Most umbrella insurers require that they
have one or more underlying policies in order to offer their personal
umbrella policy to a customer. Some insurers require all underlying
liability policies. But there are a few personal umbrella insurers out there
that don't require any other insurance. Just how good are these stand-alone
policies? This article attempts to answer that question.
Corporate 4 Insurance
So the obvious question might be: "Why aren't you writing the umbrella
policy in the same company as the underlying insurance?" Here are a few of
the more common reasons.
For this article, I review the following four different umbrella policies
for which underlying insurance is not required.
Click here for the
Stand-Alone Umbrella Policy Comparison Chart.
Note that these analyses are done by me personally; I share them with
readers for illustrative purposes only. I compare all umbrella policies as
to how well they cover the gaps—common liability risks not covered by auto
or homeowners policies and for which coverage is also not available. The
umbrella policy forms may be different in your state or may contain
endorsements unique or specific to your state, so it is critical that
readers perform their own analysis when selecting insurance policies.
Here are some features common to the group as a whole.
The number one
most important factor in choosing any umbrella is to get coverage for as
many of the coverage gaps as possible. To identify those gaps in coverage, I
find that some kind of checklist or questionnaire is very helpful. (See
Creating an Umbrella Coverage Checklist.)
comparison form for stand-alone policies, here are 10 examples of gaps and
how each of these 4 policies covers them.
So how did
these stand-alone umbrellas fair? Out of a possible 10, Auto-Owners would
cover 5. RLI covers 5 also. USLI scored 6. And American Alternative just
covered 1. Interestingly, with supporting underlying coverage, Auto-Owners
covers 9 of the 10 coverage gaps listed, and Chubb's new 2010 umbrella
covers all 10! Click here to see the
All Companies Umbrella Comparison that includes the new
2010 versions from Chubb and RLI.
Obviously, none of the
four policies I've looked at here cover all of the different types of risks
listed in the chart. But virtually no client ever has that many exposures in
their lives that are not covered by primary policies. The secret is to know
what your umbrella policies do or don't cover, to use some kind of
questionnaire to identify what gaps your client has that aren't covered by
the primary policies and can be covered by umbrella policies. And then,
third, to know enough about your umbrella policies' coverages to be able to
choose the policy for the customer that covers the most important gaps, even
if it can't cover all of them. I hope that this article helps you with that
Jack Hungelmann's book Insurance for Dummies,
contains much of this information and is available at your favorite bookstore
online. For more information on his risk management and insurance business,
go to www.JackHungelmann.com
where you can check out sample newsletters, brochures, other articles written
on various issues. For background information, see Mr. Hungelmann's
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