Umbrella insurance - renting a home

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StrangePenguin
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Umbrella insurance - renting a home

Post by StrangePenguin »

I’ve looked through some of the many threads on umbrella insurance to try to decide if I should add that to my policy. My situation is slightly different from many because I don’t own a home (although this thread is fairly relevant: viewtopic.php?t=323663 ). Right now I have Auto coverage with $300k/$500k liability limits and $100k property damage liability. My renter’s insurance has $300k liability (the amount required by my landlord). (Both policies from GEICO) From other threads I know that most umbrella claims relate to bad auto accidents, but the nightmare scenario that sometimes worries me is being responsible for, say, burning down the house that I rent. I live in a VHCOL area and the house is worth between 1.5 and 2M.

My net worth is roughly $1.5M, roughly $1M of which is in taxable accounts.

I am thinking I should buy at least $1M of umbrella. One question I have is whether an umbrella policy covers the scenario I mentioned above — damage to the property that I am renting? (The generic description on GEICO’s website says it covers “damage you cause to other people’s property” which certainly sounds applicable.) I am curious what others think. Of course it would also be handy for scenarios involving driving.
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enad
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Re: Umbrella insurance - renting a home

Post by enad »

StrangePenguin wrote: Tue Nov 22, 2022 11:57 pm I’ve looked through some of the many threads on umbrella insurance to try to decide if I should add that to my policy. My situation is slightly different from many because I don’t own a home (although this thread is fairly relevant: viewtopic.php?t=323663 ). Right now I have Auto coverage with $300k/$500k liability limits and $100k property damage liability. My renter’s insurance has $300k liability (the amount required by my landlord). (Both policies from GEICO) From other threads I know that most umbrella claims relate to bad auto accidents, but the nightmare scenario that sometimes worries me is being responsible for, say, burning down the house that I rent. I live in a VHCOL area and the house is worth between 1.5 and 2M.

My net worth is roughly $1.5M, roughly $1M of which is in taxable accounts.

I am thinking I should buy at least $1M of umbrella. One question I have is whether an umbrella policy covers the scenario I mentioned above — damage to the property that I am renting? (The generic description on GEICO’s website says it covers “damage you cause to other people’s property” which certainly sounds applicable.) I am curious what others think. Of course it would also be handy for scenarios involving driving.
If you're a renter and have renters insurance, an umbrella policy can extend your liability protection beyond the limits of your primary policy. You may be able to reduce your renter's insurance to $100K liability and your auto coverage to $100K with a $1M umbrella policy. The umbrella covers damage to the rental and auto and does not need to protect your net worth i.e. if you are in an auto accident can you foresee a situation in which there is $1M in damage?
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exodusNH
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Re: Umbrella insurance - renting a home

Post by exodusNH »

enad wrote: Wed Nov 23, 2022 12:07 am If you're a renter and have renters insurance, an umbrella policy can extend your liability protection beyond the limits of your primary policy. You may be able to reduce your renter's insurance to $100K liability and your auto coverage to $100K with a $1M umbrella policy. The umbrella covers damage to the rental and auto and does not need to protect your net worth i.e. if you are in an auto accident can you foresee a situation in which there is $1M in damage?
You'd be surprised how quickly medical costs can rack up. 17 years ago I went into the hospital with appendicitis. The ER was $75/minute. I was admitted pretty quickly, kept overnight, was operated on in the morning and was on my way home that evening. I was in the hospital for about 18 hours total and had no complications. I was driven there, so no ambulance fees. The total bill was somewhere between $17,000 and $18,000.

If hospital charges tracked inflation, that'd be around $25,000, but health care has well-exceeded inflation in most years. That was for a routine procedure, where I walked in and out.
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ResearchMed
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Re: Umbrella insurance - renting a home

Post by ResearchMed »

enad wrote: Wed Nov 23, 2022 12:07 am If you're a renter and have renters insurance, an umbrella policy can extend your liability protection beyond the limits of your primary policy. You may be able to reduce your renter's insurance to $100K liability and your auto coverage to $100K with a $1M umbrella policy. The umbrella covers damage to the rental and auto and does not need to protect your net worth i.e. if you are in an auto accident can you foresee a situation in which there is $1M in damage?

Some insurers require higher minimums on home/renters and auto insurance to get an umbrella policy. Make sure you check on that.
Getting the policies from the same insurer will help make sure everything syncs.

RM
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MikeG62
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Re: Umbrella insurance - renting a home

Post by MikeG62 »

ResearchMed wrote: Wed Nov 23, 2022 8:34 am
...Getting the policies from the same insurer will help make sure everything syncs.

RM
Good advice (I have my auto, homeowners and umbrella insurance with one insurer).
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exodusNH
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Re: Umbrella insurance - renting a home

Post by exodusNH »

MikeG62 wrote: Wed Nov 23, 2022 8:40 am
ResearchMed wrote: Wed Nov 23, 2022 8:34 am
...Getting the policies from the same insurer will help make sure everything syncs.

RM
Good advice (I have my auto, homeowners and umbrella insurance with one insurer).
And you often get multiline discounts.
Call_Me_Op
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Re: Umbrella insurance - renting a home

Post by Call_Me_Op »

exodusNH wrote: Wed Nov 23, 2022 12:16 am
enad wrote: Wed Nov 23, 2022 12:07 am If you're a renter and have renters insurance, an umbrella policy can extend your liability protection beyond the limits of your primary policy. You may be able to reduce your renter's insurance to $100K liability and your auto coverage to $100K with a $1M umbrella policy. The umbrella covers damage to the rental and auto and does not need to protect your net worth i.e. if you are in an auto accident can you foresee a situation in which there is $1M in damage?
You'd be surprised how quickly medical costs can rack up. 17 years ago I went into the hospital with appendicitis. The ER was $75/minute.
Outrageous by any measure.
Best regards, -Op | | "In the middle of difficulty lies opportunity." Einstein
BernardShakey
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Re: Umbrella insurance - renting a home

Post by BernardShakey »

StrangePenguin wrote: Tue Nov 22, 2022 11:57 pm I’ve looked through some of the many threads on umbrella insurance to try to decide if I should add that to my policy. My situation is slightly different from many because I don’t own a home (although this thread is fairly relevant: viewtopic.php?t=323663 ). Right now I have Auto coverage with $300k/$500k liability limits and $100k property damage liability. My renter’s insurance has $300k liability (the amount required by my landlord). (Both policies from GEICO) From other threads I know that most umbrella claims relate to bad auto accidents, but the nightmare scenario that sometimes worries me is being responsible for, say, burning down the house that I rent. I live in a VHCOL area and the house is worth between 1.5 and 2M.

My net worth is roughly $1.5M, roughly $1M of which is in taxable accounts.

I am thinking I should buy at least $1M of umbrella. One question I have is whether an umbrella policy covers the scenario I mentioned above — damage to the property that I am renting? (The generic description on GEICO’s website says it covers “damage you cause to other people’s property” which certainly sounds applicable.) I am curious what others think. Of course it would also be handy for scenarios involving driving.
Keep in mind that the value of the property you rent is likely more heavily based on the land it sits upon rather than the structure itself if you are in a VHCOL area. This consideration should factor into how much coverage you want for your "burning down the house" scenario.
An important key to investing is having a well-calibrated sense of your future regret.
Carefreeap
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Re: Umbrella insurance - renting a home

Post by Carefreeap »

BernardShakey wrote: Wed Nov 23, 2022 11:08 pm
StrangePenguin wrote: Tue Nov 22, 2022 11:57 pm I’ve looked through some of the many threads on umbrella insurance to try to decide if I should add that to my policy. My situation is slightly different from many because I don’t own a home (although this thread is fairly relevant: viewtopic.php?t=323663 ). Right now I have Auto coverage with $300k/$500k liability limits and $100k property damage liability. My renter’s insurance has $300k liability (the amount required by my landlord). (Both policies from GEICO) From other threads I know that most umbrella claims relate to bad auto accidents, but the nightmare scenario that sometimes worries me is being responsible for, say, burning down the house that I rent. I live in a VHCOL area and the house is worth between 1.5 and 2M.

My net worth is roughly $1.5M, roughly $1M of which is in taxable accounts.

I am thinking I should buy at least $1M of umbrella. One question I have is whether an umbrella policy covers the scenario I mentioned above — damage to the property that I am renting? (The generic description on GEICO’s website says it covers “damage you cause to other people’s property” which certainly sounds applicable.) I am curious what others think. Of course it would also be handy for scenarios involving driving.
Keep in mind that the value of the property you rent is likely more heavily based on the land it sits upon rather than the structure itself if you are in a VHCOL area. This consideration should factor into how much coverage you want for your "burning down the house" scenario.
If the OP is in the Bay Area you can be assured that labor and to a lesser extent materials are also insane. It's best to consult with the insurance agent to see what they are using for replacement value.
Every day I can hike is a good day.
leland
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Re: Umbrella insurance - renting a home

Post by leland »

StrangePenguin wrote: Tue Nov 22, 2022 11:57 pm I am thinking I should buy at least $1M of umbrella. One question I have is whether an umbrella policy covers the scenario I mentioned above — damage to the property that I am renting? (The generic description on GEICO’s website says it covers “damage you cause to other people’s property” which certainly sounds applicable.) I am curious what others think. Of course it would also be handy for scenarios involving driving.
In the same basic scenario and I carry umbrella/renters/auto from Geico. My understanding is that this scenario would be covered, that said the people you rent from will also have homeowners insurance to cover damage to their property - the umbrella would kick in if they (or their insurer) go and sue you.
softwaregeek
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Re: Umbrella insurance - renting a home

Post by softwaregeek »

Some umbrella attaches to home, others to auto. Call insurer to find out. RLI sells unattached umbrella at a reasonable price.
nalor511
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Re: Umbrella insurance - renting a home

Post by nalor511 »

softwaregeek wrote: Thu Nov 24, 2022 2:44 pm Some umbrella attaches to home, others to auto. Call insurer to find out. RLI sells unattached umbrella at a reasonable price.
RLI does do that, but RLI also requires you maintain your auto limits at certain (higher) levels, or raises the umbrella premiums to almost double if you don't
BernardShakey
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Re: Umbrella insurance - renting a home

Post by BernardShakey »

Carefreeap wrote: Thu Nov 24, 2022 12:24 pm
BernardShakey wrote: Wed Nov 23, 2022 11:08 pm
StrangePenguin wrote: Tue Nov 22, 2022 11:57 pm I’ve looked through some of the many threads on umbrella insurance to try to decide if I should add that to my policy. My situation is slightly different from many because I don’t own a home (although this thread is fairly relevant: viewtopic.php?t=323663 ). Right now I have Auto coverage with $300k/$500k liability limits and $100k property damage liability. My renter’s insurance has $300k liability (the amount required by my landlord). (Both policies from GEICO) From other threads I know that most umbrella claims relate to bad auto accidents, but the nightmare scenario that sometimes worries me is being responsible for, say, burning down the house that I rent. I live in a VHCOL area and the house is worth between 1.5 and 2M.

My net worth is roughly $1.5M, roughly $1M of which is in taxable accounts.

I am thinking I should buy at least $1M of umbrella. One question I have is whether an umbrella policy covers the scenario I mentioned above — damage to the property that I am renting? (The generic description on GEICO’s website says it covers “damage you cause to other people’s property” which certainly sounds applicable.) I am curious what others think. Of course it would also be handy for scenarios involving driving.
Keep in mind that the value of the property you rent is likely more heavily based on the land it sits upon rather than the structure itself if you are in a VHCOL area. This consideration should factor into how much coverage you want for your "burning down the house" scenario.
If the OP is in the Bay Area you can be assured that labor and to a lesser extent materials are also insane. It's best to consult with the insurance agent to see what they are using for replacement value.
Right, just have to carefully look into it and get the right coverage for the replacement cost.
An important key to investing is having a well-calibrated sense of your future regret.
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