It never rains when you bring an umbrella, right?
October 18, 2010 9:19 AM   Subscribe

How do we get personal liability/umbrella insurance in California, possibly without getting renter's insurance (which we don't need)?

We just moved to California from Germany, we'll probably be staying for at least 2 years. In Germany, it is customary to have a personal liability insurance ("Privathaftpflicht"). This kicks in when, e.g., you step on a friend's glasses, tip over an expensive vase, or you cause a huge accident as a pedestrian (not covered by car insurance), or similar stuff. It also somewhat extends the coverage of your car insurance (explained here). In Germany, private liability insurance is very cheap (about $50/year), and is the primary insurance that you'd get (e.g. even people who don't have car insurance or home insurance would typically have it).

I did some research and found out that apparently, in the US you can only get this type of insurance when you have car and home insurance. We rent a very small and old apartment and don't have any expensive stuff. We don't need renters insurance, we'd just like to get liability insurance. Is this possible?

We have our car insurance with AAA (which only gives umbrella insurance to people who have car and home insurance). I'm not sure whether this is relevant, but we have good health insurance via my husband's employer (a university).

In case it should be necessary to get home/renters insurance - How much do you pay for your renters insurance? And how much is the additional umbrella policy? I found it impossible to get a rough quote online without giving out all my personal details...

And finally - do you think getting a personal liability insurance is a good idea, at all? We're used to having it from Germany, but maybe it's not necessary/useful in the US...? Do you have any experience with how insurance companies handle this (e.g. do they actually step in when there's a liability case, or is the whole thing just a ripoff?)

Thank you for your help!
posted by The Toad to Work & Money (11 answers total) 1 user marked this as a favorite
In case it should be necessary to get home/renters insurance - How much do you pay for your renters insurance? And how much is the additional umbrella policy? I found it impossible to get a rough quote online without giving out all my personal details...

My renters' insurance is around $200/year. I'm pretty sure it can be had a bit cheaper with lower coverage amounts. That included some degree of personal liability insurance, and when I was signing up you could opt for greater amounts of liability coverage if you wanted for an additional fee — I don't know how it would have affected the cost exactly.
posted by enn at 9:31 AM on October 18, 2010

I've never heard of that being available except as an addition to homeowners or renters insurance, and usually only high-wealth individuals purchase additional umbrella liability insurance.

Is it very easy for people to pursue and win a personal liability claim in Germany? If so, that would explain the prevalence of the insurance there.

In the U.S. legal system, it's a hassle to sue someone and the lawyers end up with most of the judgment money. There is small claims court for small liabilities (in California, up to $7500) where you can sue without the aid of a lawyer, but for the type of thing you're mentioning (broken eyeglasses, vase, etc.) I think the property owner's insurance usually takes care of it. Also, people generally avoid filing suits or insurance claims against friends and associates since that pretty much ends that relationship and possibly damages other relationships with mutual acquaintances. Instead, people generally tend to insure their own stuff instead of counting on other people to pay for damages. If you break something, the proper etiquette is to offer to just pay for it (if it's a small, uninsured item) or to pay the deductible (if it's a larger item worth insuring).
posted by Jacqueline at 9:41 AM on October 18, 2010

IANYL. You should still get renter's insurance - it would offer you certain protection if you accidentally burned down your apartment or something like that.

The reason that insurers don't offer you umbrella insurance without auto and home (or renter's) insurance is that home and auto are the primary sources of high-dollar liability for individuals, and the idea of a personal liability umbrella is that it covers all liability, so they want to make sure that you have coverage for the common sources of liability first.

And finally - do you think getting a personal liability insurance is a good idea, at all? We're used to having it from Germany, but maybe it's not necessary/useful in the US...? Do you have any experience with how insurance companies handle this (e.g. do they actually step in when there's a liability case, or is the whole thing just a ripoff?)

My impression is that the U.S. is a far more litigious culture than Germany. My experience is that insurance companies do honor insurance policies and they will generally step in and handle any litigation filed against you related to the subject matter of the insurance - at no cost (but perhaps significant hassle, as you have to appear for depositions and things like that).

The reason that many people don't have a personal liability umbrella in the U.S. is that they are "judgment proof" - they don't have assets or income which it would be worthwhile for a plaintiff to go after. If you have assets or income you want to protect, a personal liability umbrella is a pretty good idea.
posted by iknowizbirfmark at 10:02 AM on October 18, 2010

In my state, renters can get an umbrella policy, but a renter's policy needs to be in effect. Renter's insurance is very cheap and you should get it no matter what, since your landlord's liability policy will not cover any of your possessions. I do not know of any carriers that will write a standalone umbrella policy, for renters or homeowners.

An umbrella policy generally covers your losses and liabilities (claims against you, for instance, in a lawsuit) above and beyond your renter's (or homeowner's or auto) policies. It is great coverage to have, but it's only for high-dollar claims. If someone sues you for $1000 because you hit their dog and it was killed because of the collision, for instance, you are not going to use your umbrella policy. If someone sues you for $2 million because you hit and killed their daughter, that's when you use your umbrella policy.

Contact a reputable insurance broker in your area. You're right, quoting does take a lot of information, but that's how it is. Also be aware that things like having speeding tickets can affect which companies will write a policy on you; a recent speeding ticket meant I had to go with a more expensive (in premium) policy because I was seen as more of a risk.
posted by FergieBelle at 10:04 AM on October 18, 2010

In the U.S. legal system, it's a hassle to sue someone...

Actually, it's far easier to sue someone than in most of the rest of the world, and, absent some sort of contractual agreement or a few specific situations otherwise, you have to pay any attorney fees you incur, even if you win. This is the reason that many people with assets or income to protect get a personal liability umbrella.

In the U.S., this kind of insurance is not intended to protect against small claims or liability like breaking your friend's glasses (and if you used it for that your premiums would probably go up enough to make it not worthwhile to do so). It is intended to protect against high-dollar liability in general or liability that exceeds your existing insurance coverage for an auto or a home claim. If you don't own a home or a large dog, are not going into business by yourself or with someone else or generally acting in ways which could lead to liability to another person (participating in certain activities, maybe), you might be better off making sure you have sufficient auto coverage instead of a personal liability umbrella policy. I would not expect that most temporary residents from other countries have it here. Frankly, if you don't already have your assets here, a plaintiff might not be able to recover much from you anyway.

Again, this is not legal or insurance advise. Consult and engage a professional advisor for that.
posted by iknowizbirfmark at 10:10 AM on October 18, 2010

Many insurance companies offer discounts for having more than one line of insurance (auto + home, for example). Renters' insurance is often so inexpensive as to be nearly free once multi-line discounts are applied.
posted by bgrebs at 10:33 AM on October 18, 2010

You state you don't need renter's insurance. I suggest you reconsider. Renter's insurance will put you up in a hotel if something happens that makes it impossible to stay in your apartment for a few days (i.e., fire in an adjacent apartment, water damage from a broken pipe in an adjacent unit, etc.)

A friend of mine went out of town for the weekend. An electrical short started a fire in her apartment, she came home to having lost everything except what was in her weekend bag. Her renter's insurance put her up in a hotel and helped cover the expense of furnishing a new place and replacing her clothing.

Trust us, you want renters insurance. When I was a renter, it was about $200 a year initially, and then it went down when I bought a car and added auto insurance to the package.
posted by ambrosia at 11:00 AM on October 18, 2010

I've never heard of just plain personal liability insurance...but I know my renters insurance does cover some of that. Get renter's insurance - it's usually super cheap along with car insurance.
posted by radioamy at 11:04 AM on October 18, 2010

Umbrella policies in the USA typically have deductibles around $100,000. Homeowners and renters insurance policies typically provide up to $100,000 of liability coverage.

The umbrella policy covers you for liability in excess of what is provided by your homeowners/renters policy. This is why an umbrella policy is usually very cheap at around $200 per million dollars of coverage.

You do need renters insurance for the liability coverage, if nothing else. However, it does not look like you need an umbrella liability policy, unless you have a million or two in assets lying around.
posted by monotreme at 12:40 PM on October 18, 2010

Okay, I think the problem here is that there's some confusion as to how insurance products are structured in the US. I work for an insurance company, and I deal with that every day, so it isn't terribly surprising.

What you're looking for is a personal liability policy. These are almost exclusively sold bundled with personal property insurance policies, i.e. homeowner's or renter's policies. A renter's policy will include both coverage for your personal property as well as coverage for personal liability. A homeowner's policy would also include coverage for your real property, but otherwise they're identical.

The liability side will include:

- Coverage L: Liability for bodily injury or property damage.
- Coverage M: Medical payments coverage, i.e. some basic no-fault medical coverage for someone who trips going up your stairs.

Neither of these will provide any coverage for liability arising out of the operation or ownership of a car. That's what your personal auto policy is for.

Umbrella policies provide another layer of liability insurance intended to sit on top of qualifying underlying policies, i.e. your homeowner's and auto policies, for those rare but catastrophic claims, e.g. you run a bus full of school kids off CA-1 into the ocean. There's also "drop down" coverage for those rare incidents which aren't covered by an underlying policy. But because they're supposed to be excess to other insurance, umbrella policies are cheaper than underlying policies per dollar of insurance, because a loss needs to exceed the underlying limits before the excess layer is pierced, reducing the frequency of losses. This means that insurers won't sell you an umbrella policy unless you have appropriate underlying policies in place, generally with maximal limits.

I highly doubt that you actually need an umbrella policy, as what you're really looking for is a renter's policy. Fortunately, they're pretty cheap. I've got about $35k in personal property coverage and a healthy liability limit and I pay about $100 a year. Homeowner's policies are far more expensive, as houses aren't cheap. But unless you've got a few hundred thousand in assets lying about, an umbrella policy would probably be overkill.

Obviously, the details of this are something you should discuss with a California agent, but that's basically how things are done over here.
posted by valkyryn at 12:49 PM on October 18, 2010 [1 favorite]

Renter's insurance is a few hundred bucks a year. Totally worth it. If you're in CA, go for the earthquake insurance if you have any nice stuff in the place you are renting.
posted by charlesv at 2:26 PM on October 18, 2010

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