as jet skis, air boats or air cushions.
liability arising out of ownership, maintenance or use of most recreational vehicles. Only snowmobiles and golf carts are covered.
damages to property you take care of, own or use.
damages covered under a Workman's Compensation policy.
liability arising out of war or insurrection.



How much is enough?
Obviously, determining how much coverage is right for you is a personal decision. Much depends on the value of the current assets you have to protect. However, there are also other factors to take into consideration. What will the value of your future assets be? Are you involved in activities that put you at greater risk? Do you have teenagers? Do they drive? Your local independent agent or Travelers representative can help you determine the coverage amount that works best for you.



Money-saving discounts
Money-saving discounts are available in most states if your car, home or boat is already insured with the same insurance company. Additionally, some companies are beginning to offer an endorsement (add-on coverage) to existing homeowner policies that increases your liability limits to the millions! Your independent agent or Travelers representative can help you determine whether this endorsement is available, as well as help you determine the best money-saving coverages available.
 

Umbrella Coverage for Preventing Your Ruin

By: New York Times

HERE’S the nightmare: Your car skids. You crash into a Mercedes with a highly paid business executive at the wheel. He’s hurt so badly he cannot return to work. A jury awards him millions of dollars and you have to pay it.

You’re wiped out financially. The court takes your savings, goes after your home and, for decades, requires you to give up a part of your salary.

For some people such a nightmare could never happen. They have an extra insurance policy, known as umbrella or excess liability coverage, which takes care of their liability for the lawsuits and medical bills of the auto accident victim — or of the teenage guest who dives into the shallow end of the swimming pool or the deliveryman who trips on the front steps.

But many people with major assets either do not buy the extra coverage or do not buy enough. Some do not know about umbrella coverage, which also pays for lawyers and other legal expenses. Others have heard of it but do not understand it. Still others decide that they do not want to pay for it, even though the cost is usually a fraction of the price of a typical package of home and auto insurance.

“This is a neglected area,” said Mark Schussel, a spokesman for the Chubb Group of Insurance Companies, which caters to affluent home and auto owners. “Some people have some coverage. But they haven’t changed the amount in years. Some people have a $1 million figure in their heads, and it just doesn’t make sense anymore.”

Charlotte Edmonston has been an insurance agent for more than 30 years. She works with wealthy clients in Baton Rouge, La., and oversees agents in 29 cities nationwide for the personal insurance unit of Arthur J. Gallagher & Company, a big insurance broker with headquarters near Chicago.

Her first question for new customers is whether they have umbrella coverage. Most of them already do. But “90 percent of them are underinsured,” she said. “Usually they were sold too little from the get-go, and their assets have grown and they never revisited the issue.”

For Jeff Cox, an owner of the third-generation insurance agency of Lloyd Bedford Cox in Bedford Hills, N.Y., and Greenwich, Conn., “the discussion about umbrella coverage usually starts at $5 million.” But he can provide up to $100 million in coverage.

Umbrella and excess coverage are extensions of home and auto insurance. Banks make people buy home insurance to get mortgages, and states require drivers to buy auto insurance. But no one mandates buying a policy that could turn out to be the most important part of your insurance package.

As a result, only 15 percent to 20 percent of clients at the Wall Street insurance agency of Campbell Solberg Associates buy umbrella coverage, said Rick Wiltshire, an executive at the firm. Instead, they stick with the $100,000, $300,000 or, in some cases, $500,000 in liability coverage that comes standard with the most widely sold home-insurance policies.

“You never think it’s going to happen to you,” said Rick Blank, an agent in White Plains, N.Y., with the Preferred Services Group. “Personal injury lawyers are making money by suing people. If you don’t have enough insurance you become personally liable.”

Some insurance companies that cater to the wealthy say that as many as half of their customers buy umbrella coverage. But State Farm, the biggest home insurer in the country, with a clientele of mainly middle- and lower-income homeowners, says about 12 percent of its policyholders buy umbrella coverage.

Buying such coverage usually does not greatly increase the overall cost of home and auto insurance. For example, in Louisiana, insurance on a $1 million home well away from the coast might run $4,500 a year, Ms. Edmonston, the Baton Rouge agent, said. Two cars could raise the cost of the package to $7,500. And $5 million in umbrella coverage might cost about $600 more, or about 8 percent of the total. In New York, agents say, $5 million in coverage might cost about the same.

Ms. Edmonston consolidated home and auto coverage for Ann Brown Singleton, a stockbroker and financial adviser in Baton Rouge, after her husband died and she married Andrew Jackson Singleton, a sales manager for several national companies. Together, they owned several houses, three vintage cars, jewelry and art.

Back Story With David Cay Johnston on The Times New Section on the Working Wealthy" I had a $1 million umbrella, which I thought would certainly satisfy everything,” Ms. Singleton said. “When Charlotte Edmonston got through with her analysis she said, ‘Whoa, you need a $5 million umbrella.’ Whether lawsuits are valid or not, you wind up having to defend yourself against them, and you never know how high the judgment is going to go. I find that frightening.”

Philip J. Hirschkop, a lawyer just outside Washington, said he had a client without an umbrella policy who had only the $100,000 coverage that came standard with his home and auto insurance policy. He was sued for much more over an auto accident and was in danger of “losing everything he owns.”

Around the country, at companies dealing with rich clients, the first million in coverage is usually the most expensive, at perhaps $150 to $300 annually, said Jeanne M. Salvatore, a specialist in home insurance at the Insurance Information Institute. Each additional million in coverage, she said, could cost around $100 to $125 annually. The rates per million decline as coverage increases. But at $10 million in coverage, the rate jumps because few customers buy that much, meaning insurers can spread their risk over only a relatively small group of customers.

The situation is often the reverse for the many insurers who specialize in middle- and lower-income clients. Often their rates shoot up after the first million in umbrella coverage because they have only a small group of buyers of umbrella policies larger than $1 million. A smaller pool of customers creates more risk per dollar of premium for an insurer, so the insurer charges more for the coverage.

One homeowner said that for a $3 million umbrella policy from a middle-income insurer, the second and third million in coverage cost him 3.5 times the rate for the first million of coverage.

Thankfully, accidents with elephantine lawsuits are not everyday events. When they do occur, however, the results can be devastating.

One of Mr. Cox’s clients crashed into the rear of a car on a slick highway. A woman and a child were critically injured. After two years of litigation, his client settled the lawsuit for more than $5 million. The client had $15 million in umbrella coverage. The policy paid for the settlement and all legal costs. “Without the umbrella,” Mr. Cox said, “they would have been completely wiped out.”