Umbrella Insurance without Homeowner's/Rental Insurance

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dorazzle
Posts: 6
Joined: Mon Oct 01, 2018 12:18 pm

Umbrella Insurance without Homeowner's/Rental Insurance

Post by dorazzle »

Hello everyone,

I am brand new to this forum and also the world of personal finance. I read my very first personal finance books last month (started with the Boglehead's guide to Investing).

From reading personal finance books and this forum I now know the importance of getting umbrella insurance. I spent the weekend looking at auto insurance policies for better rates and to also increase the liabilities of my auto insurance policy to make sure I am eligible for most umbrella insurance policies. I changed from Geico to Esurance.

So now, I am shopping for umbrella insurance but the problem I am running into is that most companies including esurance is that they won't give me umbrella policy unless I have a homeowner's or rental insurance policy as well. The problem is that I am not a homeowner or renter. I live in a very high housing market (SF Bay Area) and so I'm living with my parents while saving money for a house down payment.

So my question is what do I do now? Do I wait until I own a home to buy the insurance? I work in a higher paying profession that would be targeted by people for lawsuits if I got into a accident.
PFInterest
Posts: 2684
Joined: Sun Jan 08, 2017 12:25 pm

Re: Umbrella Insurance without Homeowner's/Rental Insurance

Post by PFInterest »

Sounds like you don't need to worry about it yet....or move out.
IowaFarmBoy
Posts: 877
Joined: Fri Jan 22, 2010 8:19 am

Re: Umbrella Insurance without Homeowner's/Rental Insurance

Post by IowaFarmBoy »

A couple of thoughts:
1) Could you get a renter's policy from the perspective that you are renting from your parents and still want your property covered and want the liability coverage? Renter's policies are usually cheap- seems like our kids were less than $100/yr.
2) If your main concern is liability for auto accidents, you could bump your auto liability coverage up. Depending on your insurance company, you should be able to go to $1 million or more. If you go this route, you wouldn't get some of the extended coverages that an umbrella offers but you could get higher limits for auto accidents. When our kids were teenagers, our umbrella premiums went crazy and it was cheaper to raise the liability limits on our auto and homeowners policies than to carry the umbrella.
KT785
Posts: 398
Joined: Fri Jul 11, 2014 2:21 pm
Location: Texas Hill Country

Re: Umbrella Insurance without Homeowner's/Rental Insurance

Post by KT785 »

You should be able to get a renter’s policy, even if you live with your parents.
Skierajs
Posts: 26
Joined: Wed Apr 04, 2018 9:05 am

Re: Umbrella Insurance without Homeowner's/Rental Insurance

Post by Skierajs »

A base policy of some sort is required, however, I’m pretty sure my umbrella with Geico only required an auto policy to sit on top of. If you don’t own a car you can even buy a “named non-owner” auto policy (the liability portion only) plus an umbrella. You will still need a renters or homeowners policy to cover any gaps when you become a renter or homeowner.
HereToLearn
Posts: 686
Joined: Sat Mar 17, 2018 5:53 pm

Re: Umbrella Insurance without Homeowner's/Rental Insurance

Post by HereToLearn »

Skierajs wrote: Mon Oct 01, 2018 10:18 pm A base policy of some sort is required, however, I’m pretty sure my umbrella with Geico only required an auto policy to sit on top of. If you don’t own a car you can even buy a “named non-owner” auto policy (the liability portion only) plus an umbrella. You will still need a renters or homeowners policy to cover any gaps when you become a renter or homeowner.
I agree about GEICO selling umbrella to car insurance customers. Their umbrella rates were very high so I did not place the umbrella coverage with them, but they still try to sell it periodically. Perhaps they do not offer umbrella in the OP's state?
visualguy
Posts: 2178
Joined: Thu Jan 30, 2014 1:32 am

Re: Umbrella Insurance without Homeowner's/Rental Insurance

Post by visualguy »

Skierajs wrote: Mon Oct 01, 2018 10:18 pm A base policy of some sort is required, however, I’m pretty sure my umbrella with Geico only required an auto policy to sit on top of. If you don’t own a car you can even buy a “named non-owner” auto policy (the liability portion only) plus an umbrella. You will still need a renters or homeowners policy to cover any gaps when you become a renter or homeowner.
Geico does require both auto and home for umbrella - their paperwork says so. However, they will sell you the policy regardless. The question is what happens when you have a claim on the umbrella. If the claim is auto related, would they ask to see your home insurance? Would they use the fact that you don't have it as an excuse not to pay? Who knows - they don't say in their paperwork. I don't think it's a good idea to take a chance with this.

There are umbrella companies that don't require other liability insurance (auto, home), and companies that explicitly say that they will pay umbrella claims minus the liability requirement on the underlying insurance that you were supposed to have. If you don't have the underlying insurance, that's fine, but you'll have to pay that part out of your pocket.
Iridium
Posts: 737
Joined: Thu May 19, 2016 10:49 am

Re: Umbrella Insurance without Homeowner's/Rental Insurance

Post by Iridium »

dorazzle wrote: Mon Oct 01, 2018 12:30 pm So now, I am shopping for umbrella insurance but the problem I am running into is that most companies including esurance is that they won't give me umbrella policy unless I have a homeowner's or rental insurance policy as well. The problem is that I am not a homeowner or renter. I live in a very high housing market (SF Bay Area) and so I'm living with my parents while saving money for a house down payment.

So my question is what do I do now? Do I wait until I own a home to buy the insurance? I work in a higher paying profession that would be targeted by people for lawsuits if I got into a accident.
Dorazzle, welcome to the forum! As a relative living in their household, you would normally be covered under your parent's homeowner's/renter's insurance. This is true even though you are an adult (in fact, if your parents move in with you someday, they would be covered under your homeowner/renter's insurance). I would try to get a copy of your parent's homeowner's/renter's policy, then when you call for quotes and they ask you whether you have homeowner's/renter's insurance, tell them that you are covered under your parents' policy. I have no experience with it, but the insurance company ought to be satisfied with a copy of that policy (perhaps along with some evidence that you are actually relatives with your parents). Note that the policy limits would have to be high enough to satisfy the umbrella insurance company (generally $300k).

If you run into issues, your best bet would likely be to reach out to an independent insurance agent. S/he'll know the right way to explain things to insurance companies so they'll recognize that you actually have the underlying coverage that they require and can generally reach out higher up the chain at the insurance company than you would be able to. S/he'll also have access to smaller insurance companies that don't employee their own agents (so are impossible to buy from except from an independent agent/broker) which may be much more flexible. If you do this, you ought to let the agent shop your car insurance at the same time. First, many insurance companies require the auto policy through them anyway. Second, the umbrella is cheap so the agent won't make much commission bending the insurance industry to your will. On the flip side, as a young driver, your auto insurance has, unfortunately, a high premium, which pays a healthy commission that will motivate the agent to find a solution for you.

If all else fails, ask your auto insurance company if they'll do a $500K or $1 million limit on your policy. It is not ideal coverage, but certainly workable in the meantime.
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