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Comparing Auto-Owners Stand-Alone versus Fully Supported Personal Umbrella Policies

March 2012

Auto-Owners is unique in being the only A.M. Best-rated A++ insurance company offering its personal umbrella policy without requiring any supporting underlying policy. Plus, as a stand-alone policy, it compares very favorably to other stand-alone personal umbrellas like those from RLI and United States Liability Insurance Group. [See Comparing Stand-Alone Personal Umbrella Policies.]

by Jack Hungelmann
Corporate 4 Insurance Agency, Inc.

As an Auto-Owners agent myself, I wanted to know how the unsupported policy compared to the fully supported policy. So, I developed the attached spreadsheet comparison, with editorial approval from Auto-Owners.

Click here for the Auto-Owners Umbrella Policy Comparison.

I am writing this article and sharing this comparison for the benefit of Auto-Owners agents countrywide. However, there are two caveats. First, this is for illustrative purposes only. What you see here applies to Minnesota as of September 2011. If you are elsewhere, check for how your state differs by checking mandatory state-specific endorsements. Second, although this is a black-and-white comparison between a fully supported umbrella policy and a stand-alone policy, umbrella coverage will improve if you add one or more underlying policies with Auto-Owners. For example, if you place the underlying auto policy with Auto-Owners, it is standard to remove the "following form" auto coverage limitation. If you write the underlying homeowners policy with Auto-Owners, likewise, the following form nonowned watercraft liability endorsement is removed.

Auto-Owners' stand-alone policy is a true umbrella—not just a straight excess policy. In fact, its scope of coverage is often broader than that of some companies' fully supported umbrella forms. As a result, I often write one or more of the underlying coverage policies with one company for cost reasons and then write the umbrella with Auto-Owners because the primary insurer's underlying policies plus their fully supported umbrella don't cover one or more significant liability risks facing my client.

An example would be a client with a personal auto policy (PAP) covering two older vehicles for liability only who often rents cars on vacation where full coverage is needed. Many companies' umbrella policies won't cover the damage caused to the rental car or the damage you didn't cause but for which you assumed responsibility when you signed the rental contract. The reason is that the umbrella contains the same legal liability exclusion for damage to property "in your care, custody, or control" contained in the underlying auto policy. Auto-Owners' unsupported umbrella covers that because it is not specifically excluded.

Another example is where a client rents a facility for her daughter's wedding reception. In the rental contract, she agrees to defend and pay any judgment against the facility for injuries to guests at the reception no matter how caused. Most underlying policies won't pick up this type of contractual obligation. Many umbrellas won't either. Auto-Owners' stand-alone umbrella covers this contract obligation.

Here are examples of risks covered by the fully supported umbrella that are sometimes covered by the stand-alone version, with references to the item number on the comparison chart.

Both policies cover bodily injury (BI) and property damage (PD) liability when renting cars worldwide.
9 Both also cover damage to the rental car itself for which you are liable.
8 Only the fully supported version covers BI and PD liability for renting a 30-foot sailboat or 22-foot pontoon boat with a 75 horsepower outboard motor. The stand-alone version covers only small boats covered by your underlying homeowners insurance policy.
9 Only the fully supported version covers liability for damage to the rental boat itself.
10 Both policies pick up your liability, often excluded by recent homeowners policy forms, for use of motorized equipment like snowblowers, and lawn mowers when used off premises. If your client's homeowners policy included that exclusion, it has been essential that you place their umbrella policy with a company that covered this gap.
11 Both policies cover your use of borrowed or rented cars if you have no personal auto coverage—critical coverage for someone in this position!
12 If you have a company-furnished car covered by the company auto policy, you probably don't have coverage for injuries you cause to coworkers riding with you because most business auto policies exclude injuries to "fellow employees." Because the nonowned car is available for your regular use, your PAP won't apply either. The stand-alone version covers this risk only if you have underlying coverage, such as the extended nonowned automobile endorsement. The fully supported form doesn't require any underlying coverage. The makes Auto-Owners a great choice for an insured with a company car but no PAP.
13 If you have a client who has neither a car nor a driver's license, he or she can still be liable for the negligent acts of someone driving a vehicle on the client's behalf such as being driven to a doctor's appointment or having someone who picks up prescription drugs for him or her. Both Auto-Owners umbrella forms cover this exposure, but many umbrella policies will not. So, be careful.
15 Neither policy picks up incidental business liability risks at home, such as injury to a courier delivering a business-related package who slips and falls on your icy driveway. If your client even occasionally has a business-related delivery at home, add the incidental occupancy endorsement to the homeowners policy, which will trigger coverage on the Auto-Owners umbrella policy.
16 Both policies cover children's part-time businesses, as long as the work is not considered their trade, profession, or occupation. No underlying insurance is required!
21 If your client has a child who races go-karts, only the Auto-Owners fully supported policy will pick up the liability for injuries and PD without any underlying insurance required.
23 Both forms cover personal injury liability (libel, slander, etc.) without underlying insurance required. Note: Auto-Owners' umbrella, supported or not, is substantially broader than most in the types of nonbodily injury claims it covers. Even if the homeowners policy is covered elsewhere, without personal injury coverage, Auto-Owners will provide step-down coverage.
25 Both forms pick up contractual liability without underlying insurance requirements (e.g., see the aforementioned wedding reception contract).
27 One of my favorite things about Auto-Owners' umbrella—any form, supported or otherwise—is that it will cover your liability for lawsuits arising from mold, without requiring underlying coverage! That's broader than the industry norm. So, if someone with a serious asthma condition has a severe allergic reaction to mold when spending the night in your basement, you're covered, regardless of what your underlying insurance does or doesn't do.
29 In about half of the states in which Auto-Owners operates, it offers a very important coverage, in my opinion—excess uninsured and underinsured motorists coverage. It's available only to fully supported umbrella policies and is available with $1 million maximum limits.

Summary

As you survey the kinds of risks facing your client and identify those not covered by primary policies, here is a list of those risks with broadest coverage by the Auto-Owners' umbrella only if underlying policies are placed there as well.

Risk Description Required Underlying Policies
Rented boats BI and PD liability

Legal liability for damage to the rented boat itself
Homeowners for both risks
Rented snowmobiles and all-terrain vehicles (ATVs) BI and PD liability



Legal and contractual liability for damage to the rented recreational vehicle (RV) itself
Homeowners only if you don't own such a vehicle yourself. Otherwise, homeowners with owned RV liability endorsement.

Same
Having a furnished company car with no PAP (Injuries to coworkers riding with you in a company car are not covered by the BAP fellow employee exclusion.) Automobile
Does not drive or own a car yet still has an auto liability risk (Someone in assisted living who has others run errands for him or her.) Homeowners
Racing go-karts, snowmobiles, or ATVs Home and Auto

The fact that the above list is relatively short is a testimony to how strong the personal umbrella stand-alone policy is with Auto-Owners. Since I don't always know when some new adventurous risk might arise in my client's life, I try whenever possible to write all underlying insurance with Auto-Owners, which I believe is the stronger umbrella coverage for the client.

If you are an Auto-Owners agent, my hope is that you will find this tool helpful to you, particularly in discerning when it is necessary to place the underlying insurance in part or entirely with Auto-Owners to broaden the umbrella coverage for your client. There clearly will be times when it is to your client's advantage to pay additional premiums for auto and homeowners insurance with Auto-Owners compared to the competition in order to pick up coverage for a serious uncovered liability exposure under its umbrella policy.

Remember that, although the Auto-Owners basic umbrella form doesn't vary from state to state, the state-specific endorsements do vary. So, if you're operating in a state other than Minnesota, be sure to check with your state underwriting department as to how this comparison may change as a result of the different endorsements.


Jack Hungelmann's book, Insurance for Dummies, contains much of this information and is available at your favorite bookstore or online. For more information on his risk management and insurance business, go to www.JackHungelmann.com, where you can check out sample newsletters, brochures, and other articles written on various issues. For background information, see Mr. Hungelmann's biography.


Opinions expressed in Expert Commentary articles are those of the author and are not necessarily held by the author's employer or IRMI. Expert Commentary articles and other IRMI Online content do not purport to provide legal, accounting, or other professional advice or opinion. If such advice is needed, consult with your attorney, accountant, or other qualified adviser.

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