Author Topic: Umbrella policy dependencies/solutions  (Read 1683 times)

firemane

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Umbrella policy dependencies/solutions
« on: May 23, 2019, 08:52:14 AM »
Hello all.

I am in a dilemma on choosing an umbrella policy. I am married but not legally married as we don’t believe in legal marriage. This creates a curve ball because my SO would need to get renters insurance and also a separate umbrella policy of SOs own. I don’t mind putting my SO on the deed of the house, but I don’t really want to get legally married because I feel like it is corrupt. SO doesn’t care either way as it’s not part of SO’s home countries culture.However, we may get forced into at some point due to things like this.

Question: I already have higher than normal coverages - 1 million on house (house only worth 150k), and 500k on each driver. I believe most of the coverage has a higher value for property damage than injury. My agent is advising that rather than getting a 1 million umbrella, I could just get 1 million liability on the cars. Would this be similar to getting a 1 million umbrella? Any other suggestions are welcome.
« Last Edit: May 23, 2019, 08:54:58 AM by firemane »

CoffeeR

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Re: Umbrella policy dependencies/solutions
« Reply #1 on: May 23, 2019, 09:40:41 AM »
Question: I already have higher than normal coverages - 1 million on house (house only worth 150k), and 500k on each driver. I believe most of the coverage has a higher value for property damage than injury. My agent is advising that rather than getting a 1 million umbrella, I could just get 1 million liability on the cars. Would this be similar to getting a 1 million umbrella? Any other suggestions are welcome.
Similar yes, the same no. Umbrella covers you for many non-business liabilities not related to car and house and it is in addition to your house/car insurance, but it is my understanding that most large judgements involve the car so having large car liability insurance will cover you for many cases were large judgements realistically happen.

(I am not an insurance agent or lawyer, so take my advice with that in mind.)

There has been a lot of discussion of umbrella policies on MMM: https://tinyurl.com/y58kdlhl

« Last Edit: May 23, 2019, 09:46:58 AM by CoffeeR »

Paul der Krake

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Re: Umbrella policy dependencies/solutions
« Reply #2 on: May 23, 2019, 09:44:51 AM »
No it's not the same. Umbrella is on top of existing policies. A 1m umbrella policy would turn your underlying policies into 1.5m auto and 2m house. Plus you get some protection around things like slander and whatnot.

This isn't what you asked for, but I'll just say it anyway: you're making life harder for yourself over some hangup. Just get married and enjoy the automatic protections afforded by that. It's not a hill worth dying on.

honeybbq

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Re: Umbrella policy dependencies/solutions
« Reply #3 on: May 23, 2019, 12:31:55 PM »
As stated, not the same. Someone could slip and fall on your sidewalk and it wouldn't be covered.

Why won't your insurance provider extend umbrella coverage cover your spousal unit? Mine does. I have USAA. Maybe shop around and look for insurance companies that recognize domestic partnerships, etc.

merula

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Re: Umbrella policy dependencies/solutions
« Reply #4 on: May 23, 2019, 12:51:21 PM »
I work in insurance, and Umbrella is my specialty.

As stated by CoffeeR, there have been several discussions of Umbrella insurance before, many of which I've contributed to:
https://forum.mrmoneymustache.com/ask-a-mustachian/buy-umbrella-insurance/
https://forum.mrmoneymustache.com/welcome-to-the-forum/how-do-you-shop-for-carhomeowners-insurance/
https://forum.mrmoneymustache.com/ask-a-mustachian/anyone-ever-been-sued-for-liability-that-exceeded-your-insurance-coverage/

To address your original question, I'm very confused as to what your insurance covers.

Question: I already have higher than normal coverages - 1 million on house (house only worth 150k), and 500k on each driver. I believe most of the coverage has a higher value for property damage than injury. My agent is advising that rather than getting a 1 million umbrella, I could just get 1 million liability on the cars. Would this be similar to getting a 1 million umbrella? Any other suggestions are welcome.

There are two different parts of homeowners and auto policies: the property damage/physical damage, and the liability piece. What your home and car are worth make up the basis of the property damage/physical damage side of this, as the insurance company is paying to repair or replace those items.

Liability coverage is for when you harm other people, and it is not tied to what your home/car is worth. Whether you paralyze someone with a 2019 Lamborghini or a 1979 Lincoln, they suffered the same injury.

An Umbrella policy provides extra liability coverage, but does not provide extra property damage or physical damage coverage.

Adding an extra million in limits to your auto policy would be similar to an umbrella, but wouldn't address the homeowners piece of it. You could request higher limits on that policy separately, but the reason that Umbrella policies exist is because it's generally cheaper to buy one extra limit of coverage for all policies rather than one on each policy.

Regarding the specific question about adding your "spouse" to the policy, unless there is something you haven't disclosed, there's no reason you shouldn't be able to do this. Typically, insurance companies only care about marriage in the opposite scenario, when someone is legally married but doesn't want to list their spouse on a policy. Companies don't allow that because they're generally required by state regulations to cover spouses, so they don't want to provide that coverage for free.

If your "spouse" is listed on the primary homeowners and auto policies, there's no reason for an umbrella policy to not list them. If they are not listed on the primary policies, that is your issue, not the umbrella.

I have personally listed a significant other who lived with me in a home that I owned separately on a homeowners policy. You just need to be up-front that you are not legally married, because that could be construed as a misrepresentation that allows them to retroactively cancel your coverage.

 

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