Which Company for my Umbrella Insurance?

Dear Insurance Adviser,

My car insurance and home insurance policies are with two different companies. Which one should I choose for an umbrella policy? Or, could we buy the umbrella insurance from a third company? Thank you.


Dear Carolyn,

Personal umbrella policies do two things well: They defend you if you're sued beyond the limits of your other insurance policies; and if you lose the lawsuit, they will pay an additional $1 million or more on top of your primary automobile or homeowners liability limits.

Every umbrella insurer requires that you carry a minimum of liability coverage on your underlying policies (such as, $500,000 on your auto policy, $300,000 on your home insurance, $300,000 on any watercraft or recreational vehicle policy). Those underlying limits vary from company to company. It's important that you work with a knowledgeable agent who can help make sure you comply with those requirements.

What makes umbrella insurance policies special is their third possible benefit: They may cover liability claims from lawsuits arising from activities not covered by your primary insurance policies.

Some umbrella policies are very narrow in scope and provide no additional coverage for these sorts of gaps. But most policies will take care of some coverage holes, and a very small handful of policies cover virtually all gaps you may be exposed to. It's not critical that you buy only an umbrella policy that covers every possible hole. The only critical factor is whether or not the policy you are considering covers your gaps!

Here are some typical activities not usually covered by automobile or homeowner's insurance that can be covered by the right umbrella policy: •Renting a ski boat or personal watercraft on vacation and seriously injuring a swimmer with the boat propeller. •Using your company car and injuring a co-worker in a crash (typically excluded under both your employer's company auto policy and your own personal auto policy). •Renting a car on a European vacation and causing serious injuries.

Choosing the right company for your umbrella insurance policy is not as important as getting the right policy. An agent can help you identify liability areas not otherwise covered -- in other words, the gaps -- and help you choose an umbrella policy that will cover all or most of them.

Good luck!

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