Insurance Highlight: Personal Umbrella

Insurance Highlight: Personal Umbrella

| September 28, 2020
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Personal Umbrella -- are you guilty of thinking it is only for the wealthy?  If so, you couldn't be farther from the truth.  

What is a Personal Umbrella

  • It is an affordable way to secure additional limits of coverage to protect yourselves if someone sues you for more than what is covered under your basic insurance policy.  
  • A single judgement can exceed your savings, the value of your home and other assets, even putting your future earnings at risk. Even renters are especially vulnerable to judgements that garnish wages and future earnings. 
  • Besides the threat of a costly judgement, you will also have to pay to defend yourself, even if the suit is frivolous.  A defense attorney may charge anywhere from $100 to $800 per hours, but a Personal Umbrella pays defense costs in addition to your limit of coverage. 
  • An affordable way to obtain a lot of coverage for an affordable cost per month. 


  • There is no standard policy form.  Careful review is necessary.  
  • Provides limits options from 1 Million to 10 Million.
  • Provides worldwide protection
  • The underlying insurance is primary when a loss occurs, and the Personal Umbrella picks up the coverage as soon as the underlying coverage is exhausted. 

Who should purchase

  • Families with teenage drivers.
  • Those who need to protect assets, such as sole proprietors, partners, executives, high profile individuals, and those who travel abroad.
  • Those with good earnings potential, such as those beginning a promising career and/or pursuing a new business venture.
  • Those who wish to protect assets in excess of their underlying coverage, such as middle class Americans, and blue collar workers with sufficient assets.

Important Policy Provisions

  • Who is an "Insured?"
    • "You" is the named insured and spouse if a resident of the same household.  "You"  has the broadest coverage, and is insured for whatever the policy may cover.  
    • Family member
    • A person related to "You" by blood or marriage or adoption (includes ward of the court or foster children, or any person under 21 years old that is in the care of any of the resident relative). 
    • Family members usually are not covered while using cars owned by or furnished for resident relatives. (If a child buys their own car, they will need their own Personal Umbrella policy)
    • Other Insureds:
      • Persons having custody of the named insured's animals (except for business purposes).
      • Vicarious Liability defendants:
        • Any person using, with your permission, an auto, watercraft or recreational vehicle, which you own or lease or which is furnished or available for your regular use.  (This does not include those in the auto business who are repairing, parking, testing, etc., the auto, watercraft or Recreational Vehicle.)
        • Any person legally responsible for acts or omissions of the named insured, a family member, or those having custody of an insured's animals.

Underlying Policies

Umbrella coverage is subject to low self-insured retention ($250-$500). This will outline the requirement for a primary insurer and will state the Umbrella/Excess carriers requirements of the   underlying insurer. Common underlying policies are:


Read these carefully, as some exclusions are absolute and others are conditioned upon the presence of underlying coverage.

  • Aircraft
    • No property damage liability for owned, rented, hired or care, custody, and control
    • No personal injury liability for owned or non-owned unless:
      • Primary coverage is scheduled on the Personal Umbrella.
      • Aircraft is chartered with crew
      • Aircraft is hired by someone other than the insured. 
  • Watercraft
    • Few exclude damage from non-owned but most exclude damage to non-owned.
  • Recreational Vehicle
    • A good source of coverage for the go-cart, golf cart, etc., especially for the non-owned. 
      • Follow underlying recreational vehicle coverage
      • Liability for non-owned
      • Damage to non-owned
      • Contractual Assumption only
  • Intentional Acts
    • NO coverage for acts where intent is to cause Bodily Injury or Property Damage
  • D&O
    • Most cover all non-profit organizations, few if any cover activities with for profit organizations.  This is not a true Directors & Officers because the only coverage is for personal injury and property damage. 
  • Uninsured Motorists
    • Always excluded unless a separate premium is charged. 
  • Personal Injury
    • Takes away intentional acts
  • Pollution


  • Other Insurance  (Personal Umbrella insurance is always excess.)
  • Underlying insurance requirements
    • Auto - the typical required underlying limit is $250,000 bodily injury per person/$500,000 bodily injury per occurrence/$100,000 property damage per accident or a combined single limit of $500,000 (bodily injury per person/bodily injury per occurrence, and property damage per accident). Bodily injury coverage covers medical, funeral, loss of income, pain and suffering of those persons you injure in an accident.  Property damage coverage covers the repair or replacement of vehicle(s) and or other items belonging to others, such as a wall, house, or tree.  
    • Comprehensive Personal Liability on Homeowner - the typical required underlying limit is $500,000 
    • Watercraft -
      • Large watercraft of the type excluded under a homeowner policy (sailboats 26 feet and over, boats owned with outboard motors exceeding 25 horsepower, etc.) may be insured over a yacht and boat policy with Protection and Indemnity coverage.
      • There will be a required minimum limit
      • This is a liability policy; it does not add additional amounts to the Hull coverage (physical damage) for the underlying Yacht and Boat Policy

Maintenance of Underlying

  • The insured is responsible for any failure to maintain the primary coverage and limits shown on the Declarations.
  • The insured must notify the Personal Umbrella carrier of any change in the primary coverage.
  • Must take all reasonable steps to reinstate any reduced aggregate.

Pay on Behalf or Indemnify

  • Interpretation of "Indemnify" insuring agreements
    • Some Personal Umbrella insuring agreements agree to "indemnify" an insured for covered damages.  This may sound as if the insured is obligated to pay the damages and then the company will reimburse the insured.  We know of no company that employs this practice.  
    • Some insureds will prefer the "indemnity" agreement since in theory, it gives the insured greater control over investigation and settlement of losses, as well as legal defense.
    • This one should be avoided. 
  • Interpretation of "Pay on Behalf"
    • The "pay on behalf" insuring agreement does away with the question of reimbursement.  This is a First Dollar defense.
    • It usually means that the umbrella carrier reserves the right to investigate and settle claims and control the legal defense.
    • This one is preferred.


  • Worldwide

Remember your last name doesn't have to be Gates or Rockefeller to be sued.  The Truth:  Because anyone can be sued, everyone needs a Personal Umbrella policy! 

Reach out to your current agent or contact our team at Consultative Insurance Group to learn more about a Personal Umbrella policy today!  

1.800.886.0305,, or contact us online.  

Consultative Insurance Group, Inc. 

"Consultative...It's the way we do business!" 

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