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.
| 8 | 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.