Personal Umbrella Insurance
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More Protection With An Umbrella Policy
Umbrella insurance is not just for the wealthy.
With the common occurrence of lawsuits, it is a
must for every home, auto and watercraft owner.
As many Americans are finding out, you don't
have to be a millionaire to be sued like one.
That is why Travelers offers an Umbrella Policy
to supplement the basic liability coverage
provided by our auto, home and boat policies.
Umbrella Policy Provides: Extra
Liability Coverage beyond that provided in your
underlying auto, home or boat policy. Travelers
Umbrella policy broadens your coverage. And, if
you are involved in a lawsuit, you have the
security of an extra $1million to $10 million in
Get Peace of Mind Without A Large
Added Cost: Umbrella Policy is
inexpensive, especially when you consider the
added coverage you get. Plus, our umbrella
insurance covers your non-business activities
anywhere in the world. No one should be without
an Umbrella policy!
This material is for
informational purposes only. All statements
herein are subject to the provisions, exclusions
and conditions of the applicable policy. For an
actual description of all coverages, terms and
conditions, refer to the insurance policy.
Coverages are subject to individual insured
meeting our underwriting qualifications and to
Umbrella Coverage 101
The more you have, the more protection you
The more your earning power and
assets increase, the more you have at risk, and
therefore, the more you need to protect.
If you think you need at least a million
dollars of additional protection above your
current homeowners or automobile liability
limits, you can purchase something called excess
liability. Often referred to as an umbrella
policy, excess liability is the additional
protection you need in case a judgment against
you exceeds the liability limits of your
existing auto or homeowners policy. Available in
amounts ranging from one to five million
dollars, excess liability coverage increases
your personal liability limits by adding
protection to your current auto, boat or
coverage from your homeowners and auto policy
may not be enough
provides a minimum of $100,000 liability
coverage (the coverage that protects you when
people are injured or property is damaged due to
circumstances in which you or your family are
responsible). Although it varies widely by
state, the typical minimum liability protection
for auto insurance is around $25,000 per person
and $50,000 per accident.
With both of these coverages you can
purchase higher limits (or amounts) of liability
protection...but the most that can be purchased
is $500,000 for homeowners policies or $250,000
per person, $500,000 per accident for auto
insurance. Again, this may not be enough
protection in today's lawsuit frenzied
environment where million dollar judgments are
fast becoming the rule rather than the
exception, even for seemingly minor situations.
To understand more about what excess
liability coverage is, and how it can help you,
please review the following topics:
What is Excess Liability?
How it works
How much is enough?
What is Excess Liability?
Available in amounts ranging from one to five
million dollars, excess liability coverage
increases your personal liability limits by
adding protection to your current auto, boat or
homeowners policies. Also, if something is not
covered in your homeowners policy (like libel),
and it's not specifically excluded in the excess
liability policy, you're covered.
Protection for covered claims by others for
personal injury or property damage caused by
you, members of your family/household, or
hazards on your property for which you are
Personal liability coverage for occurrences on
or off your premises
An additional layer of protection above your
primary auto policy against auto-related
Protection against non-business related personal
injury liabilities such as slander, libel,
wrongful eviction or false arrest
Legal defense costs for a covered loss. Lawyer
fees and associated court costs are covered
Worldwide coverage- no matter where you go, with
the only exception being situations involving
foreign ownership of dwellings or cars
How it works
Depending on the type of
accident, your homeowners, auto or boat policy
liability limits are used up first, then the
excess liability policy covers all remaining
costs (up to the amounts of coverage you
purchased). For example, if your neighbor dove
into your swimming pool and broke his neck, your
homeowners liability coverage would pay for the
first $100,000 in damages. Your excess liability
policy would cover the rest (including
associated legal fees) up to the one million
dollar policy amount that you had purchased.
Most companies require that you carry
certain limits on your primary insurance
policies (homeowners, auto and boat) in order to
receive excess liability coverage. For example,
a company may require the following primary
liability limits: $100,000 for homeowners,
$250,000 per person/$500,000 per accident for
auto and $300,000 for boat/yacht coverage.
tend to get loaded down with legal-sounding
jargon, especially a product that specifically
deals with circumstances for which you are
legally responsible. Therefore, a few common
definitions might help clear up any confusion:
Personal Liability: Coverage for damages
that you are legally liable (responsible) for.
This includes incidents occurring at your home
and/or caused by you, residents of your
household or your pets. Here are some common
examples: your dog bites someone, a guest falls
down your front steps, your teenage son
rough-houses with his buddy and accidentally
breaks that friend's leg!
Injury: This all-inclusive definition covers
many predicaments. Personal injury can take many
forms, including: bodily injury, shock,
emotional distress, mental anguish, sickness or
disease, or death arising from any of the above.
Personal injury also means false arrest,
detention or imprisonment, malicious
prosecution, wrongful entry or eviction,
humiliation, libel or slander, defamation of
character or invasion of privacy.
Property Damage: Accidental damage to the
property of others caused by you, residents of
your household, or your pets.
Often, insurance policies
are defined not by what they cover, but by what
they don't. This is especially true for excess
liability products. If something is not
specifically excluded, you're covered.
Exclusions vary widely by company. Here are some
damages expected or intended by insured.
damages arising out of business or professional
liability assumed under contract or agreement.
liability arising out of ownership, maintenance,
use, loading or unloading of aircraft.
liability arising out of ownership, maintenance
or use of non-traditional watercraft such as jet
skis, air boats or air cushions.
liability arising out of ownership, maintenance
or use of most recreational vehicles. Only
snowmobiles and golf carts are covered.
damages to property you take care of, own or
damages covered under a Workman's Compensation
liability arising out of war or insurrection.
How much is enough?
determining how much coverage is right for you
is a personal decision. Much depends on the
value of the current assets you have to protect.
However, there are also other factors to take
into consideration. What will the value of your
future assets be? Are you involved in activities
that put you at greater risk? Do you have
teenagers? Do they drive? Your local independent
agent or Travelers representative can help you
determine the coverage amount that works best
discounts are available in most states if your
car, home or boat is already insured with the
same insurance company. Additionally, some
companies are beginning to offer an endorsement
(add-on coverage) to existing homeowner policies
that increases your liability limits to the
millions! Your independent agent or Travelers
representative can help you determine whether
this endorsement is available, as well as help
you determine the best money-saving coverages
Umbrella Coverage for Preventing
By: New York Times
HERE�€™S the nightmare: Your car skids. You crash
into a Mercedes with a highly paid business
executive at the wheel. He�€™s hurt so badly he
cannot return to work. A jury awards him
millions of dollars and you have to pay it.
You�€™re wiped out financially. The court
takes your savings, goes after your home and,
for decades, requires you to give up a part of
For some people such a nightmare could never
happen. They have an extra insurance policy,
known as umbrella or excess liability coverage,
which takes care of their liability for the
lawsuits and medical bills of the auto accident
victim �€” or of the teenage guest who dives into
the shallow end of the swimming pool or the
deliveryman who trips on the front steps.
But many people with major assets either do
not buy the extra coverage or do not buy enough.
Some do not know about umbrella coverage, which
also pays for lawyers and other legal expenses.
Others have heard of it but do not understand
it. Still others decide that they do not want to
pay for it, even though the cost is usually a
fraction of the price of a typical package of
home and auto insurance.
�€œThis is a neglected area,�€� said Mark
Schussel, a spokesman for the Chubb Group of
Insurance Companies, which caters to affluent
home and auto owners. �€œSome people have some
coverage. But they haven�€™t changed the amount in
years. Some people have a $1 million figure in
their heads, and it just doesn�€™t make sense
Charlotte Edmonston has been an
insurance agent for more than 30 years. She
works with wealthy clients in Baton Rouge, La.,
and oversees agents in 29 cities nationwide for
the personal insurance unit of Arthur J.
Gallagher & Company, a big insurance broker with
headquarters near Chicago.
question for new customers is whether they have
umbrella coverage. Most of them already do. But
�€œ90 percent of them are underinsured,�€� she said.
�€œUsually they were sold too little from the
get-go, and their assets have grown and they
never revisited the issue.�€�
For Jeff Cox,
an owner of the third-generation insurance
agency of Lloyd Bedford Cox in Bedford Hills,
N.Y., and Greenwich, Conn., �€œthe discussion
about umbrella coverage usually starts at $5
million.�€� But he can provide up to $100 million
Umbrella and excess coverage are extensions
of home and auto insurance. Banks make people
buy home insurance to get mortgages, and states
require drivers to buy auto insurance. But no
one mandates buying a policy that could turn out
to be the most important part of your insurance
As a result, only 15 percent to 20 percent
of clients at the Wall Street insurance agency
of Campbell Solberg Associates buy umbrella
coverage, said Rick Wiltshire, an executive at
the firm. Instead, they stick with the $100,000,
$300,000 or, in some cases, $500,000 in
liability coverage that comes standard with the
most widely sold home-insurance policies.
�€œYou never think it�€™s going to happen to
you,�€� said Rick Blank, an agent in White Plains,
N.Y., with the Preferred Services Group.
�€œPersonal injury lawyers are making money by
suing people. If you don�€™t have enough insurance
you become personally liable.�€�
insurance companies that cater to the wealthy
say that as many as half of their customers buy
umbrella coverage. But State Farm, the biggest
home insurer in the country, with a clientele of
mainly middle- and streamline-income homeowners, says
about 12 percent of its policyholders buy
Buying such coverage usually does not
greatly increase the overall cost of home and
auto insurance. For example, in Louisiana,
insurance on a $1 million home well away from
the coast might run $4,500 a year, Ms.
Edmonston, the Baton Rouge agent, said. Two cars
could raise the cost of the package to $7,500.
And $5 million in umbrella coverage might cost
about $600 more, or about 8 percent of the
total. In New York, agents say, $5 million in
coverage might cost about the same.
Edmonston consolidated home and auto coverage
for Ann Brown Singleton, a stockbroker and
financial adviser in Baton Rouge, after her
husband died and she married Andrew Jackson
Singleton, a sales manager for several national
companies. Together, they owned several houses,
three vintage cars, jewelry and art.
Back Story With David Cay Johnston on The
Times New Section on the Working Wealthy" I had
a $1 million umbrella, which I thought would
certainly satisfy everything,�€� Ms. Singleton
said. �€œWhen Charlotte Edmonston got through with
her analysis she said, �€˜Whoa, you need a $5
million umbrella.�€™ Whether lawsuits are valid or
not, you wind up having to defend yourself
against them, and you never know how high the
judgment is going to go. I find that
Philip J. Hirschkop, a
lawyer just outside Washington, said he had a
client without an umbrella policy who had only
the $100,000 coverage that came standard with
his home and auto insurance policy. He was sued
for much more over an auto accident and was in
danger of �€œlosing everything he owns.�€�
Around the country, at companies dealing with
rich clients, the first million in coverage is
usually the most expensive, at perhaps $150 to
$300 annually, said Jeanne M. Salvatore, a
specialist in home insurance at the Insurance
Information Institute. Each additional million
in coverage, she said, could cost around $100 to
$125 annually. The rates per million decline as
coverage increases. But at $10 million in
coverage, the rate jumps because few customers
buy that much, meaning insurers can spread their
risk over only a relatively small group of
The situation is often the reverse for the
many insurers who specialize in middle- and
streamline-income clients. Often their rates shoot up
after the first million in umbrella coverage
because they have only a small group of buyers
of umbrella policies larger than $1 million. A
smaller pool of customers creates more risk per
dollar of premium for an insurer, so the insurer
charges more for the coverage.
One homeowner said that for a $3 million
umbrella policy from a middle-income insurer,
the second and third million in coverage cost
him 3.5 times the rate for the first million of
Thankfully, accidents with
elephantine lawsuits are not everyday events.
When they do occur, however, the results can be
One of Mr. Cox�€™s clients crashed into the
rear of a car on a slick highway. A woman and a
child were critically injured. After two years
of litigation, his client settled the lawsuit
for more than $5 million. The client had $15
million in umbrella coverage. The policy paid
for the settlement and all legal costs. �€œWithout
the umbrella,�€� Mr. Cox said, �€œthey would have
been completely wiped out.�€�