Umbrella Insurance discounts and questions
Adds a layer of liability above your auto, home, boat and rental policies, paying once their limits are spent. It is priced by the limit you choose and the policies beneath it, and it pays some claims those policies never would.
Discounts carriers commonly offer
- Multi-policy
- The umbrella written with the same carrier as the auto and home. With many carriers this is the only way the umbrella is written at all.
- Claim-free household
- No liability claims on any underlying policy over the look-back period.
- No youthful drivers
- A household without a driver under the carrier's youthful age is priced lower; adding a teenager is the usual reason an umbrella premium jumps.
- Paid in full
- The annual premium paid at inception.
Questions people ask
Who actually needs an umbrella?
Anyone whose net worth or future earnings would be reached by a judgment above their auto or home limits: a household with equity, retirement savings, a teenage driver, a pool, a dog, a boat, a rental house, or a seat on a nonprofit board. The list is broad because the premium is low relative to the limit.
It is not everyone. A renter with no car, no savings and no dependants has little a judgment could take, and for them the money is better spent raising the liability limits on the policies they do carry. We say so when that is the case.
How much umbrella coverage should I buy?
Enough to cover net worth plus several years of income, rounded up to the next limit the carrier offers, because a judgment that outruns the policy is collected from both. The step from one limit to the next usually costs less than the first layer did. The analysis puts a number on it from your balance sheet rather than from a rule of thumb.
Does the umbrella cover my rental property or my boat?
Only if it is listed on the umbrella and carries its own underlying liability at the required limit. A rental house needs a landlord policy under the umbrella; a boat needs a watercraft policy or a qualifying endorsement. Adding a property or a boat and forgetting to add it to the umbrella is a gap we look for at every renewal.
What happens if I lower my auto limits below the required amount?
The umbrella does not drop down to meet you. It attaches at the underlying limit it required, so on a large claim you pay the difference between what you carry and what the umbrella expected before the umbrella pays anything. Any change to an underlying policy should be checked against the umbrella's schedule first.
Does an umbrella cover my teenager?
Yes, as a member of the household, and a teenage driver is the most common reason a family buys one. The carrier will require the teenager to be listed on the auto policy beneath it at the required limits, and the umbrella premium will reflect the added driver.
Am I covered if I am sued for something I posted online?
Most umbrellas include personal injury coverage, which responds to claims of libel and slander, including statements made online, so long as they were not made knowingly false or in the course of a business. The home policy beneath it usually excludes this, so the umbrella pays from the first dollar after the retention. The wording varies by carrier and is worth reading if this is the exposure you are buying for.