When Umbrella Coverage Won't Keep You Dry

By Burg, Brad | Medical Economics, April 12, 1999 | Go to article overview

When Umbrella Coverage Won't Keep You Dry


Burg, Brad, Medical Economics


It's crucial protection-but with the wrong policy, you may still be exposed to financial storms.

Umbrella insurance is a comforting concept: It not only expands your coverage, it protects you in all the areas your policies miss.

That's the idea, at least-if you have a true umbrella, and if it's properly coordinated with your other coverage. But those ifs are bigger than you might suspect.

For one thing, sometimes policies that go "over" other policies don't actually fill any holes in the existing coverage. Certain types only provide extra dollars for risks already covered. That's the case with "excess" policies, which are sometimes loosely called umbrellas, notes James Salisbury, an insurance broker in Walnut Creek, CA. So if the general liability provision of your homeowner policy doesn't cover volunteer work that you or household members do, such an "umbrella" won't cover it, either.

A second point: If you're dealing with more than one insurer, you might unknowingly lack coordinated coverage. For certain risks, you may expect your umbrella to start paying after the underlying policy has paid out its face value. But as we'll see, errors or misunderstandings can cause gaps between the policies. And then? "You might be liable for hundreds of thousands of dollars before that umbrella kicks in," says CPA Sherman Doll of Walnut Creek, CA.

Moreover, your personal umbrella has nothing to do with business coverage. For that, you need a separate umbrella, and there can be big holes in that shield, too.

Chances are, you haven't spent much time thinking about umbrella coverage. Yet large settlements occur for reasons other than malpractice. Someday, an umbrella policy may be all that protects your assets from a hefty judgment.

So here's a review of this essential insurance and the coverage gaps it can fill. Better look it over now-before that rainy day. The good news: You might have to spend only hundreds of dollars to buy millions of dollars' worth of added protection.

The holes that make an umbrella crucial

Let's consider first how your personal coverage can leave you unprotected. There aren't a huge number of holes in most home and auto policies, but those that exist can be significant.

For example, as previously noted, the liability provision in your homeowner policy might not cover you while you're doing volunteer work. That also might mean you're not covered as a board member of a nonprofit organization. Additionally, the policy may not insure you for libel or slander. And while a homeowner policy would typically cover certain boating activities, it might well leave you out there alone if the boat is more than a certain length. The insurance may not apply to other watercraft, such as Jet Skis, at all.

Your auto policy probably has cracks, too, says Ray Williamson of Barusso Insurance in Larkspur, CA: "Often, it won't cover you or family members while you're driving recreational vehicles like dune buggies. It also might not cover uninsuredmotorist risks."

These are certainly reasons to make sure your umbrella is a true umbrella. But there's another kind of gap to be aware of, too. Your second policy typically won't kick in until a certain dollar amount has already been paid off. "In my own auto coverage, I had an umbrella that didn't start paying until a claim reached $500,000,' says Sherman Doll. "But my primary policy only paid to a $300,000 limit. So I would have been liable for the $200,000 gap if I hadn't switched my coverage."

In fact, it's to fill such voids that the "excess" policy has its proper use, explains insurance broker William Ieuter of Secure Futures in Chicago: "In a case like that, you might get an excess policy of $200,000 on the underlying policy, which would then qualify you for the umbrella coverage."

Why you need more than one umbrella

Even a true umbrella isn't universal. A personal umbrella doesn't fit over your malpractice insurance or apply to your liability as owner of a business. …

The rest of this article is only available to active members of Questia

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Default project is now your active project.
Project items

Items saved from this article

This article has been saved
Highlights (0)
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

Citations (0)
Some of your citations are legacy items.

Any citation created before July 30, 2012 will labeled as a “Cited page.” New citations will be saved as cited passages, pages or articles.

We also added the ability to view new citations from your projects or the book or article where you created them.

Notes (0)
Bookmarks (0)

You have no saved items from this article

Project items include:
  • Saved book/article
  • Highlights
  • Quotes/citations
  • Notes
  • Bookmarks
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Buy instant access to cite pages or passages in MLA, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited article

When Umbrella Coverage Won't Keep You Dry
Settings

Settings

Typeface
Text size Smaller Larger Reset View mode
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Help
Full screen

matching results for page

    Questia reader help

    How to highlight and cite specific passages

    1. Click or tap the first word you want to select.
    2. Click or tap the last word you want to select, and you’ll see everything in between get selected.
    3. You’ll then get a menu of options like creating a highlight or a citation from that passage of text.

    OK, got it!

    Cited passage

    Style
    Citations are available only to our active members.
    Buy instant access to cite pages or passages in MLA, APA and Chicago citation styles.

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

    1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

    Cited passage

    Thanks for trying Questia!

    Please continue trying out our research tools, but please note, full functionality is available only to our active members.

    Your work will be lost once you leave this Web page.

    Buy instant access to save your work.

    Already a member? Log in now.

    Oops!

    An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.