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Got Umbrella Insurance?

Recently one of our clients child got into an car accident and it was the child fault. The other party was hospitalized. A few weeks later, the claimant filed a claim for $850,000.

If this happened to you, do you

(a) know your liability coverage limit?

(b) do you have enough insurance coverage limit to cover this claim?

Most people auto insurance policy carry a $100,000/$300,000 bodily injury limit. In this case that will not be sufficient to cover the claim. Once your insurance limit has exhausted, the claimant can go after your other assets and your incomes. So what can you do to protect yourself and your family from this situation? That is where personal umbrella Insurance comes into the picture. In this situation if the insured auto policy has a $250,000 bodily injury limit with a $1,000,000 personal umbrella policy, the insured total liability limit is $1,250,000. Hence the insured policy has enough coverage for the $850,000 claim. So what is a personal umbrella insurance?

Personal umbrella insurance is a excess liability insurance policy that provide excess protection on the policy holder assets and future income beyond the standard limits on their primary policies. It gets trigger when all the underlying policies such as auto insurance, homeowners insurance, boat insurance liability limits are totally exhausted. An umbrella insurance is the most cost effective way to protect your assets and future income. However, most personal umbrella policies do not cover punitive damages, intentional actions or liability incurred in connection with your business activities.

Typically, a personal umbrella policy is sold in increments of one million dollars and usually starts from one million dollars limit and max out at five million dollars. There are some insurance companies that offers personal umbrella limit over five million dollars for wealthy clients.

All insurance companies that sell umbrella insurance require a minimum liability limit on the primary policies such as auto insurance and homeowner insurance.

Most insurance companies require the following minimum liability limits in CA:

  • Auto & watercraft insurance: $250,000/$500,000 on bodily injury and $100,000 on property damage, or $300,000 combined single limit (CSL).
  • Homeowner insurance: $300,000 on liability.

The yearly premium for a personal umbrella insurance usually start from $180 and depends on the coverage limit, your claim/violation history, number of drivers and properties owned. To get a quote, please contact your insurance agent.

Teck Wong