UMBRELLA POLICY-FOR A RAINY DAY?

By Alan Plafker, PRESIDENT & CEO
Member Brokerage Service LLC
A Melrose Credit Union Service Organization

A Personal Umbrella Policy provides additional liability coverage of $1,000,000 or more over other personal liability coverage. Other personal Liability policies such as Homeowners and Auto must have a required minimum limit, usually at least $300,000 for the Umbrella policy. You can be sued for personal reasons, including injuring someone while playing ball, or someone falling in your home (whether owned or not), or for injuries in an auto accident using a personal vehicle.

Liability insurance covers bodily injury or property damages for which you may become liable. In an Auto accident you could be sued for damage to someone else’s property (usually a vehicle) or if you cause bodily injury to someone. An auto policy covers this, but only up to the policy limits.

If someone is injured at your home you could be sued for that bodily injury. A Homeowner policy covers this up to that policy’s limits. An umbrella extends the limits for these liability claims, BUT DOES NOT provide any property coverage like fire, theft, or flood for your home, other property, or personal belongings. Another exclusion to point out is intentional acts. You can't hit your neighbor with a baseball bat and expect your liability insurance company to protect you if they can show it was intentional. 

I often have clients who own Taxi Medallions or Black Cars and ask if they can get an umbrella policy to protect them. Often it is a Medallion owner who leases his medallion and is concerned about a large claim in excess of his $100,000/$300,000 limits. It is a real concern when the medallion is in an individual name and the owner can be sued personally on a large claim. A PERSONAL UMBRELLA POLICY WILL NOT PROTECT YOU AS FOR AN ACCIDENT INVOLVING AN OWNED TAXI or LIMOUSINE.

The Personal Umbrella Policy only covers personal risk. In other words it excludes any business use, or business related claims. Since policies exclude "business" of any kind, it has nothing to do with, and offers no protection for a Taxi Medallion or a Black Car. A taxi medallion is an asset, and you are subject to losing all your assets, including a house, investment property, or a valuable medallion, it if you don't have enough liability limits on your personal insurance.

Another valuable feature of an Umbrella policy is that it provides defense coverage in addition to the policy limits. Often people are sued for millions of dollars. If you are not protected with high limits on an umbrella policy your insurance company can settle the claim by paying the policy limits and leave you personally responsible for the rest of the claim, putting your assets at risk. With an umbrella policy, the insurance company has limits of $1,000,000 or more at risk and will defend you all the way since they would have to pay the full amount (up to the policy limit) of any award.

Umbrella policies cover many more exposures than just your autos and homes. The policy will provide coverage extensions over other policies like motorcycles, boats, and other recreational vehicles. Some policies can cover your liability as volunteer officer or director on the board of certain organizations. Protect your assets with a Personal Umbrella Policy.

Because of the complexity of coverages, limits, and rates I recommend having someone working for you to offer advice and find the best coverage to fit your needs. There are many policies offered direct by insurance companies on line or by telephone, but this does not give you the advice of an agent working for you.

You should have someone that can look at the complete picture to provide all the policies you need for complete protection. An independent professional insurance agent works for you and believes that your satisfaction with insurance is of the utmost importance. In an increasingly self-service world, it can be a welcome relief to turn over a question or problem to someone else who will handle matters quickly and professionally for you.

Alan Plafker is President of Member Brokerage Service LLC, a Melrose Credit Union Service Organization. He is a licensed Insurance Broker and serves on the Board of Directors the PIANY (Professional Insurance Agents Association of NY) and on the Board of CIBGNY (Council of Insurance Brokers of Greater NY). His Agency insures thousands of polices for TLC Insurance as well as many policies for all types of insurance. You can reach him in his Briarwood, Queens office at (718) 523-1300 ext. 1082.

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