Turned down for umbrella insurance

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jbmitt
Posts: 247
Joined: Mon Jul 14, 2008 1:00 am

Re: Turned down for umbrella insurance

Post by jbmitt » Thu Sep 14, 2017 2:45 pm

deltaneutral83 wrote:
Thu Sep 14, 2017 1:37 pm
jbmitt wrote:
Thu Sep 14, 2017 10:42 am
deltaneutral83 wrote:
Thu Sep 14, 2017 8:51 am


This seems odd, what if you let someone borrow your car just for the day with the title still in your name?
There is a difference between family and non-family. The previous example suggested that the car was purchased by the parent for the benefit of the child and to try and shield against liability.

Your example is different if you loan your car out. Insurance follows the vehicle regardless of the driver. There can be some nuances for both vehicle and driver having insurance, excluded drivers, etc. Typically this means you would be responsible for your friends damages. Assuming they carry insurance, theirs may provide excess coverage or share damages proportionally to yours depending on the specific policy language.

edited for typos from my phone
Interesting, I knew insurance was on the vehicle, but what about bodily damage. If someone who borrows my car gets in a wreck at fault and injures the other person, how does this come into play?
Your insurance pays for the actions of the person driving your car. Your policy may have language that says their coverage is excess over any insurance that the driver has, and the driver's insurance may say their coverage is excess over any insurance on a non-owned vehicle. These commonly leads to both insurers (vehicle and driver) splitting the loss in proportion to their limits insurance. It's always good to think about who is using your car. If you carry high limits and they have low or no coverage, your insurance will really pay for things.

miles monroe
Posts: 1132
Joined: Mon Jan 20, 2014 12:14 pm

Re: Turned down for umbrella insurance

Post by miles monroe » Thu Sep 14, 2017 2:50 pm

i had a large claim paid under my umbrella; they put me in "time-out" for 3 years before i could get it again.

michaeljc70
Posts: 1955
Joined: Thu Oct 15, 2015 3:53 pm

Re: Turned down for umbrella insurance

Post by michaeljc70 » Thu Sep 14, 2017 5:45 pm

skeptical wrote:
Thu Sep 14, 2017 1:47 pm
michaeljc70 wrote:
Thu Sep 14, 2017 9:24 am
Why are you sticking with Liberty? I would just go somewhere else assuming the rates were the same or lower. I wouldn't want to give such a company more business. This should not be complicated to do.
Inertia, and really no reason to switch, and I don't like giving out personal information all over the place.

Now that my kids are starting to drive and I started locking down my credit reports, I had the need to bump the policy up and I seem to be typing in my personal info all over the place.

Getting two quotes, will let people here know how it turned out, and whether I really need a financial advisor to get more coverage. Feedback here is that it is unusual.
I hear you. Sometimes rates do vary a lot and switching can save a lot of money. I try to quote everything out every 2-3 years to see where my rates are relative to the competition. If you've had tickets/accidents/claims then it makes it trickier to switch.

cherijoh
Posts: 4046
Joined: Tue Feb 20, 2007 4:49 pm
Location: Charlotte NC

Re: Turned down for umbrella insurance

Post by cherijoh » Thu Sep 14, 2017 8:11 pm

skeptical wrote:
Wed Sep 13, 2017 11:17 am
A couple of mysteries resolved, hopefully will help others in my position:

- When I called back to get the CLUE report, they told me the original submission was done in error, that the phone agent should have attached information on net worth but did not. They did ask me for a reason, which I stated to protect my net worth, but did not ask for anything more than that.
- Net worth info has to be submitted to them by a certified financial advisor, and since I do not have one, that is problematic. I suppose I can try to use my Vanguard rep, but it is not clear that that is acceptable - they said I could try to submit it with that.
- The "almost clean" is an issue - I was told that I might be accepted for a slightly lower amount, but the higher amount probably would not be acceptable because of an auto claim against me (one fender bender in a crowded parking lot in the past 20 years of being their customer). I did not even file a claim because there was no damage on my car.
- The claim issue was not a factor in the original denial, lack of proof of assets were.

Interesting lesson here - bumping fenders in a parking lot could prevent you from getting covered in the future.
Maybe getting more than $1MM umbrella coverage is analogous to a jumbo mortgage in a low to medium COL area. There isn't much demand for one so not everyone offers it. Your insurance company might not even be underwriting anything but $1MM policies. The fact that they expect the financial data to come from a CFA suggests this might be a niche market for high net worth individuals.

It could also be an issue with the gap in coverage the umbrella policy is covering over and above your auto and homeowner's policies. If you owned relatively modest cars and home relative to your total net worth, they might consider it too much risk exposure. Whereas if you already have a homeowners policy for a $1MM house, a $1.5MM umbrella rider may not be that much more of a gap than someone with a modest home and $1MM policy.

talzara
Posts: 277
Joined: Thu Feb 12, 2009 7:40 pm

Re: Turned down for umbrella insurance

Post by talzara » Fri Sep 15, 2017 10:04 am

cherijoh wrote:
Thu Sep 14, 2017 8:11 pm
Maybe getting more than $1MM umbrella coverage is analogous to a jumbo mortgage in a low to medium COL area. There isn't much demand for one so not everyone offers it. Your insurance company might not even be underwriting anything but $1MM policies. The fact that they expect the financial data to come from a CFA suggests this might be a niche market for high net worth individuals.
Maybe Liberty Mutual recently paid out a big umbrella claim in the area?

Umbrella insurance is for long-tail risks. It's so long-tail that even a top-10 auto insurance company will only handle 1 or 2 umbrella claims a year in most states.

If they recently paid a claim, they might be tightening up their underwriting standards. This is like closing the barn door after the horse has bolted. However, the insurance industry is always moving between too-loose and too-tight. They're always overreacting to recent events.
cherijoh wrote:
Thu Sep 14, 2017 8:11 pm
It could also be an issue with the gap in coverage the umbrella policy is covering over and above your auto and homeowner's policies. If you owned relatively modest cars and home relative to your total net worth, they might consider it too much risk exposure. Whereas if you already have a homeowners policy for a $1MM house, a $1.5MM umbrella rider may not be that much more of a gap than someone with a modest home and $1MM policy.
A coverage gap is when you have exposure that is not covered by any policy -- primary or umbrella. Umbrella policies require you to maintain specific limits on your underlying auto and homeowners policies, so there's no coverage gap. If the liability requirement is $300,000, then the umbrella policy will take over at $300,001.

In a homeowners policy, the liability coverage limit is separate from the dwelling coverage. It's even priced separately by most insurers, including Liberty Mutual. It is not determined by the value of the house. A person with a $100,000 house will pay the same for liability coverage as a person with a $1 million house.

cherijoh
Posts: 4046
Joined: Tue Feb 20, 2007 4:49 pm
Location: Charlotte NC

Re: Turned down for umbrella insurance

Post by cherijoh » Sat Sep 16, 2017 7:19 am

talzara wrote:
Fri Sep 15, 2017 10:04 am
cherijoh wrote:
Thu Sep 14, 2017 8:11 pm
It could also be an issue with the gap in coverage the umbrella policy is covering over and above your auto and homeowner's policies. If you owned relatively modest cars and home relative to your total net worth, they might consider it too much risk exposure. Whereas if you already have a homeowners policy for a $1MM house, a $1.5MM umbrella rider may not be that much more of a gap than someone with a modest home and $1MM policy.
A coverage gap is when you have exposure that is not covered by any policy -- primary or umbrella. Umbrella policies require you to maintain specific limits on your underlying auto and homeowners policies, so there's no coverage gap. If the liability requirement is $300,000, then the umbrella policy will take over at $300,001.

In a homeowners policy, the liability coverage limit is separate from the dwelling coverage. It's even priced separately by most insurers, including Liberty Mutual. It is not determined by the value of the house. A person with a $100,000 house will pay the same for liability coverage as a person with a $1 million house.
I do know how umbrella policies work. Gap may be the wrong term. What I meant is how much the umbrella policy would have to pick up after exhausting the underlying insurance. If you are really living below your means but want a large umbrella policy then that differential could be a lot larger than a typical customer who gets a big umbrella policy.

talzara
Posts: 277
Joined: Thu Feb 12, 2009 7:40 pm

Re: Turned down for umbrella insurance

Post by talzara » Sat Sep 16, 2017 10:37 am

cherijoh wrote:
Sat Sep 16, 2017 7:19 am
I do know how umbrella policies work. Gap may be the wrong term. What I meant is how much the umbrella policy would have to pick up after exhausting the underlying insurance. If you are really living below your means but want a large umbrella policy then that differential could be a lot larger than a typical customer who gets a big umbrella policy.
There is no differential either. The umbrella picks up at the same point.

It doesn't matter whether your house is worth $100k or $1 million. The umbrella will still pick up at $300k, or wherever the required underlying coverage ends. The coverage requirement is the same, regardless of what your house is worth.

It's easier to see this with auto insurance. The value of your car doesn't matter, because you're not required to carry collision or comprehensive insurance. The umbrella policy only requires you to carry auto liability coverage.

Also, consider the case of a high-income professional who rents an apartment. Even though his real estate holdings are worth $0, the umbrella still picks up at $300k. The insurance company will require him to carry a renter's policy that has $300k of liability coverage.

skeptical
Posts: 26
Joined: Fri Jul 18, 2014 12:24 pm

Re: Turned down for umbrella insurance

Post by skeptical » Fri Sep 29, 2017 4:49 pm

An update:

Got everything I wanted (home, auto, umbrella) with more and better coverage at less cost by going with a local insurance company that signed me up with PURE.

Interesting note:
- This home policy provides a "cash" option - you do not have to rebuild (or you can rebuild in any way you want), and will give you cash per policy limits.
- Cut my home insurance costs by 40% by going from $2,500 to a $10,000 deductible. Wow. The new home policy was cheaper than the old one but I got 35% more coverage. Now it is far cheaper, albeit with higher deductible. Deductible is waived of claims are greater than $50K
- No third degree or requirement for a financial advisor to get involved for the umbrella, which was also was about 30% cheaper.

All in all, very much worth the trouble of finding a new place and switching.

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