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Timing of Umbrella Insurance

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  • #16
    @Tim Once the amount is over the limit the ins company wants to settle to limit their legal fees but if they are paying to the limit why would the ins company fight any more on behalf of the client? Wouldn't it be clients responsibility to fight the claim to lower the award or to ensure it does not go over the limit?

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    • #17


      Once the amount is over the limit the ins company
      Click to expand...


      Until it is resolved, the "defense of the policy holder" is provided by the insurance company. Fiduciary duties on the insurance company, attorney and the policy holder.

      Claim $10mm, Policy limit $1mm, Settlement offer for $5mm

      A vigorous defense might still result in zero.


      Wouldn’t it be clients responsibility to fight the claim to lower the award or to ensure it does not go over the limit?
      Click to expand...


      Typically, there is one defense regardless of amount or limits. You would be fighting your own legal team and not cooperating from the start. You are correct, the motivations shift "after the fact". If you hire your own attorney the insurance company may come back and refuse to cover the $1mm due to lack of using their preferred legal strategy. Not a pleasant situation. That is why typically the Umbrella is written on top of a home owner's or auto liability policy. It prevents a separate legal defense. You would be responsible after the fact for additional expenses.

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      • #18
        Didnt know about having to follow their legal strategy. Interesting. Thanks.

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        • #19
          I always figured you wanted enough umbrella insurance to make it “worth it” for the insurance company to fight on your behalf. I agree on just getting 1M now, it’s super cheap so just do it.

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