Abram Interstate Insurance Services, Inc., CMGA

Helping Independent Insurance Agents Since 1996

Umbrella Insurance: What is it? Why is it needed?

Published on February 10, 2015

Many people in the general public don’t know about umbrella insurance policies, and/or they’ve heard the term but have no idea what it entails or why it would be helpful to them. That’s why we’ve compiled this article for you, our insurance agents to be able to pass along to try to give your customers the gist on why they may need umbrella insurance and what it does for them. Please share this article with them!

Note to insurance agents: see our wholesale umbrella insurance market highlights at the bottom of the article.

Umbrella insurance: what is it and why do I need it?

3323717659_322d80921bHave you ever stopped and talked to someone who has found themselves homeless? Maybe you met them on the street, or maybe they were a friend who needed a place to stay for a few nights. There are many circumstances that land people on the streets, and this is not the majority, but I’ve certainly heard this story a handful of times in my years of talking with those I meet who have found themselves homeless: There was some sort of accident — car accident, an accident on their property, or some other reason that ended up in a lawsuit against them, and in a nightmare of a situation, they went from living OK or living well, to finding themselves in financial ruin.

Umbrella policies exist to help make sure that doesn’t happen to you. It acts, surprise surprise, as an umbrella, which over-arcs your existing homeowners insurance, auto insurance, and other similar policies. By definition, umbrella insurance is a liability-type policy that will protect the assets and future income of the policy holder above and beyond the standard limits on their primary policies.

photo credit: Jen exploring the space. via photopin (license)

Here are some facts that Money Magazine shared a few years back on Umbrella Insurance:

Without It, You Could Lose Everything

You neighbor slips on ice in your yard.  A branch from one of your trees falls and hits someone.  You get into a car accident and the other driver is injured.  Any of these circumstances could result in a lawsuit that would wipe you out financially.

Your typical auto or homeowner’s insurance policy will only cover you up to your personal-liability limit which is typically between $100,000 and $300,000, but settlements and legal fees could easily push your liability higher.  An umbrella policy will cover these additional costs.  Without it you could see your wages garnished and your assets seized.

Liability Risks Are Everywhere

You might think you live an ordinary and boring lifestyle, but there are still risks all around you.  Your dog bites the mailman.  The neighbor’s kid tries to dive into you pool and misses.  The babysitter falls down your stairs.  You’re driving down the street and don’t see the teenager on his skateboard until it’s too late.  These aren’t everyday occurrences but that’s okay because…

Umbrella Insurance Protects Against Worst-Case Scenarios

While a standard auto or home insurance policy will protect you from typical accidents and damage, umbrella insurance is for those once in a lifetime events that could be catastrophic and life-changing financially.  And because it is not likely to be needed often…

Umbrella Insurance is Inexpensive

While you may not be crazy about coughing up another few dollars a month for something you hope you’ll never need anyway, financially savvy people know that being properly insured is well with the added cost.

And though it may seem counter intuitive, the wealthier the individual, the more helpful umbrella insurance could be in case of  the unfortunate. Forbes did an article in 2012 about the top 1% of the U.S. population being a target for law suits, and yet not honing into the idea getting the insurance needed to protect them in these events.

Why have an umbrella? Umbrella policies kick in on top of auto and home insurance, giving you extra liability coverage. The ACE report includes examples of grisly accidents (decapitation) and outsized verdicts (ranging from $14 million to $49 million), courtesy of defense attorneys. “Severe things can happen,” says Robert Courtemanche, ACE president, adding that folks don’t appreciate how much exposure they have as they lead their everyday lives until an agent walks them through the risks. Think dog bites and defamation charges from sending taboo tweets. Even fender benders can turn ugly…

Mind the gap. An umbrella policy kicks in where your auto and home policies end, so if your umbrella policy coverage starts when losses exceed $500,000, then the auto and home policies must provide coverage up to $500,000, not less. If there’s a gap, you’re on the hook, having inadvertently self-insured for the difference.

While, again, the hope is that you would never need to rely on this insurance, it is those rare cases that it really does pay to have covered yourself.

Talk to your local insurance agent about getting the Umbrella Policy to fit you and your needs today.


For insurance agents: Abram’s Umbrella Product Highlights

Umbrella policies provide peace of mind and an extra layer of protection against losses. We write umbrella policies as part of a home and auto package or as stand alone.
Click here for program details!

Minimum company requirements:

  • $300,000 on comprehensive personal liability
  • $300,000 single limit or $250,000/500,000/50,000 split limits on auto
  • 9 or less dwelling units owned (Travelers)
  • 16 or less dwelling units owned (Safeco)


Prefer a phone quote? Call the Abram In-Sync Hotline at 888.845.1626. Click below to begin quoting online or to self-register for this rater.
USLI Personal Umbrella

Home & Auto Package Umbrella quote (all below forms required):
ACORD 83 Personal Umbrella Application
ACORD Homeowner Application
ACORD California Personal Auto Application

Abram Interstate Insurance Services, Inc. is a California wholesale insurance broker (CMGA) that has licensing and expertise to place business in both admitted and non-admitted markets for personal lines insurance and commercial lines insurance in California and surrounding areas.

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