R&R Insurance Blog

Liability claims often exceed the basic limits afforded by an average home or auto policy. These claims are covered by a personal umbrella liability policy. Personal umbrella liability insurance provides individuals and families with higher limits of liability protection that is excess over any personal automobile, and other liability insurance. Just think of it as an extra layer of coverage, like an umbrella over everything.

Personal umbrella coverage is designed to cover claims that arise out of the activities of a personal or family nature; these types of policies do not cover professional or business activities. Personal umbrella policies are intended for catastrophe-type claims. Not all policies are exactly alike, but in general, the purpose of a personal umbrella policy is not only to provide million dollar excess limits, but to broaden basic liability protection. To adequately protect the insured a personal umbrella policy will provide an additional amount of liability above the limits on the auto and home policy, but it will also provide coverage for some exposures that are not already covered on the insured’s underlying policy, and it will provide coverage for damages caused by slander, libel, defamation, detention, confinement, humiliation, invasion of privacy, wrongful entry and related allegations.

Personal umbrella liability is written with a minimum limit of liability of $1 Million, with higher limits available. The personal umbrella liability policy pays on behalf of the insured person the amount of damages for an occurrence (the accident) that results in the insured person’s obligation to pay for personal injury, or property damages.

If there is a covered liability claim under your auto or homeowners policy and the dollar amount of the judgment is greater than the coverage limits you have purchased on those policies, the umbrella provides the additional limits of coverage.

Is the policy expensive?
Fortunately, catastrophic events happen to very few people. That is why the cost of this type of coverage is very affordable. The average cost is about $150 to $200 a year. The pricing is based on the number of exposures you have (exposures are the number of vehicles you own, the number of homes you own, if you have boats, recreational vehicles, youthful drivers, etc).

How does it work?
You, or a family member living with you, are the cause of an auto accident resulting in serious injury to the driver in another vehicle and his young passenger. Both the driver and passenger have injuries. You are sued, determined to be at fault, and the judgment is almost $900,000. Your auto policy provides coverage in the amount of $500,000. If you had a personal umbrella liability policy it would pay the remaining $400,000. If you did not have a personal umbrella liability policy the $400,000 would come out of your pocket. And what if you did not have $400,000 available? Your assets would no doubt be used to pay the judgment.

You have friends over for a backyard party. Their 16 year old son, while diving into your pool, breaks his neck and is paralyzed. The judgment in the lawsuit is $1 million. Your homeowner’s policy provides $500,000 for liability and responds promptly by paying out the entire $500,000 liability amount. Again, if you have a personal umbrella liability policy it would pay the additional $500,000. If you don’t, you will be paying it out of your pocket! And if you don’t have $500, 0000 your assets would be most likely used.

You have a large yard and you use your ATV on your own property. One summer day your 35 year old neighbor hops on the back for a ride. He either falls off or jumps off hitting his head on a rock and suffers head injury. He never fully recovers. He is married with two young children and three years later he still isn’t able to return to his job and may never work again due to serious brain damage. The judgment is for $1 million. The policy covering your ATV has a liability limit of $300,000, leaving you with a $700,000 out of pocket amount to pay. If you have an umbrella policy it would pay the additional $700,000.

The answer is YES, you probably do need an umbrella policy. For most people $150 to $200 a year or $12 to $15 a month is worth their peace of mind.

What exactly are your assets?
• Home and Personal Property
• Automobiles, Recreational Vehicles, Boats, etc.
• 401k, College Savings, and Future Earnings

What is worldwide coverage?
A Personal Umbrella Liability policy has coverage for things that happen anywhere in the world. Some policies, such as an auto policy, have a territorial limit.

What is the defense coverage?
The policy pays for the cost to defend any claim or suit for damages because of personal injury, or property damage arising out of the occurrence which is covered by the policy.

Here's a common question we get; “I am supplied a car by my employer and am permitted to use it for both work and pleasure. My employer told me that I need to get my own insurance to cover me when I use the car off duty. How can I do that under my personal auto policy?”

The answer: The Personal Auto Policy has an exclusion that states that there is no coverage for the use on a vehicle furnished or available for your regular use. Thus, when driving the employer-owned company vehicle there is no coverage under his personal auto policy. This would be the same if the spouse or another family member used the company vehicle. This is a little known gap in all personal auto coverage, but a very common situation.

Normally, the policy written in the name of the business would protect the employee, but in this case the employer told the employee he was not protected off duty. This being the case this person has a huge gap in coverage.

The answer is to add an endorsement to the personal auto policy referred to as the Extended Non-Owned Coverage for Named Individuals to the personal auto policy. Each person in the family should be named in the endorsement if there is any chance they would drive the company vehicle.

This endorsement will fix the gap in coverage when an employee is furnished an auto for this regular use (or even has one available for his regular use out of a pool of vehicles). But note this is only for Liability coverage and there is not going to be any physical damage coverage for the vehicle.

If the company won’t add the extended non owned endorsement (or a similar one) to the personal auto policy or can't add it, the next option would be to buy a Named Non Owned policy to fill the gap in coverage. In effect, this accomplishes the same thing as the Extended Non Owned Coverage for a Named Individual but may be more expensive.

There are other examples when you would want to add the Extended Non Owned Coverage for a Named Individual. For example your neighbor might have an extra vehicle that they allow you to use whenever you need it, or a student in college who has the use of a room mate’s vehicle.

Here is another scenario: You don’t own a vehicle and don’t have a personal auto policy, but you do have a company vehicle to use. You then borrow someone’s auto and have an accident. There is no coverage under your company car policy. Here are the two solutions to fix that gap in coverage. #1 have the company amend their commercial auto policy to add the Drive Other Car Coverage endorsement or buy a Named Non Owner policy for yourself.

There are some other reasons that someone who has a company vehicle would want to add the Extended Non Owner Coverage for a Named Individual onto their auto policy even when the business auto policy extends protection to the employee, and that is that the limit of liability must be shared with the named insured (the employer). Or, the employee may not feel comfortable with the liability limit on the business auto policy, or may not have faith that the company will keep the coverage in force or keep the liability coverage at the same level. Many times the employee who has this company vehicle isn’t in any type of a position where they would even know if the company policy would cover them.

Another sound reason for any employee who drives a company owned pickup, van or larger truck on the job to have Extended Non Owned protection is that fellow-employee suits are becoming more common. This is, an increasing number of courts are allowing one employee to sue another (at fault) employee for injuries sustained in the course of employment. The employee’s personal auto policy excludes business use of a truck and the employer’s policy excludes bodily injury to a fellow employee. Thus, the employee is left without protection under either policy. The simplest way of coverage for this exposure is endorsing the employee’s policy with extended non owned coverage.

These are all great reasons why having the advice of a good, professional independent insurance agent can be invaluable!

On June 29, 2009, the Wisconsin Budget Bill was signed by Governor James Doyle. Included in that bill were a number of significant changes to Wisconsin Motor Vehicle Insurance Law. Despite insurance industry attempts to strike them from the budget, all insurers licensed to do business in Wisconsin are required by law to implement these mandates. The effect on individual policies will vary based upon your current coverages and limits. The mandated changes may result in a higher renewal premium for your policy due to increased or additional coverages that may need to be added. Policies that renew on or after 11/01/2009 are subject to the following changes:

Liability Minimums

The law requires the minimum limit for Bodily Injury Liability to be $50,000 for each person and $100,000 for each occurrence. The minimum limit for Property Damage Liability is $15,000 for each occurrence.

Medical Payments Coverage

The minimum limit for Medical Payments coverage has been increased from $1,000 per person to $10,000 per person. If your policy limit is less than the new minimum limit, it will be increased to $10,000. If your policy limit is greater than the new minimum limit, it will remain unchanged. In addition, the new law allows stacking (current coverage limit multiplied by the number of vehicles in your household) for up to three autos on a policy. Medical Payments remains an optional coverage.

Uninsured Motorist (UM) Coverage

Previously, UM was a required coverage and remains so under the new laws. The minimum limits for UM coverage have been increased from $25,000 per person and $50,000 per accident to $100,000 per person and $300,000 per accident. If your policy limits are less than the new minimum limits they will be increased to the new minimum limits. If your policy limits were greater than the new minimum limits, they will remain unchanged. The definition of an uninsured motor vehicle has been revised to allow UM coverage when there has been no physical contact between vehicles but can be substantiated by an independent third party witness. The provisions of the new law no longer allow UM limits to be reduced by sums paid by another applicable coverage. In addition, the new law allows the UM limits to be stacked for up to three vehicles on a policy.

Underinsured Motorist (UIM) Coverage

Previously, UIM coverage was an elective coverage. UIM coverage is now required on all auto policies issued in Wisconsin. The minimum limits for UIM coverage have been set at $100,000 per person and $300,000 per accident via the provisions of the new laws. If you previously did not have UIM coverage on your policy, it will be added to your policy at the new minimum limits. If you previously had UIM coverage with a limit greater than the new minimum limits, your limits will remain unchanged. The definition of an underinsured motor vehicle has been revised to allow UIM coverage to apply when the limits under the Bodily Injury Liability policy are less than the amount required to completely compensate the insured for his or her damages. The provisions of the new law no longer allow UIM limits to be reduced by sums paid by another applicable coverage. In addition, the new law allows the UIM limits to be stacked for up to three vehicles on a policy.

Personal Umbrella Coverage

Personal Umbrellas will now automatically include Uninsured Motorist and Underinsured Motorist coverage unless your insurance carrier receives a signed rejection form from you. Your carrier may also automatically increase your underlying Auto Uninsured Motorist and Underinsured Motorist coverage limits to prevent any gap in the underlying coverage and the umbrella. Personal Umbrella Uninsured Motorist or Underinsured Motorist coverage limits can also be stacked on your Umbrella in the event of a covered loss, for up to three vehicles on a policy. The stacking feature cannot be rejected if Personal Umbrella Uninsured Motorist and/or Underinsured Motorist coverage applies under the Personal Umbrella coverage. As a result of this mandate, we are anticipating noticeable increases in current Umbrella premiums.

For a Home/Auto Quote, call 800-566-7007 or visit myknowledgebroker.com/newlaw

There many circumstances that, if they occur, could be financially devastating to you and your family's well-being. No worries though! Auto and homeowner's policies have extra coverage options that may be added to your policy to meet your specific needs. The following are the most common additional coverage endorsements that are added to homeowner's policies. Please keep in mind you may have already elected to add some of these endorsements to you policy.

1. Back up of Sewer and Drain - Provides coverage for damage caused by the back up of a sewer, drain, or sump pump overflow.
   
2. Flood Insurance - Flood coverage is not provided on a homeowner's policy, it's a separate policy that we can provide for you. It provides coverage from an overflow of a body of water and surface water. You do not need to be in a flood prone area to purchase a flood policy.
   
3. Replacement Cost on your Dwelling and your Personal Property - Guarantees the dwelling or personal property will be replaced, without depreciation, in the event of a loss.
   
4. Identity Theft Coverage - Reimburses you for expenses related to restoring you identity if it were stolen.
   
5. Personal Property Schedule - Removes deductible & provides worldwide coverage for jewelry, guns, furs, musical instruments, collectibles, fine arts, etc.
   
6. Special personal property - Provides the broadest coverage available for your home contents.
   
7. Earthquake Coverage- Covers the cost to replace or repair your damaged property in the event of an earthquake. This coverage is excluded on a homeowner's policy.
   
8. Business in the Home Endorsement - Provides liability and/or business property coverage for certain home-based businesses.
9. Excess Liability (Umbrella) and Increased Liability Limits - Protects your assets in the event you or someone in your household accidentally injures another person or damages their property.
   
10. Recreational Vehicle Coverage - Coverage can be added for boats, ATVs, Snowmobiles, Golf Carts, etc.
    
11. Loan/Lease - Loan/Lease covers the difference between the amount owed on lease or loan and the amount normally paid by a car insurance policy at the time of a total loss.
12. Rental Reimbursement - Covers up to a specified amount for a rental car while your car is being fixed after a covered loss.
13. Towing - Covers roadside services for your vehicle, up to a specified limit.
14. Uninsured/Underinsured Motorist on Umbrella - provides excess coverage for injuries caused to you and your passengers should you get hit by an uninsured or underinsured motorist.
15. Life Insurance - A way of protecting your next of kin against financial hardship should something happen to you.