Go out with Umbrella (policy) or leave it ?
March 6, 2011 11:32 PM   Subscribe

Any advice or general thoughts on purchasing an umbrella policy to add on to renters policy and auto insurance? Why would one do that? why not? etc...
posted by dougiedd to Home & Garden (10 answers total) 5 users marked this as a favorite
 
We do because we do a nannyshare in our home. Better liability.
posted by k8t at 3:38 AM on March 7, 2011


The reason to buy more insurance is because you have assets that need to be protected or because you have an unusually high exposure. In other words, the only people who need umbrella policies are rich people and people who own businesses. If you're renting, it's unlikely that you're either of those. Buying extra insurance for the heck of it is just giving the insurance company money.

Either way, it seems unlikely that a renters' policy is going to have sufficient limits to make you eligible for an umbrella policy. Most such policies require you to have underlying liability coverage in the $500,000-$1,000,000 range, and renters' policies normally have maximum limits lower than that.
posted by valkyryn at 3:42 AM on March 7, 2011


Generally, an umbrella policy is excess coverage over your primary underlying coverage. Most people probably don't need an umbrella policy as renters or auto owners... but it depends on your situation, which you've told us nothing about.
posted by J. Wilson at 4:34 AM on March 7, 2011


For an additional million bux of coverage, I pay about $100/yr for my umbrella policy. While most claims fall well below that level, it's fairly comforting. If you have a lot of assets, it's cheap protection. If you don't, it's probably superfluous.
posted by FauxScot at 4:55 AM on March 7, 2011


The examples I hear for needing umbrella insurance usually involve the auto policy - medical costs can rack up, especially if physical therapy is involved or if the other driver doesn't have insurance. Raising the limits could be an easier solution but an umbrella policy could provide that peace of mind security cushion.
posted by zix at 6:57 AM on March 7, 2011


The examples I hear for needing umbrella insurance usually involve the auto policy

That's because for the vast majority of people, driving is their single biggest liability exposure. But as umbrella policies provide excess coverage for all forms of liability, insurers generally require one to carry the maximum limits for non-vehicular liability as well. Most renters' policies of which I'm aware don't tend to come with those, which can make getting an umbrella policy in the absence of a traditional homeowners' policy a little tricky.

The reason for this is that excess coverage is a lot cheaper than underlying coverage because insurers are counting on a claim having to burn through the underlying limit before the excess layer can be implicated. This doesn't happen very often unless the underlying limits are inadequate, so there are generally very high requirements on underlying coverage.
posted by valkyryn at 7:23 AM on March 7, 2011


It's a good idea. The policies are generally cheap, and people like to sue. Someone could fall at your house and hurt themselves. Your dog could bite someone. There are a lot of reasons.

I have a house that I own but don't live in--I rent it. I also have a renters insurance policy for the house I do live in. I have an umbrella policy on both because each has a liability max of 500k. State Farm had no issues setting this up, and tge cost to me monthly was basically lost in the noise.
posted by jeffamaphone at 7:39 AM on March 7, 2011


In other words, the only people who need umbrella policies are rich people and people who own businesses.

I wouldn't say "rich". More like people who value their assets. If you are a renter with $50k stored up for a house down payment that has taken you 5 years to build up, that $350k verdict against your $300k auto policy is really going to hurt.

The counterpoint to umbrella coverage is that you are more attractive for a lawsuit if you have a million dollars to offer rather than $100k.
posted by smackfu at 8:52 AM on March 7, 2011


What if I don't have a lot of assets and I'm sued for a lot of damages and lose the suit? Wouldn't I be paying it off out of future income for the rest of my life? Wouldn't an umbrella policy protect me from that?
posted by exphysicist345 at 12:22 PM on March 7, 2011


What if I don't have a lot of assets and I'm sued for a lot of damages and lose the suit?

You declare bankruptcy. A bankruptcy judge can't seize assets you don't have, ergo if you aren't terribly wealthy, the ding on your credit score may be the only real consequence other than making the judgment go away.
posted by valkyryn at 1:04 PM on March 8, 2011 [1 favorite]


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