Personal Umbrella Policy Continued

Work-Related home premises liability is liability for injuries to those coming on your premises for business purposes, such as a courier bringing a package from your employer, who falls on your premises and sues for their injuries. Homeowner policies completely exclude business-related lawsuits. These are people that either have home businesses or bring business home to work.

This is one of the most overlooked exposures not covered by homeowner’s policies. This coverage under an umbrella policy sometimes is provided only if there is underlying coverage on the homeowners and sometimes even if underlying coverage is added to the homeowners, the umbrella will not extend unless you ask for and pay for additionally a separate incidental office endorsement to the umbrella policy.

Employer’s liability is coverage for clients with domestic workers (nannies, handyman, personal care attendants); this exposure is completely excluded by underlying policies. It is available through some umbrella policies sometimes requiring underlying primary coverage or sometimes as a freestanding coverage not requiring underlying coverage at all.

Many times an individual assumes liability when they sign a contract. At times the exposure is a huge and assumed unwittingly. Here are some examples:

1. An individual has an elevator installed in his/her home. The contract with the elevator maintenance company requires the individual to defend and pay judgments against them even when the cause of the injury was at least partially caused by the negligence of the elevator maintenance company.

2. A wedding reception contract contains a restaurant requirement that the bride and groom defend and pay judgments against the restaurant even if caused by the negligence of the restaurant (i.e., 100 guests getting seriously ill from food poisoning).

3. A group of friends, all turning 30 years old, rent a building for a birthday party. In the contract, one of the friends agrees to defend and pay any judgment the building owner for injuries or property damage regardless of who was at fault.

Each of these examples represent a liability exposure that is largely uninsured by primary liability coverage. Many of these exposures are excluded by some umbrella policies but are covered by others. To properly manage risk, the Independent agent must first determine what liability risks your client faces that are not insured by his primary policies. Then locate an umbrella policy or policies that best covers as many of these uninsured risks as possible.

Personal Umbrella Policy

Most people buy a personal umbrella policy for its excess coverage, including defense costs. It also has significant value as a risk management tool.


Often there are liability coverage gaps that fall outside the scope of underlying auto, homeowners, and other personal policies. An Independent agent can assist you in recommending an umbrella policy that provides step-down primary coverage for those uninsured exposures.

There is a lack of consistency among umbrella policies. Most personal auto and homeowners policies, are fairly comparable, umbrella policies vary dramatically in their coverage.

For the next few blogs we are going to explore how the right umbrella policy can help an individual obtain coverage for which is normally excluded. For today we are going to discuss automobile exposures.


For individuals who have no personal auto policy of their own and thus have no automatic coverage to drive non-owned cars (they either have no automobiles at all or only have a vehicle furnished by their employer) the purchase of the right umbrella policy may be the way to go. Underlying drive other car or named non-owner coverage is very expensive or unavailable, thus it may be most economical to choose an umbrella policy that will provide step-down coverage.

Certain individuals neither own nor drive their own car and are elderly or disabled. However they may receive rides through the generosity of their friends or family members to shop, see doctors, etc. Under many states principal-agency law, these passengers can be sued and held liable for accidents caused by their drivers because the car that caused the accident was on the road for the sole benefit of the passenger. Again, these individuals can avoid this exposure with an umbrella policy that does not require underlying insurance for this exposure.

Those individuals who are either furnished or have access to a company vehicle and occasionally have coworkers as passengers, umbrella coverage is desirable. If the driver’s negligence injures a coworker, the business auto policy usually excludes coverage for “fellow employee” lawsuits. The driver’s personal auto policy excludes coverage for vehicles “furnished or available for regular use.”

Under most personal auto policies, your collision coverage will transfer on an excess basis to a rental car, but only if you have collision coverage on at least one car. There is no coverage outside the United States and Canada. The right umbrella policy will cover collision damage you cause to a rented or borrowed car on a primary basis and worldwide.

Sometimes an individual signs a fine print contract to defend and pay any judgment against the rental car company, even if you weren’t personally driving the vehicle! (An example would be renting a vehicle on a business trip with a co-worker where you sign the rental contract solely, and the coworker causes the accident with injuries. The obligation is to defend and pay judgments against the rental company even though the signer had nothing to do directly with the accident. This is another instance where the right umbrella policy will protect an individual from an exposure the person doesn’t know exists.

Again, the right umbrella is something an individual should discuss with the person’s Independent Insurance Agent.