Insurance Questions - Umbrella, Renters, etc.

Non-investing personal finance issues including insurance, credit, real estate, taxes, employment and legal issues such as trusts and wills
Post Reply
User avatar
Topic Author
BB76
Posts: 18
Joined: Mon Dec 17, 2018 3:12 pm
Location: Heartland

Insurance Questions - Umbrella, Renters, etc.

Post by BB76 » Tue Mar 24, 2020 3:25 pm

Given current events, I'm in the process of reviewing aspects of our financial life and am wondering about our current insurance coverage, especially in regards to "liability" coverage.

Some brief background; about 9 years ago, my wife and I combined households with my parents when my father was diagnosed with a type of leukemia. A couple of years later he passed away, but we've continue to maintain a multi-generational household with no plans to change. My mother owns the house we all live in outright (no mortgage) and we've been advised by our CPA not to put our name on it for tax purposes. As a result, the homeowners policy is in her name only.

The three of us (me, my wife and my mother) are listed on a $2mil umbrella policy, and my wife and I have maintained a renters policy since before we combined households, on the recommendation of our insurance agent. However, if my wife and I are covered under the umbrella policy (or homeowners?), I question the need for the renters policy. If necessary, I would keep it for any liability coverage not provided by other policies and not strictly for coverage of our "stuff."

In addition, my wife and I maintain a vehicle in our name and my mother owners her own vehicle. Given age and mileage, I'm considering dropping comp and collision on our vehicle. However, my mother maintains lower limits on the other areas than we do. Should this be changed?

The umbrella, renters & both auto policies are with a single insurance company. The homeowners policy is with a different company. I do have questions into both agents regarding the above, but would appreciate some unbiased thoughts if possible. Thanks very much in advance.
“Any intelligent fool can make things bigger, more complex, and more violent. It takes a touch of genius — and a lot of courage to move in the opposite direction.” ― E.F. Schumacher

oldfort
Posts: 78
Joined: Mon Mar 02, 2020 8:45 pm

Re: Insurance Questions - Umbrella, Renters, etc.

Post by oldfort » Tue Mar 24, 2020 4:26 pm

If you are covered for liability on your mother's homeowner's and umbrella, I don't see the need for a separate renter's policy, unless you have lots of high value stuff? Do you have expensive jewelry, art, or other high dollar collectibles?

jbmitt
Posts: 461
Joined: Mon Jul 14, 2008 1:00 am

Re: Insurance Questions - Umbrella, Renters, etc.

Post by jbmitt » Tue Mar 24, 2020 4:43 pm

The homeowner policy should cover the contents of household members up to the limits and/or applicable sub limits. A dwelling or renters policy does nothing for items in excess of the sub limits unless they are scheduled. You said you aren’t owners of the house, but have you inquired whether you can be added as named insureds on the homeowner policy with your mother? If you can be, you can likely get rid of the dwelling/renters policy.

If not, that’s a potential gap and a possibility why the dwelling/renters policy was recommended. The umbrella policy drops down, but may have a specific underlying amount of liability coverage required that the dwelling/renters policy fulfills if not provided under the homeowners policy.

Your auto coverages should be fine with regards to dropping comp or collision. The umbrella policy likely specifies the amount of liability coverage necessary under the auto policy.

User avatar
Topic Author
BB76
Posts: 18
Joined: Mon Dec 17, 2018 3:12 pm
Location: Heartland

Re: Insurance Questions - Umbrella, Renters, etc.

Post by BB76 » Tue Mar 24, 2020 6:11 pm

Thank you very much for the helpful replies!
oldfort wrote:
Tue Mar 24, 2020 4:26 pm
If you are covered for liability on your mother's homeowner's and umbrella, I don't see the need for a separate renter's policy, unless you have lots of high value stuff? Do you have expensive jewelry, art, or other high dollar collectibles?
No high value stuff of any consequence personally owned by my wife and me, simply sentimental items.
jbmitt wrote:
Tue Mar 24, 2020 4:43 pm
The homeowner policy should cover the contents of household members up to the limits and/or applicable sub limits. A dwelling or renters policy does nothing for items in excess of the sub limits unless they are scheduled. You said you aren’t owners of the house, but have you inquired whether you can be added as named insureds on the homeowner policy with your mother? If you can be, you can likely get rid of the dwelling/renters policy.

If not, that’s a potential gap and a possibility why the dwelling/renters policy was recommended. The umbrella policy drops down, but may have a specific underlying amount of liability coverage required that the dwelling/renters policy fulfills if not provided under the homeowners policy.

Your auto coverages should be fine with regards to dropping comp or collision. The umbrella policy likely specifies the amount of liability coverage necessary under the auto policy.
I contacted the homeowner policy agent and he stated the name on the deed is the name on the policy. He is going to see what coverage is, if any, for family members as he thought there would be some coverage for family members' property and liability. He stated he would ask an adjuster my questions, but suggested keeping separate policies. I'm not clear on why we would keep the separate policies if we're all covered under the same policy regardless of naming. I'll update the thread when the information is received.

In reviewing the $2mil umbrella policy, the required underlying residential liability is $100k. Our renters policy currently has personal liability coverage of $500k and my mother's homeowners policy has personal liability coverage of $1mil, though not sure yet if it applies to my wife and me. The required underlying for the auto policy is $100k/$300k/$25k person/accident/property. As a result, dropping comp & collision and reducing to required minimums will save some on auto premium.

If I understand correctly, the issue of keeping the renters policy will come down to whether or not the $1mil personal liability coverage of the homeowners policy applies to my wife and me, at least up to the $100k required underlying residential liability coverage necessary for the umbrella policy. If it does, we drop the renters. If it doesn't, we keep the renters and drop the liability coverage to $100k. Am I understanding all of this correctly?
“Any intelligent fool can make things bigger, more complex, and more violent. It takes a touch of genius — and a lot of courage to move in the opposite direction.” ― E.F. Schumacher

oldfort
Posts: 78
Joined: Mon Mar 02, 2020 8:45 pm

Re: Insurance Questions - Umbrella, Renters, etc.

Post by oldfort » Tue Mar 24, 2020 6:24 pm

Have you read your mother's policies? My umbrella and homeowner's define an insured as any named insured in the declaration, their spouse, or any relatives residing in the same household.

User avatar
Topic Author
BB76
Posts: 18
Joined: Mon Dec 17, 2018 3:12 pm
Location: Heartland

Re: Insurance Questions - Umbrella, Renters, etc.

Post by BB76 » Tue Mar 24, 2020 6:35 pm

oldfort wrote:
Tue Mar 24, 2020 6:24 pm
Have you read your mother's policies? My umbrella and homeowner's define an insured as any named insured in the declaration, their spouse, or any relatives residing in the same household.
Happy coincidence - I was reading the definition of "Insured Person" in the homeowner's policy when I received the notification of your post. The definition of insured in the homeowner's policy is listed the same as you indicated. Because my wife and I are specifically named in the umbrella policy, I believe the renters policy can be dropped. Thanks very much!
:sharebeer
“Any intelligent fool can make things bigger, more complex, and more violent. It takes a touch of genius — and a lot of courage to move in the opposite direction.” ― E.F. Schumacher

User avatar
Topic Author
BB76
Posts: 18
Joined: Mon Dec 17, 2018 3:12 pm
Location: Heartland

Re: Insurance Questions - Umbrella, Renters, etc.

Post by BB76 » Thu Mar 26, 2020 5:13 pm

Thanks again for the replies. I received some verifying and additional information from both agents. In short, my family is fully covered under both my mother's homeowner's policy and the umbrella policy as "resident relatives." If we were to drop the renters policy, my wife and I will be removed as named insureds on the umbrella policy, but maintain full coverage as "resident relatives." In short, keeping the renters policy in place separates my wife and my claim history from my mother. Removing the renters policy puts the claim history for both policies on my mother. No claims have been made on either policy. My initial thought is to remove the renters policy until our young children reach driving age. Depending on life circumstances at that time, we could potentially add the additional layer of coverage if necessary. However, it may make just as much sense to increase limits on the homeowner's and/or umbrella policies (&/or our auto policy) for everyone at that point. Any additional input? Thanks very much.
“Any intelligent fool can make things bigger, more complex, and more violent. It takes a touch of genius — and a lot of courage to move in the opposite direction.” ― E.F. Schumacher

inverter
Posts: 221
Joined: Mon Jul 27, 2015 1:40 pm

Re: Insurance Questions - Umbrella, Renters, etc.

Post by inverter » Thu Mar 26, 2020 5:47 pm

BB76 wrote:
Thu Mar 26, 2020 5:13 pm
Thanks again for the replies. I received some verifying and additional information from both agents. In short, my family is fully covered under both my mother's homeowner's policy and the umbrella policy as "resident relatives." If we were to drop the renters policy, my wife and I will be removed as named insureds on the umbrella policy, but maintain full coverage as "resident relatives." In short, keeping the renters policy in place separates my wife and my claim history from my mother. Removing the renters policy puts the claim history for both policies on my mother. No claims have been made on either policy. My initial thought is to remove the renters policy until our young children reach driving age. Depending on life circumstances at that time, we could potentially add the additional layer of coverage if necessary. However, it may make just as much sense to increase limits on the homeowner's and/or umbrella policies (&/or our auto policy) for everyone at that point. Any additional input? Thanks very much.
I think it's probably fine to drop the Renter's. While I was moving cities in the fall, I stayed at my parent's house for 4 months and kept my Renter's Insurance to have a consistent history of insurance. If you don't care about having your own insurance history and being independent, then drop it and save a couple of bucks!

Post Reply