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Umbrella Coverage Question

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  • Umbrella Coverage Question

    Finishing up fellowship and about ready for my first attending job.  I have carried disability insurance throughout the past few years in training, and went to meet with my insurance agent about adding an umbrella coverage to my policy.  There was an option for uninsured motorist coverage as well.  I am not sure if this is worth getting and looking for opinions (as this nearly doubles the price).  There is uninsured motorist coverage on both of my vehicles, and as I understand it if I am at fault my umbrella policy will kick in.  If I were to be injured by an uninsured motorist would be the only time the uninsured motorist would kick in, and at that point I would have my 500k max and if there were that catastrophic an injury my personal disability insurance policy would kick in after 90 days.

    Am I thinking through this correctly?  Or this another situation/reason that you think I should add uninsured motorist coverage to my umbrella policy?

    Thanks for the feedback

  • #2
    My understanding is that not all umbrella policies offer this option today and it hasn't always been an extra charge. You might want to check with a couple of other agents. If it is doubling the umbrella policy cost and you already have $500k and a good disability policy in place, that sounds overly expensive. Hopefully Larry or Scott will step in, though.
    Our passion is protecting clients and others from predatory and ignorant advisors. Fox & Co CPAs, Fox & Co Wealth Mgmt. 270-247-6087


    • #3
      As long as your underlying coverage (auto and homeowner's/renters policy) meets the minimum requirements for the umbrella to kick in, if you have $500,000 of uninsured motorist coverage, you should not need more than that - especially if since you have adequate disability and medical insurance policies inforce.

      Lawrence B. Keller, CFP, CLU, ChFC, RHU, LUTCF


      • #4
        First off I am not a Property and Casualty (P/C) insurance expert in fact I buy my home, auto, and umbrella from Liberty Mutual.  However the policies as I buy them have a small fee, for uninsured motorist (under $100 per year) but all that does is repair my vehicle in case they have no insurance or are under insured to the extent of the damage caused to my car from theirs.  The Umbrella is really about your out-bound liability.  As an example you run over a person who is badly hurt with multiple surgeries or treatment for years to come, that is when you have blown through your base auto policy (mine is for $500,000) and there is still liability out there, that is when my umbrella for $2 million kicks in.  If you personally get hurt from someone else and they don't have enough coverage to pay your medical bills and lost wages then you will be in a suit against them (assuming they have any money to go after) and you will be filing a claim on your disability insurance.  This is also an interesting point since if you have an individual disability policy you will then get the benefit (assuming there is a real claim for disability) but if you have a group policy the group policies almost 100% of the time have a benefit reduction or income offset for 'No-Fault Accident Benefits'.  What that means is if you have a group policy for $10k as an example, get in a car wreck, they are then paying you $7,500 of lost wages then your employer group plan only has to pay you $2,500 since they get to offset it dollar for dollar.  If you have an individual plan then you get the lost wages of $7,500 and the $10k from you individual disability plan, I like getting what I pay for.  Just remember that language makes a difference in these policies and it is important how they 'weave' together vs. just 'stacking' them on top of each other.
        Scott Nelson-Archer, CLU, ChFC
        281-770-8080 Direct / [email protected]