We (independent agents) are raised to sell umbrella liability insurance policies, but why?
We are told to sell umbrellas because people can get sued for an auto accident or a slip-and-fall, and other outrageous scenarios. Basically, when you make a mistake and cause harm, you are protected for a higher level of liability and this is great! Most of us have never had a claim breach the umbrella level—but when we do, it’s bad!
I want to focus on the personal-lines umbrella in this article. Often, the basic umbrella is bundled from the auto insurance carrier, and it should be linked with coverage over the homeowners insurance as well.
The basic umbrella is $1 million over the underlying coverage and it is set up with minimum requirements of underlying coverage for liability on the primary auto insurance and the primary homeowners—typically of $250,000 for auto, and $300,000 for homeowners with discounts provided when higher limits are carried. Ultimately, this underlying limit becomes the deductible for the umbrella policy to be triggered.
Typically, the quoting is simple: How many vehicles, drivers, homes including rentals, watercraft—including personal watercrafts—and voila, an umbrella quote! (subject to underwriting approval, of course.)
Now, what happens when the “other driver” is at fault, and you are injured and your property damaged? What if your family member is injured in your vehicle and the other driver is at fault? What if you are walking on the sidewalk and get hit by a motor vehicle?
Sure, we should go after the other driver, but in many instances that other driver has poor limits of liability—and the state minimum limits won’t protect you!
Welcome to Part B, the magic!
Part B of the umbrella—the uninsured/underinsured motorist coverage—is the holy grail of personal liability, and in my opinion, it is the most important piece that you need to carry.
This UM/UIM is defined just how it sounds. This coverage protects you, and it protects you from others with low limits of liability. The Part B of the umbrella operates similarly to Part A, with the UM/UIM underlying coverage as the trigger for this section of the umbrella policy.
Not every insurance company is able to, or is willing to, offer Part B. As an independent insurance agent, it is important to understand where you can find this coverage and how to offer it appropriately. Doing so, can and will protect you if your client has a catastrophic event that breaches the underlying coverage limit.
Check your coverage, exclusions, limits and always remember the Part B!
Aaron Levine, CIC, MBA, is founder and managing member of LG Insurance Agency—also known as The Luxury Group. Aaron started LG Insurance Agency in 2009 with the motto of being accessible and available and to this day, the agency thrives on the principle of “just pick up the phone ... .” He is the current vice chair of Fulfill, the foodbank of Monmouth and Ocean counties, as well as treasurer of PIA New Jersey. Aaron has served on many committees and nonprofits throughout his career, and he continues to be community- and relationship-focused for all that he does. Join Aaron on his social media and podcasting journey on the “... and insurance podcast, by aaron levine” and on social media at @Luxurygroupins.