Personal Umbrella Myths Debunked: Myth #2
Is Millions of Dollars of Umbrella Coverage Really Expensive?
Over the decades that the Big “I” has partnered with RLI to bring our agent members a personal umbrella market, we have encountered several persistent myths about umbrella coverage in the marketplace. We’ll tackle and debunk these myths one by one. First up:
PERSONAL UMBRELLA MYTH:
Millions of dollars in liability coverage must be really expensive.
PERSONAL UMBRELLA TRUTH:
A personal umbrella liability policy is an affordable way to obtain a lot of coverage.
Since other kinds of policies that provide a few hundred thousand in coverage can cost thousands of dollars per year, it’s a logical assumption that a policy providing millions of dollars in coverage would be even more expensive. In fact, the opposite is usually true when it comes to a personal umbrella.
The purpose of a personal umbrella policy is to provide coverage only once a customer’s underlying policy (homeowners, auto, watercraft, etc.) has paid out at the full minimum required limit, and has been exhausted. Since a personal umbrella isn’t meant to provide coverage from the first dollar, and usually only comes into play when the injury costs several hundreds of thousands of dollars, claims (though very costly) are infrequent compared to home or auto claims.
For that reason, and others, umbrella rates for the average household tend to be quite affordable. For a household with 1 home, 2 cars, and 2 drivers with clean driving records, $1 million of personal liability coverage may cost just $200 annually. Households that present greater risk will pay more but arguably have a greater need for the coverage as well. Examples would be households with a teen or elderly driver, several rental properties or watercraft, an international property, or those who live in a particularly litigious region.
Having a personal umbrella is vital to protecting a customer’s assets (including future earnings), in the event that they are sued. A personal umbrella also covers defense costs. In light of what it can cost a customer who doesn’t have the extra liability from a personal umbrella, agents should be quoting a personal umbrella to every client. It’s also wise to document that offer, especially if the customer declines the coverage. Download our sample Personal Umbrella Offer/Decline Form, which makes it easy to offer an umbrella and document your customer’s decision.
Big “I” members have access to the RLI Personal Umbrella, which offers limits of up to $5M ($1M in NM) and excess UM/UIM nationwide. Quote a new RLI umbrella in just two minutes at RLI’s Portal site, or reach out to your dedicated Big “I” RLI administrator to get set up.