Umbrella policies, more than just home or auto

To truly protect our clients, I will often offer an “Umbrella” policy.  The most common questions are, what is an umbrella policy, and why would I need one.

I am glad you asked.

Umbrella policies provide additional excess liability coverage beyond the current Home/Auto policies.  The critical distinction is the BEYOND PART.

Umbrellas protect against bodily injury and property damage claims after other policies have been exhausted.  While the highest likelihood of these comes from an auto/property claim, Umbrella policies go beyond these scenarios.  Umbrella policies provide defense costs, legal fees, arrests, libel, or slander as well.

Innocent until proven guilty comes at a defense cost, which umbrella policies can cover as well.

Why is this important?

Ever heard of “more money more problems?”  The vast majority of Americans spend their days attempting to build wealth.  Such as saving for retirement, homeownership, or annual vacations with their families.  As clients start to acquire wealth, these are at risk of being used in the even they are at fault or a bodily injury or property damage claim.

Mistakes happen, and while many will agree that it is unfortunate, a person was hurt, the costs of getting that person back on their feet are expensive.  With legal representation, that other party is concerned about the well being of them and their family.

How much are Umbrella policies?

They can range anywhere between $125-$500/year depending on the risk and the carrier.

Some things to consider:

  1. Low-risk individuals with one or two cars, no young drivers, excellent credit and low loss history will have a lower premium
  2. Higher risk individuals who have three or more cars, boats, motorcycles, several landlord homes, or a claims history will have a higher premium.

At any rate, regardless of the cost, defense cost, and liability limits of 1,000,000 dollars for less than $500/year is a fantastic offering, with effective cost/benefits ratios.

Underlying limits- is it too good to be true?

Kind of…  Umbrella policies hedge their bet by requiring auto policies to have 300 Combined single limits or 100/300 split auto bodily injury limits.  They are also going to want insurance on all toys, boats, RV’s, and Property with specific limits as well.  The cost of the umbrella can only be low if it is excess, and not primary to the risks it is covering.

That sounds expensive!

Hold on now, with the Right Carrier, and Right client, the cost can be mitigated.  Here is a quick example.

Client: Moderate credit, three tickets in the last three years, two cars, one driver.

Safeco Premium: $6,000 year

Progresesive Premium: $3,000 year.

With a client that has excellent credit and no loss history, Safeco will over higher limits at a lower rate.

Here is a prime example of why insurance doesn’t have to cost a ton of money, but you have to partner with a company that is willing to offer the right price for the right coverages.



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