Personal Umbrella versus Personal Excess Liability policies ?

[Linney]

I just received the umbrella liability renewal notice from my insurance company and got a minor surprise. They have changed the policy from "Personal Umbrella Liability" to a "Personal Excess Liability".

I searched a bit in google and various websites seemed to indicate that these two policy types are essentially synonymous. That was reassuring until I read the insurance company's official enclosed notice that states: "There are DIFFERENCES (emphasis mine) between an umbrella liability policy and an excess liability policy. (1) An umbrella policy may cover claims that are not covered by your primary policy. (2) An excess liability policy extends the liability limits of your underlying policy."

As is typical, I have all my insurance policies --- auto, home, and umbrella excess liability policies --- with the same insurance company which came highly rated and recommended by my local AAA.

Any resident experts on insurance policies here who could provide some insight on the policy name change? Should I be concerned? I'm pretty good at reading and understanding contract documents but insurance policy language often stumps me (sigh).

 

[brewer12345]

The main difference as I understand it is that excess liability is triggered when one of your primary policies (auto, home, etc.) is maxed out. OTOH, umbrella both covers you once the primary policy is maxed out and if something happens that isn't covered by a primary policy. I can't think of anything obvious that might serve as an example, but there must be something out there. I might call up another carrier and see if they offer you an umbrella on competitive terms. I know GEICO/Berkshire Hathaway like to write these policies, but obviously there are lots of other companies out there.

 

[Linney]

Maybe the real question then is what type of policy would be sufficient protection for my growing nest egg. I've reached the point where I'm debt-free and mortgage-free and at the same time I am hitting income limits for contributing to a Roth. Because of that my taxable savings is starting to get large rather quickly now and net worth is approaching 1 million. I'm looking for reasonable protection against lawsuits and the like. Would either an umbrella policy or a personal excess policy provide that kind of protection? or is the personal excess policy insufficient for my needs? The key thing I'm looking for is reasonable protection -- I can't protect against every scenario but I do want to take reasonable precautions.

 

[Goonie]

I have an Umbrella policy. It covers over and above the coverages I have for Auto and Home Owner policies. It also covers such things as libel and slander, and other things that some ying-yang may sue about. It will also cover me if some bozo breaks into my abode, and I beat him within an inch of his worthless life, and then shoot him in the knee caps just for good measure....and he gets upset by all of that and sues me!!!

I'm not at all familiar with the Personal Excess Liability.

 

[Delawaredave]

My policy says "umbrella". It also says "required underlying insurances" - then says:

1. Automobile policy (references my auto policy with them)
2. Personal liability for bodily injury and property damage (references my homeowners policy with them)
3. Personal injury liability (again references my homeowners policy number)

What if you are golfing and hit and injure someone with a golf ball and they sue you ?
- I'm assuming the umbrella policy would cover this
- Would "Personal Excess Liability" coverage cover this ?

If Personal Excess Liability only extends your homeowners, and homeowners would not cover the above "golfing accident", then that might be a conern.

 

[Goonie]

What if you are golfing and hit and injure someone with a golf ball and they sue you ?
- I'm assuming the umbrella policy would cover this

Yes, the Umbrella Policy would cover this.

 

[mathjak107]

these policies can be very tricky. i recently read about a guy who shot a burgler in his home. the policy wouldnt cover a civil suit or even legal expenses as the pulling of the trigger regardless wasnt an accident but intentional and intenional acts are excluded. same could be implied i guess about your dog biting an intruder maybe

 

[mathjak107]

heres another good one you may want to check with your insurance company on.

if you and your wife have different insurance companies , like i got married a year and a half ago, i had geico my wife had all state. we kept our respective policies for a while. we found out we couldnt drive each others vehicles. while a person can loan his car to anyone they want and they are covered most companies consider a husband and wife owners of the vehicle for insurance purposes even if the title is in each others name. since a husband or wife are owners if one is not listed on the policy they are considered an un-insured owner.

if you drive someone elses car your own insurance only serves as a back up for liability after the owner of the vehicles policy limits are reached. there is no property coverage either carried over when you drive someone elses car although i wonder what happens if you hit a very expensive car thats exceeded the property limit on the base policy of the persons car you are driving. . so i guess they can be right saying your not insured as husband and wife when driving each others cars if you have different companies.

 

[brewer12345]

Maybe the real question then is what type of policy would be sufficient protection for my growing nest egg. I've reached the point where I'm debt-free and mortgage-free and at the same time I am hitting income limits for contributing to a Roth. Because of that my taxable savings is starting to get large rather quickly now and net worth is approaching 1 million. I'm looking for reasonable protection against lawsuits and the like. Would either an umbrella policy or a personal excess policy provide that kind of protection? or is the personal excess policy insufficient for my needs? The key thing I'm looking for is reasonable protection -- I can't protect against every scenario but I do want to take reasonable precautions.

I believe you would be best served by an umbrella policy, even if you have to go to another insurer to get it. You want a minimum of $1MM umbrella, 2 or 3MM would be better. These policies are cheap protection against unlikely, but potentially devastating happenings.

 

[donheff]

What if you are golfing and hit and injure someone with a golf ball and they sue you ?
- I'm assuming the umbrella policy would cover this
- Would "Personal Excess Liability" coverage cover this ?

I have an umbrella policy and always assumed it would cover something like this. But I guess I am not sure unless the terms spell it out or there is a industry standard for what "umbrella" means. The policy isn't handy so I can't look. Others have stated that it will cover you for slander. What about assault? If I slug a guy in a bar will it kick in

 

[brewer12345]

What about assault? If I slug a guy in a bar will it kick in

Most policies specifically exclude intentional acts.

 

[Nords]

I believe you would be best served by an umbrella policy, even if you have to go to another insurer to get it.

I agree but there's a hidden story here and my inner nuke is curious about why an insurance company feels compelled to take this step. I guess the essential question is: what's not covered by a personal excess liability policy that would be covered by an umbrella policy?

You want a minimum of $1MM umbrella, 2 or 3MM would be better. These policies are cheap protection against unlikely, but potentially devastating happenings.

I stumbled across an interesting gotcha with Armed Forces Insurance's umbrella liability policy that may apply to other company's policies as well. When I called to raise our umbrella liability limit (thank you, Hawaii real estate & Berkshire Hathaway!) I was informed that there was an annual limit on the size of the increase. In other words the higher limit that we wanted couldn't be jumped all at once-- it would have to be done over two years (or technically over 365 + 1 days). This "requirement" was eventually waived upon vociferous complaining by a 25-year customer taking up way too much "Customer Service" time, but it's an interesting loophole that I hope others can avoid.

 

[brewer12345]

FWIW, my understanding is that Berkshire Hathaway will double your umbrella coverage for 90% of the premium of the initial policy.

 

[Nords]

FWIW, my understanding is that Berkshire Hathaway will double your umbrella coverage for 90% of the premium of the initial policy.

Boy, I had a big blind spot there. I didn't realize BRK messed around directly with us retail little guys... I thought that they just reinsured the liability insurers.

 

[brewer12345]

Boy, I had a big blind spot there. I didn't realize BRK messed around directly with us retail little guys... I thought that they just reinsured the liability insurers.

Nope. If you go direct to BRK's website I believe they will give you a quote.

 

[bongo2]

What if you are golfing and hit and injure someone with a golf ball and they sue you ?
- I'm assuming the umbrella policy would cover this
- Would "Personal Excess Liability" coverage cover this ?

It should, and your homeowners policy should also cover you in this situation.

Here is one explanation of the difference between Umbrella and Excess:

http://www.insurance.com/Article.aspx/Umbrella_Policies_Extend_Your_Coverage/artid/164

The personal injury protection offers coverage not found in your auto and homeowners policy. Generally, personal injury encompasses false arrest, false imprisonment, malicious prosecution, defamation, invasion of privacy, wrongful entry, or eviction. Most primary policies cover bodily injury and property damage, but not personal injury. Certain umbrella policies also provide coverage if you face liability arising from your service on the board of a civic, charitable, or religious organization.

While umbrella is cheap limit, it is not generally cheap to buy umbrella from anyone besides your own Auto or Home writer, so if you're set on getting it you may want to switch carriers. You are incredibly unlikely to need this cover (much more likely to die, for example), so I wouldn't loose too much sleep.

 

[Delawaredave]

Here is one explanation of the difference between Umbrella and Excess:

http://www.insurance.com/Article.aspx/Umbrella_Policies_Extend_Your_Coverage/artid/164

Good article - but I didn't see any reference to specfically named "Excess Liability" policies and how/if they differ from "Umbrella".

 

[Linney]

I agree but there's a hidden story here and my inner nuke is curious about why an insurance company feels compelled to take this step. I guess the essential question is: what's not covered by a personal excess liability policy that would be covered by an umbrella policy?

Here is what is excluded in the excess liability policy that I received. They were kind enough to separate out what was already excluded versus what is newly excluded:

NEWLY EXCLUDED:
- injuries or damage arising out of ownership, maintenance or use of an aircraft
- injuries or damage arising due to child care service provided by the insured
- injuries or damage caused intentionally (unless in defense of self or property)
- injuries or damage related to employment of any person by the insured (except domestic employees)
- injuries or damages arising out of oral or written material if done by or at the direction of insured with knowledge of its falsity
- liabilities payable under ERISA or Worker's Comp

ALREADY EXCLUDED were:
- watercraft greater than 50 feet
- injuries or damages arising out of membership on a board of directors
- injuries or damages arising as a officer of an organization except non-paid positions
- injuries or damages caused by war, undeclared war, or warlike acts by a military force
- any property damage to property owned by the insured
- losses charged against you as a member of an association of property owners
- losses due to participation in racing, speed or demolition contest involving a motored vehicle
(that's less than half the list, but we get the idea, right?)


Okay, listing that out helped me -- seems the exclusions are not particularly unusual in nature.

Based on feedback by some other posters, I am starting to think that it comes down to this: coverage of a personal excess policy is the same as coverage by a homeowners/auto policy.

So.... Is a golfing accident covered under a homeowners insurance? If so, then it would be extended by the "personal excess" policy up to the policy limit and I'm sufficiently covered. If not, I need to find a real umbrella liability policy by another carrier.

 

[Linney]

While umbrella is cheap limit, it is not generally cheap to buy umbrella from anyone besides your own Auto or Home writer, so if you're set on getting it you may want to switch carriers.

Yup, and that's why I'm trying to figure this out -- I don't relish having to change my auto AND home AND personal liabilty coverage to a new provider.

You are incredibly unlikely to need this cover (much more likely to die, for example), so I wouldn't loose too much sleep.

Just tryin' to ensure the protection my nest egg so I can use it to Retire Early instead of turning it over to someone else in this lawsuit-happy country of ours.

 

[brewer12345]

Linney, I think we are making this too hard. Do you have an agent that can find their own butt without the use of both hands? If so, ask them for an explanation and what they think.

 

[Martha]

I agree with Brewer on talking to the agent.

One thing I really wanted with our insurance policies was coverage for people working on our property, not just domestic employees. Of course, you want to hire people that have their own workers compensation insurance but what if they don't or if it lapsed? Plus, most guys you hire to shovel snow aren't going to have workers compensation. So I made sure we had coverage for those kind of claims. I see that on your excess liability policy that sort of claim is not covered. It may not be covered on your homeowner's policy either.

The golf course type accident should be covered under your homeowners policy and thus covered under the excess liability policy.

 

[ERD50]

I agree with Brewer on talking to the agent.

I agree also, but.... don't all these contracts have wording to the effect... ' no promises, conditions, or statements made by any representative of the company shall override the provisions of the contract'?

So, while it is a good idea to discuss this with the agent, you could walk away feeling like he/she answered every question fully and professionally, but maybe they are just good at appeasing their clients, tell them what they want to hear, and you could still be left hangin' in the breeze. Still, you may learn what you need to know, but I never feel confident that I got the right answers.

I feel like a numbskull when it comes to insurance. The last time I tried to get serious about understanding my policies, I got some books that just got me more confused. The lawyers say ' well, that is really an insurance question', and the insurance guys say ' well, that is really a legal question'.... I got 'analysis paralysis' and made no changes.

One thing I really wanted with our insurance policies was coverage for people working on our property, not just domestic employees.

Yes, I was surprised to see that excluded. I will check our umbrella for that, I was assuming we had that coverage.

-ERD50

 

[FinanceDude]

I agree with Brewer on talking to the agent.

One thing I really wanted with our insurance policies was coverage for people working on our property, not just domestic employees. Of course, you want to hire people that have their own workers compensation insurance but what if they don't or if it lapsed? Plus, most guys you hire to shovel snow aren't going to have workers compensation. So I made sure we had coverage for those kind of claims. I see that on your excess liability policy that sort of claim is not covered. It may not be covered on your homeowner's policy either.

The golf course type accident should be covered under your homeowners policy and thus covered under the excess liability policy.

Well, when I hire any outfit, I get it in writing that they are insured and bonded...........otherwise, no dice. I probably pay more for such jobs, but I feel it is worth the cost............

 

[JustCurious]

Linney,

I am a practicing civil litigation attorney in Florida, and in my experience the answer to your question is counter-intuitive. (Please understand that the information and opinion that I am giving you is based on my education and experience in Florida.... the answer may vary in your state)

The answer is that you should get auto and home insurance with reasonable liability limits, and forget about umbrella or excess policies. First of all, it is a highly unlikely occurence that you will ever do anything that will cause significant injury to someone else that will result in a very large liability. And, despite the propaganda that you get from the media, there is no frivolous lawsuit crisis. I have been involved with many hundreds of civil lawsuits in my career, and I have NEVER seen a frivolous lawsuit get very far, or get anything more than a nominal or nuisance type settlement (a few thousand at the very most). I can tell you that most judges and lawyers and jurors go out of their way to dispose of frivolous lawsuits.

Now, is it possible that you will injury someone and cause significant injuries and liability? Yes. Is that the purpose of insurance... to cover the ulikely but catastrophic? Yes. However, here is the counter-intuitive part....if you get too much insurance, you will become more of a target for an opportunistic plaintiff's attorney who wants to get at your insurance money. Without getting too technical, an insurance company has just as much of an obligation to defend you in a lawsuit if you have a 10k policy or a 1M policy. And, they can't settle without getting a release of liability. So, the practical result (in virtually EVERY case that I have been involved in, save one out of hundreds) is that the plaintiff's counsel will settle with you to get your insurance money, assuming it is a reasonable amount (say 100k), because he knows it is highly unlikely he will ever collect against you.

Now, you say, what if you have 1M..well, the answer is that most of that money is probably in retirement accounts which are exempt from attachment. Also (in Florida) if you have a joint account with your spouse, that money is exempt too. (all of it, not just half) Also, your house is fully exempt, even if you have a mansion. Also, Social Security is exempt, and any interest in a life insurance policy. If you have any significant non-exempt money, you would be covered anyway since you would have reasonable policy limits and the plaintiff will settle to get those limits.

Having said all that, it is theoretically possible that you could be hit with a judgment in excess of your reasonable limits because the plaintiff's attorney refused to settle, but I think that is just about as likely as you being struck by lightning in my experience.

 

[73ss454]

Thanks JC,

I'm moving to Fla. on friday and this is great info.