Looking for Actual Experiences with Umbrella Insurance

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dgdevil
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Re: Looking for Actual Experiences with Umbrella Insurance

Post by dgdevil »

I'm feeling a little insecure about my $1m policy now that I read about people with policies up to $5m ... I assume I can upgrade to $2m relatively cheaply, but how long 'til I get $5 mil envy? I have a $500k auto policy. How are others placed with their umbrella coverage?
jasc15
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Re: Looking for Actual Experiences with Umbrella Insurance

Post by jasc15 »

There are mentions of insuring up to your net worth, however, it seems advisable to insure beyond that amount in some cases presented here, since there is nothing to limit a lawsuit beyond one's net worth. So I ask, why should net worth be any consideration when choosing the size of an umbrella policy?
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Re: Looking for Actual Experiences with Umbrella Insurance

Post by Call_Me_Op »

jasc15 wrote:There are mentions of insuring up to your net worth, however, it seems advisable to insure beyond that amount in some cases presented here, since there is nothing to limit a lawsuit beyond one's net worth. So I ask, why should net worth be any consideration when choosing the size of an umbrella policy?
You and many others have asked this. As far as I can tell, here is the justification. You want to have enough to make the plaintiff's lawyer go away. If you are worth $10 million and insure at a $1 million level, he's going to salivate at the $10 million and go after it. So there's no real science to this - but that's how I see it. If you insure to 2X vulnerable net worth, the lawyer has little incentive to go after your personal assets - which are hard to get (since you'll fight to the death to protect them).
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dm200
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Re: Looking for Actual Experiences with Umbrella Insurance

Post by dm200 »

From some painful personal experience, lawsuits can become more "personal" and "vindictive" than logically cost-effective. For various reasons, sometimes justified and sometimes not, those with the funds to pay high-priced attorneys can inflict a great deal of damage, both financial and otherwise on the target(s) of these lawsuits. The side with the larger amount available to fund the lawsuit(s) can wage a war of attrition - and pursue the lawsuit(s) - and all the associated procedures - until the side with the fewer assets gives in. An umbrella policy give you the financial backing to fight this.
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Re: Looking for Actual Experiences with Umbrella Insurance

Post by tj »

Call_Me_Op wrote:
jasc15 wrote:There are mentions of insuring up to your net worth, however, it seems advisable to insure beyond that amount in some cases presented here, since there is nothing to limit a lawsuit beyond one's net worth. So I ask, why should net worth be any consideration when choosing the size of an umbrella policy?
You and many others have asked this. As far as I can tell, here is the justification. You want to have enough to make the plaintiff's lawyer go away. If you are worth $10 million and insure at a $1 million level, he's going to salivate at the $10 million and go after it. So there's no real science to this - but that's how I see it. If you insure to 2X vulnerable net worth, the lawyer has little incentive to go after your personal assets - which are hard to get (since you'll fight to the death to protect them).


How would a plaintiff's lawyer know your net worth?
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Re: Looking for Actual Experiences with Umbrella Insurance

Post by Call_Me_Op »

tj wrote:
Call_Me_Op wrote:
jasc15 wrote:There are mentions of insuring up to your net worth, however, it seems advisable to insure beyond that amount in some cases presented here, since there is nothing to limit a lawsuit beyond one's net worth. So I ask, why should net worth be any consideration when choosing the size of an umbrella policy?
You and many others have asked this. As far as I can tell, here is the justification. You want to have enough to make the plaintiff's lawyer go away. If you are worth $10 million and insure at a $1 million level, he's going to salivate at the $10 million and go after it. So there's no real science to this - but that's how I see it. If you insure to 2X vulnerable net worth, the lawyer has little incentive to go after your personal assets - which are hard to get (since you'll fight to the death to protect them).


How would a plaintiff's lawyer know your net worth?
The court can request a statement of net worth. If you are untruthful, you may have more trouble on your hands.
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dm200
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Re: Looking for Actual Experiences with Umbrella Insurance

Post by dm200 »

Call_Me_Op wrote:
tj wrote:
Call_Me_Op wrote:
jasc15 wrote:There are mentions of insuring up to your net worth, however, it seems advisable to insure beyond that amount in some cases presented here, since there is nothing to limit a lawsuit beyond one's net worth. So I ask, why should net worth be any consideration when choosing the size of an umbrella policy?
You and many others have asked this. As far as I can tell, here is the justification. You want to have enough to make the plaintiff's lawyer go away. If you are worth $10 million and insure at a $1 million level, he's going to salivate at the $10 million and go after it. So there's no real science to this - but that's how I see it. If you insure to 2X vulnerable net worth, the lawyer has little incentive to go after your personal assets - which are hard to get (since you'll fight to the death to protect them).


How would a plaintiff's lawyer know your net worth?
The court can request a statement of net worth. If you are untruthful, you may have more trouble on your hands.
Yes - it is called "Discovery" - and you may be required to turn over many years of financial records, etc. Then - face (under oath) a grilling by the opposing attorney(s) about every detail. Just one example of what I dealt with in this (in my opinion) very degrading process. After turning over years of checking account statements - I was questioned about a monthly check to a storage facility that we rented to store some furniture acquired when a family member died and the house was sold. The opposing attorney questioned whether I had used this storage facility to hide assets that they were going after. In my experience, you have no secrets - and if the opposing side has the money to pay for attorneys (at $250-$500 per hour) to do this - they can put you through a lot. And, you must pay for an attorney to be with you in this process as well (it would be foolish to go without one).
downshiftme
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Re: Looking for Actual Experiences with Umbrella Insurance

Post by downshiftme »

Yes, I carry earthquake insurance. When I had a loss in an earthquake, there was plenty of FEMA money and the insurance didn't pay anything. But I'm glad I had it, as neighbors suffered much more extensive damage and had my house been as damaged as theirs, insurance would have been a huge relief.

I also carry umbrella insurance. To avoid the scenarios some have described where multiple carriers dispute who is responsible for what, I always have the same carrier for the underlying auto and homeowners as well. In the only instance where I had to "use" the insurance, a baseless suit was filed based on a accident that was the other drivers fault. The claim would have exceeded the underlying liability limit, but been well under the umbrella limit. I don't know if this influenced the insurance company's defense or not, but they were very vigorous about it and paid zero claim money - presumably they had expenses. I do not know if they would have been as vigorous in the absence of the umbrella or not, but I was definitely comforted by knowing that however this turned out, I was not on the hook for anything.
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denovo
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Re: Looking for Actual Experiences with Umbrella Insurance

Post by denovo »

Call_Me_Op wrote:
jasc15 wrote:There are mentions of insuring up to your net worth, however, it seems advisable to insure beyond that amount in some cases presented here, since there is nothing to limit a lawsuit beyond one's net worth. So I ask, why should net worth be any consideration when choosing the size of an umbrella policy?
You and many others have asked this. As far as I can tell, here is the justification. You want to have enough to make the plaintiff's lawyer go away. If you are worth $10 million and insure at a $1 million level, he's going to salivate at the $10 million and go after it. So there's no real science to this - but that's how I see it. If you insure to 2X vulnerable net worth, the lawyer has little incentive to go after your personal assets - which are hard to get (since you'll fight to the death to protect them).

OP, here. I didn't start this thread as a backdoor way to criticize umbrella insurance. I was just inquiring if anyone had any experiences, which I admit may be difficult since these policies have relatively infrequent claims, hence the premiums.... because I was wondering if for example, what call me op says is true in reality re: settlement offers and legal strategies when someone has umbrella insurance.

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tadamsmar
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Re: Looking for Actual Experiences with Umbrella Insurance

Post by tadamsmar »

You and many others have asked this. As far as I can tell, here is the justification. You want to have enough to make the plaintiff's lawyer go away. If you are worth $10 million and insure at a $1 million level, he's going to salivate at the $10 million and go after it. So there's no real science to this - but that's how I see it. If you insure to 2X vulnerable net worth, the lawyer has little incentive to go after your personal assets - which are hard to get (since you'll fight to the death to protect them).
I think this legal game theory stuff, while there might be some truth to it, misses the point. If you look at actual experiences:

http://www.bogleheads.org/forum/viewtop ... 0#p1913260

they typically involve someone making a mistake, like a driving error, and ending up being obviously liable for the long-term severe disability of a young person or some injury that justifies a large pain and suffering claim. The lawyer does not need a incentive to try hard since the case is impossible to lose.
kidsgone
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Re: Looking for Actual Experiences with Umbrella Insurance

Post by kidsgone »

I am aware of two incidents that involved umbrella insurance:
1. 6 yrs ago I was at a stop sign, behind me was a Ford Explorer going 55 mph, that driver never saw me, never hit the brakes, and hit me in the rear shooting my 4-Runner about 120 ft into the desert. The damaged Ford then hit a motorcycle and 2 other vehicles in the on-coming lanes. The driver had 1M limits plus a 1M umbrella. I later learned that the driver was responsible for over 4M in damages for which she paid. The severely injured motorcyclist received over 1M plus the driver's N Scottsdale home worth about 1.6 M (the driver owned 3 homes). Luckily, I was not injured (thank you Toyota 4-Runner).
2. 4 years ago my sister was T-boned and almost killed by a driver who ran a red light. Unfortunately, my sister had only 100k limits, with low under-insured limits and no umbrella, and the other driver also had only 100k limits with no assets to go after. Fortunately, the other driver had a 1M umbrella. The umbrella was needed for my sister's case recently settled for just under the 1M mark. Without the other driver's umbrella insurance my sister would not have received money for her lost wages and the 3 years of surgeries and suffering.
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Re: Looking for Actual Experiences with Umbrella Insurance

Post by beachplum »

dowse wrote:I would like to share my experience with umbrella insurance that I haven't seen mentioned. While an adult child was still living with us, he accumulated some speeding tickets on his driving record. After exceeding some unspecified limit, we were notified that our umbrella coverage was to be cancelled. It seems that just having someone with a bad driving record living under your roof was considered a risk that the insurance company wouldn't accept. Even having his own car with his own insurance wasn't good enough. When he moved out, we were able to re-apply and obtain coverage. Of course, having him move out and become independent has many other benefits, but that one we didn't see coming at all.
I recently inquired about cost of one of my daughters having insurance in her own name. It was going to be 200 more a year if our umbrella policy also covered her. It turned out that all I had to do was not have her covered by our umbrella policy to lower the rate.
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Re: Looking for Actual Experiences with Umbrella Insurance

Post by Call_Me_Op »

tadamsmar wrote:
You and many others have asked this. As far as I can tell, here is the justification. You want to have enough to make the plaintiff's lawyer go away. If you are worth $10 million and insure at a $1 million level, he's going to salivate at the $10 million and go after it. So there's no real science to this - but that's how I see it. If you insure to 2X vulnerable net worth, the lawyer has little incentive to go after your personal assets - which are hard to get (since you'll fight to the death to protect them).
I think this legal game theory stuff, while there might be some truth to it, misses the point. If you look at actual experiences:

http://www.bogleheads.org/forum/viewtop ... 0#p1913260

they typically involve someone making a mistake, like a driving error, and ending up being obviously liable for the long-term severe disability of a young person or some injury that justifies a large pain and suffering claim. The lawyer does not need an incentive to try hard since the case is impossible to lose.
In some of the cases cited in your references, the awards are so high there is little point even having an umbrella policy for a few million dollars.
Last edited by Call_Me_Op on Thu Jan 09, 2014 11:56 am, edited 1 time in total.
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likegarden
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Re: Looking for Actual Experiences with Umbrella Insurance

Post by likegarden »

You do not have to do have done something to get sued for damages. Many years ago a man was sued by people from NY City in his small town in upstate NY. They said that he was in NY City at a certain date and injured people and/or damaged property, and they wanted to get large damages paid. But in court he could show that as a physician he was in a local hospital at that same day, which ended that scam. A young engineer friend of mine also was getting sued by people in NY City because of an accident he did not have there. Those accusers always had false witnesses. Having Umbrella insurance will give you some safety against false claims.
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dratkinson
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Re: Looking for Actual Experiences with Umbrella Insurance

Post by dratkinson »

I'm late to this party....

Factoid. In the '80s I needed to drive a gov vehicle for work and added a "government vehicle" rider to my USAA auto policy to cover my liability. Just curious, I asked the CSR how often they had to pay out on the rider. The CSR said, "...almost never." When I asked why, was told, "...the people careful enough to purchase the rider, are also careful enough to avoid getting into situations were the rider would be needed."

Maybe this is true with umbrella insurance, too. Careful people buy basic insurance, and careful+ people buy umbrella insurance. And careful+ people don't often get into the situations where the additional coverage is needed.



Also recall someone here saying "don't confuse outcome with strategy." It's a good strategy to buy life insurance, even if the outcome is bad and you don't die.
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grabiner
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Re: Looking for Actual Experiences with Umbrella Insurance

Post by grabiner »

tadamsmar wrote:
You and many others have asked this. As far as I can tell, here is the justification. You want to have enough to make the plaintiff's lawyer go away. If you are worth $10 million and insure at a $1 million level, he's going to salivate at the $10 million and go after it. So there's no real science to this - but that's how I see it. If you insure to 2X vulnerable net worth, the lawyer has little incentive to go after your personal assets - which are hard to get (since you'll fight to the death to protect them).
I think this legal game theory stuff, while there might be some truth to it, misses the point. If you look at actual experiences:

http://www.bogleheads.org/forum/viewtop ... 0#p1913260

they typically involve someone making a mistake, like a driving error, and ending up being obviously liable for the long-term severe disability of a young person or some injury that justifies a large pain and suffering claim. The lawyer does not need a incentive to try hard since the case is impossible to lose.
A case isn't simply "won" or "lost". If you have $1M in collectible assets, and $2M in insurance, you can offer to settle a $5M lawsuit for $2M today, or let it go to trial at which the plaintiff may collect $3M two years from now (and may not even get that if you use up some of your assets defending the case, or the jury sees the case differently and reduces the damages or finds a third party partially liable, or the plaintiff dies first and the projected millions of future medical expenses don't happen). This is the game theory argument. It still doesn't work because it assumes the rationality of the plaintiff.
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Re: Looking for Actual Experiences with Umbrella Insurance

Post by Grt2bOutdoors »

BolderBoy wrote:What folks so often seem to overlook about an umbrella policy is that you are buying a lawyer - the larger the umbrella the more lawyers the company will put to work defending the claim. Even if you win, the legal fees can be enormous along the way. Without the umbrella, you pay all the legal fees.
I don't know if this question has been asked before: How do you quantify how much umbrella coverage to purchase? Assume the person has homeowners and car insurance already, but an amount of assets that exceeds the collective liability limits of the policies previously listed and at least twenty more years of employment at a decent salary. Is there a calculator out there for this?
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Re: Looking for Actual Experiences with Umbrella Insurance

Post by Bfwolf »

It seems like many of the usage occasions for umbrella insurance are car accidents. I don't own a car, and only drive a few times a year when I travel for work. My work always says I should decline add'l insurance coverage from the rental car company....should I assume that if I'm traveling for the company on the company credit card, they will cover all expenses for an auto accident that is my fault?

I also don't own a house, which would seem to be one of the other big drivers of umbrella insurance kicking in. I have renter's insurance, but the limits aren't very high...a few hundred thousand dollars I think. But the risk feels low...I rarely have people over.

I'm just wondering if umbrella insurance really makes sense for everybody or whether people without cars and without homes are so unlikely to need it that it is superfluous.
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Re: Looking for Actual Experiences with Umbrella Insurance

Post by Call_Me_Op »

Bfwolf wrote:It seems like many of the usage occasions for umbrella insurance are car accidents. I don't own a car, and only drive a few times a year when I travel for work. My work always says I should decline add'l insurance coverage from the rental car company....should I assume that if I'm traveling for the company on the company credit card, they will cover all expenses for an auto accident that is my fault?

I also don't own a house, which would seem to be one of the other big drivers of umbrella insurance kicking in. I have renter's insurance, but the limits aren't very high...a few hundred thousand dollars I think. But the risk feels low...I rarely have people over.

I'm just wondering if umbrella insurance really makes sense for everybody or whether people without cars and without homes are so unlikely to need it that it is superfluous.
I would still get it if I had anything to protect. There are other scenarios that do not involve your car or home. An example is you purchase a car for your nephew and he injures someone. (This cost a woman 900K from her pocket.) The list is virtually endless. If you are even remotely connected to a case and you have assets, a "smart" lawyer will make you look responsible - and go after your assets.
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gordon9775
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Re: Looking for Actual Experiences with Umbrella Insurance

Post by gordon9775 »

Careful people buy basic insurance, and careful+ people buy umbrella insurance. And careful+ people don't often get into the situations where the additional coverage is needed.
This strikes me as a very bad reason not to buy insurance. Returning to my original story told to me by my insurance agent, the couple in question was: elderly. Meaning (if we buy the stereotype) they drive slow. And cautiously. And ... they still turned left into an oncoming motorcyclist.

An older friend of ours married a man who was widowed by an accident in which he was the driver and turned into an oncoming truck. Again, very nice people, the last people in the world you would expect to etc.

And this is why we insure.
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NeverRoyals
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Re: Looking for Actual Experiences with Umbrella Insurance

Post by NeverRoyals »

gordon9775 wrote:
Careful people buy basic insurance, and careful+ people buy umbrella insurance. And careful+ people don't often get into the situations where the additional coverage is needed.
This strikes me as a very bad reason not to buy insurance. Returning to my original story told to me by my insurance agent, the couple in question was: elderly. Meaning (if we buy the stereotype) they drive slow. And cautiously. And ... they still turned left into an oncoming motorcyclist.

An older friend of ours married a man who was widowed by an accident in which he was the driver and turned into an oncoming truck. Again, very nice people, the last people in the world you would expect to etc.

And this is why we insure.
Pretty sure his point wasn't to not buy insurance if one is careful, it was that generally speaking those that get umbrella insurance are typically less likely to be in a situation wherein they'd need it. This results in skewed stats, artificially decreasing the probability of a claim.
NeverRoyals
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Re: Looking for Actual Experiences with Umbrella Insurance

Post by NeverRoyals »

I've seen a couple folks mention the theory of an umbrella policy dissuading a lawyer from proceeding, and I've always assumed the opposite; wouldn't a lawyer be more apt to proceed if they knew much deeper pockets existed?
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tadamsmar
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Re: Looking for Actual Experiences with Umbrella Insurance

Post by tadamsmar »

Here's an interesting experience of a Boglehead w/umbrella insurance not posted on this thread, getting sued for something not covered:

http://www.bogleheads.org/forum/viewtop ... 0#p1669440
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Re: Looking for Actual Experiences with Umbrella Insurance

Post by Call_Me_Op »

NeverRoyals wrote:I've seen a couple folks mention the theory of an umbrella policy dissuading a lawyer from proceeding, and I've always assumed the opposite; wouldn't a lawyer be more apt to proceed if they knew much deeper pockets existed?
Perhaps - but they are not your pockets!

Presumably, you have assets to protect - so the lawyer may well have gone after you even if you did not have the insurance. Put another way, would you rather have X % chance of losing all of your hard-earned savings, or 2X % chance of your insurance company making a payout?

Think about it from a practical standpoint. Someone gets badly injured, and you are potentially to blame. If there is any money to be had, the attorney for the injured party is going to get a big chunk of it - for his client and himself. Infinitely better to have an insurance company to defend the suit and pay the lawyer - than to leave yourself exposed.
Best regards, -Op | | "In the middle of difficulty lies opportunity." Einstein
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Re: Looking for Actual Experiences with Umbrella Insurance

Post by letsgobobby »

freebeer wrote:
abuss368 wrote:
gordon9775 wrote:...The story our agent tells is quite similar: six months after taking out their first umbrella policy, an elderly couple she was insuring made a left turn in front of a motorcyclist. One point five million dollars in payouts later, the couple visited the agent in tears - not for the biker, sad to say, but in gratitude for the agent's advice that saved their nestegg. Just because it's a self-serving story doesn't mean you can't learn from it...
That is an incredible story...
Yes, and it might even be true. Of course that doesn't have any real bearing on whether this class of insurance is worthwhile. How many of Bogleheads carry earthquake riders on our homeowners insurance policies? Or LTC care insurance? Clearly there are heartstring-tugging stories aplenty where such policies paid out, or conversely the lack of insurance caused significant financial distress, but yet they are widely viewed as "bad deals" by BH's while somehow umbrella insurance is viewed by many BH's as "appropriate" or even "necessary" (for higher net-worth households). Perhaps it's partly psychological based on the perception of unlimited downside exposure of possible lawsuits, i.e. "losing everything", although even then the widely recommended umbrella insurance in the amount of one's net worth doesn't protect against a judgment that's 2x of one's net worth. It could be that because umbrella insurance is relatively cheap that it seems like a good deal vs. earthquake/LTC policies which are not but BH's are not in general inclined towards "long shot" bets which by implication umbrella insurance is. And we definitely don't buy flight insurance which is also a cheap "long shot" bet. So absent any real data on the probability of a claim utilizing an umbrella policy, and how actuarially fair such policies are (I suspect that they are way more profitable for both insurers and agents because there is less competition, mostly being adders sold to existing captured customers) it's not at all clear to me that it is appropriate or necessary and I remain puzzled on how people do a rational evaluation of which policies to get vs. avoid.
ltci and earthquake insurance are not considered wastes of money. They're considered expensive. Umbrella, on the other hand, is cheap.
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dm200
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Re: Looking for Actual Experiences with Umbrella Insurance

Post by dm200 »

I wonder if an Umbrella Policy would have helped this family? http://www.foxnews.com/us/2014/01/16/li ... on-injury/
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Re: Looking for Actual Experiences with Umbrella Insurance

Post by montej »

I think my question is relevant to the topic as someone else might have had similar experience.

I currently do not own a car, but I borrow my brother's car every few weeks or so (ie. for road trips). He does not have an umbrella insurance, my name's on his policy as additional driver.

Is there a way to purchase umbrella insurance for myself?
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Re: Looking for Actual Experiences with Umbrella Insurance

Post by Quasimodo »

montej wrote:I think my question is relevant to the topic as someone else might have had similar experience.

I currently do not own a car, but I borrow my brother's car every few weeks or so (ie. for road trips). He does not have an umbrella insurance, my name's on his policy as additional driver.

Is there a way to purchase umbrella insurance for myself?
I believe you would need to buy hired and non-owned auto liability insurance for yourself along with personal liability insurance. I think then you could buy an umbrella policy that scheduled those coverages as primary insurance.

Without automobile and personal liability insurance with you as the primary named insured, then, no, I don't believe you can buy personal umbrella liability insurance for yourself.

I'm a retired business insurance underwriter, and this is a personal opinion.

Good luck whatever you decide!

John
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dm200
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Re: Looking for Actual Experiences with Umbrella Insurance

Post by dm200 »

montej wrote:I think my question is relevant to the topic as someone else might have had similar experience.

I currently do not own a car, but I borrow my brother's car every few weeks or so (ie. for road trips). He does not have an umbrella insurance, my name's on his policy as additional driver.

Is there a way to purchase umbrella insurance for myself?
Just call an insurance agent and ask.
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