Get an umbrella and reduce limits on vehicle coverage?

[DesertMan]

Quick insurance question: I'm considering getting an umbrella policy to protect my assets in the event of who-knows-what. The point of the umbrella is to provide coverage for once-in-a-blue-moon events that aren't covered by, or exceed the limits on, your primary insurance policies. That being the case, I'm re-evaluating the limits on our auto coverage, which are currently $150K across the board. If I have an umbrella covering say $500K, it seems like high limits on the auto coverage are overkill. If we actually (God forbid) had some kind of disaster on the road, it's not likely $650K versus, say, $600K of total liability coverage would make a world of difference. In any event the high auto limits don't seem like it's worth paying extra for. If I get the umbrella, should I consider lowering the auto limits a bit, or is there something I'm missing here? Thanks.

[ccieemeritus]

Generally the umbrella insurer requires that you have the auto policy with them and it be a certain size.

[livesoft]

I could not get an umbrella until I had the max limits on auto first.

[neilpilot]

Maybe you have never been quoted an umbrella policy. Umbrella coverage will specify a minimum underlying liability coverage for your auto policy. So you will lower (or increase) your auto (and home owner) liability coverage to match the umbrella policy specifies.

[sixty40]

For Geico umbrella, I think you need minimum 300/600 for all autos.

[Dottie57]

Both my home and auto limits needed to be upped when I bought umbrella insurance.

[RickBoglehead]

Correct. OP will in fact likely have to raise his limits as they are quite low.

[DesertMan]

Maybe you have never been quoted an umbrella policy. Umbrella coverage will specify a minimum underlying liability coverage for your auto policy. So you will lower (or increase) your auto (and home owner) liability coverage to match the umbrella policy specifies.

Got it. I just submitted the quote request today. I’ll see what they say about minimum limits. Believe it or not I already have close to the max on the auto policy and I’ll take the limit requirements into account when doing the cost comparison. Thanks.

[talzara]

I could not get an umbrella until I had the max limits on auto first.

Umbrella policies do not require maximum limits on the underlying auto policy. They require specific limits.

Most of the large insurers will write $1 million of primary auto liability, but they only require $300k to write an umbrella.

[Big Dog]

Believe it or not I already have close to the max on the auto policy...

Seriously? $150k is on the low side for auto insurance recommendations. Would you mind sharing the company name?

[mariezzz]

Believe it or not I already have close to the max on the auto policy...

Seriously? $150k is on the low side for auto insurance recommendations. Would you mind sharing the company name?

Plus read the umbrella policy carefully to understand precisely what is/isn't covered. It may not be a true 'umbrella' policy.

[Gill]

I could not get an umbrella until I had the max limits on auto first.

Why would you get the maximum limits on your auto policy? I only carry the amount required by the umbrella policy and the umbrella covers the rest.
Gill

[ncbill]

I could not get an umbrella until I had the max limits on auto first.

Why would you get the maximum limits on your auto policy? I only carry the amount required by the umbrella policy and the umbrella covers the rest.
Gill

Obviously livesoft's auto insurer required it.

My auto/home insurer (Traveler's) required me to increase auto coverage to $500k/$500k before they'd write an umbrella.

[DesertMan]

Believe it or not I already have close to the max on the auto policy...

Seriously? $150k is on the low side for auto insurance recommendations. Would you mind sharing the company name?

My bad, I was looking at the COLLISION limits and not the LIABILITY which does go up to $1MM. I currently have $500k. This is with AAA Texas and it looks like it’s ptetty typical.

[RickBoglehead]

Believe it or not I already have close to the max on the auto policy...

Seriously? $150k is on the low side for auto insurance recommendations. Would you mind sharing the company name?

My bad, I was looking at the COLLISION limits and not the LIABILITY which does go up to $1MM. I currently have $500k. This is with AAA Texas and it looks like it’s ptetty typical.

As stated, your insurance company will tell you what each policy (auto, home) has to have for the umbrella to be issued.

[MedSaver]

For Geico umbrella, I think you need minimum 300/600 for all autos.

Geico is 300/300 for umbrella.

[Enzo IX]

If your vehicle and umbrella coverage is with the same company than I am sure they have safeguards and internal controls that will not leave a gap between your auto and umbrella coverage. A problem may arise if you have different insurance carriers for the two coverages. If there is a gap between your automobile coverage and your required limits that your umbrella requires than you will be essentially self insuring the gap.

[MedSaver]

You'll also need to review your renter's/homeowner's policy to ensure there's no gaps. My renter's policy is separate from Geico and they just told me the minimums, but didn't verify that coverage.

[DesertMan]

You'll also need to review your renter's/homeowner's policy to ensure there's no gaps. My renter's policy is separate from Geico and they just told me the minimums, but didn't verify that coverage.

If your vehicle and umbrella coverage is with the same company than I am sure they have safeguards and internal controls that will not leave a gap between your auto and umbrella coverage. A problem may arise if you have different insurance carriers for the two coverages. If there is a gap between your automobile coverage and your required limits that your umbrella requires than you will be essentially self insuring the gap.

I’d heard that most insurers won’t write an umbrella unless most or all of your liability-bearing policies (auto/home/etc.) are with the same company for exactly these reasons. I think GEICO is an exception because they do not write their own home/renter policies but act as a broker.

[MedSaver]

I’d heard that most insurers won’t write an umbrella unless most or all of your liability-bearing policies (auto/home/etc.) are with the same company for exactly these reasons. I think GEICO is an exception because they do not write their own home/renter policies but act as a broker.

I agree it would be nice if everything was under one roof, but as you said, GEICO doesn't write those policies and I ended up with State Farm renter's. Will probably be a giant mess if a large claim occurs under the renter's policy, but generally, I'm much more worried about auto.

[neilpilot]

I agree it would be nice if everything was under one roof, but as you said, GEICO doesn't write those policies and I ended up with State Farm renter's. Will probably be a giant mess if a large claim occurs under the renter's policy, but generally, I'm much more worried about auto.

So if you incurred a liability claim related to your renter's policy, State Farm might be liable for their policy coverage, and the GEICO for the remainder up to the umbrella limit. In addition to that exposure, GEICO would be on the hook for your legal representation and possibly also State Farm.

This isn't an unusual situation, and typically the 2 carriers would work out a single pro-rated defense and/or settlement plan. Not really a big mess based on 2 examples of similar occurrences that I'm familiar with.

[MedSaver]

This isn't an unusual situation, and typically the 2 carriers would work out a single pro-rated defense and/or settlement plan. Not really a big mess based on 2 examples of similar occurrences that I'm familiar with.

That's reassuring to hear. Thanks!

[Nicolas]

I could not get an umbrella until I had the max limits on auto first.

Why would you get the maximum limits on your auto policy? I only carry the amount required by the umbrella policy and the umbrella covers the rest.
Gill

One reason to take max limits is to maximize uninsured/underinsured coverage which can’t exceed the liability limits of your auto policy. So for example if your liability limits are 250/250 you can’t have uninsured/underinsured coverage higher than that. But if you increase your liability coverage to 500/500 then your uninsured/underinsured coverage can be set to that higher amount of coverage.

I feel more comfortable with a higher amount of un/under as there are a lot of drivers without insurance (some even without drivers licenses).

This is assuming your umbrella doesn’t include uninsured/underinsured. My agent said my umbrella’s premium would be doubled with that additional coverage.

[DesertMan]

I could not get an umbrella until I had the max limits on auto first.

Why would you get the maximum limits on your auto policy? I only carry the amount required by the umbrella policy and the umbrella covers the rest.
Gill

One reason to take max limits is to maximize uninsured/underinsured coverage which can’t exceed the liability limits of your auto policy. So for example if your liability limits are 250/250 you can’t have uninsured/underinsured coverage higher than that. But if you increase your liability coverage to 500/500 then your uninsured/underinsured coverage can be set to that higher amount of coverage.

I feel more comfortable with a higher amount of un/under as there are a lot of drivers without insurance (some even without drivers licenses).

This is assuming your umbrella doesn’t include uninsured/underinsured. My agent said my umbrella’s premium would be doubled with that additional coverage.

Thank you for mentioning the UM/UIM issue. This is huge in our area. I’ll be sure to ask about how the umbrella would work in that situation when I talk to the agent.