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Umbrella for Retirees

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  • Umbrella for Retirees

    My elderly parents have recently retired to California. They live in a rental and have rental insurance. They do not drive, so no auto insurance. They own a single-family rental property in California with a Landlord's policy through State Farm. They have had a very difficult time finding an umbrella policy that would cover the rental property given that they do not have an auto and/or home owner's policy. Its been suggested to them that they simply raise the liability limits on their landlord's policy. Do the experts think that this would suffice? I'm concerned about all the various exclusions and limitations of a typical Landlord policy, and also the $5k cap on the medical payments. Would appreciate any thoughts or suggestions.

  • #2
    Well, at a minimum I would raise the liability coverage on my ‘landlord” policy (my insurer calls this a Fire Policy - not sure why) to $1-2M. I am surprised State Farm won’t grant umbrella coverage based on maxing out coverage on the the landlord policy. But it is true that umbrella is hard to find standalone. Maybe give these a shot.


    • #3
      Your parents can get an umbrella if they buy an auto policy to go with it. A non-owned auto policy goes for $64/year in my area. It covers them for liability if they ever end up driving someone else's vehicle, as a rental or a loaner. Once you have that, you can then get an umbrella.

      As a landlord, they should likely have umbrella coverage. As an alternative, they could set up an LLC for their rental property, then quit claim ownership to the LLC, and rewrite the lease under the LLC, but then they would have to maintain separate business banking and credit card accounts to maintain the LLC protection.