Umbrella policy?

[woodscrew]

Does anyone know if there are any companies offering umbrella policies for “homeless” live aboards? We had one through our homeowners policy but no longer have a dirt home. Currently have a million dollars liability on the boat, and also on our two vehicles. I checked with Chubb (our boat insurer) about upping our liability coverage and they said no can do. Used to be a million would be comfortable but it ain’t much against the kind of settlements that are regularly handed down these days. Any help greatly appreciated.

 

[sbu22]

Recommend you take this to General Discussion for better exposure. This section is pretty obscure, I think.

 

[Delta Riverat]

Do you have a slip with a mailing address? Have you called insurance companies?

Where do you park the vehicles?

 

[tiltrider1]

I have heard that renters can now get umbrella policies. Look into the possibility of getting a renters insurance policy with an umbrella. I have been meaning to look into this but haven’t had the time.

 

[O C Diver]

A friend has a rental agreement from his brother in law for their guesthouse. He's able to get renter's insurance and by extension an umbrella insurance policy. They use it as their legal residence as they are full time cruisers.

Ted

 

[psneeld]

When I was living aboard I found no umbrella offers but with a liveaboard policy I didn't feel I needed one.

When I sold and moved ashore and bought my RV, the fulltimers insurance didn't quite fit the bill for additional liability.

So I investigated renters insurance and for around $200 a month I have $1mil liability. Increasing the liability from the $300,000 starter (matched auto) to $1mil was only something like $3 a month.

 

[IRENE]

Geico sells an umbrella policy from RLI Insurance

Geico sells an umbrella policy from RLI insurance that fits the scenario you describe. There was a reasonable and brief screening process to determine eligibility. It is inexpensive; we just renewed ours.

 

[Shrew]

I asked a close relative who spent almost 40 years in the insurance business for both personal and business lines. She said in 40 years of writing policies and processing claims she never saw a umbrella policy pay out.

She also claimed that in those same 40 years, she's never seen property get repossessed to cover an award exceeding a policy limit.

 

[Pete Meisinger]

I had an umbrella policy on my home a number of years ago. I think my boat was included. Anyway, I dropped it a few year ago. It was fairly expensive and I didn't feel it was needed.

pete

 

[MYTraveler]

Once the decision is made to get umbrella coverage, the question becomes how much coverage is enough, but I suppose that is a topic for a different thread.

 

[Hippocampus]

Have has several friends where the umbrella saved their house and or kitty.

US has become ridiculously litigious with awards becoming absurd. Five or ten years ago would agree an umbrella might not be necessary but would do my due diligence on need depending upon where you live and your exposure.

Have had friends who were offered very lucrative jobs in Alabama and elsewhere but refused them because they viewed the medmal situation to be so onerous there. Although never had a claim cost and risk not appealing.

The old sarcastic sayings have some justification. One lawyer in town no business. Two are busy. Revolution comes get rid of the lawyers first.

 

[O C Diver]

I asked a close relative who spent almost 40 years in the insurance business for both personal and business lines. She said in 40 years of writing policies and processing claims she never saw a umbrella policy pay out.

She also claimed that in those same 40 years, she's never seen property get repossessed to cover an award exceeding a policy limit.

The purpose of an umbrella is to increase liability coverage. In the event that someone decides to file a liability suit against you, the house or boat policy and the umbrella policy come into play to both pay your legal fees and any settlement of court award. In short, when the insurance companies are on the hook for both legal expenses and settlement, they're more willing to go to court as they're payout could be measured in millions as opposed to thousands.

The other thing that an umbrella policy does is that it provides liability coverage for things that you can't buy insurance for. As an example, your riding your bicycle down the street and a child runs out in front of you. She ends up in the hospital and a lawyer was riding the bumper on the of the ambulance. Umbrella covers you for the fact that there isn't bicycling insurance. I own land underwater. It's deeded property that is my boat slip. I only own the land as the docks, pilings, etc., are owned by the condo association. In the event that somebody backed into my slip, struck something, and claimed damage from something on my property, the umbrella covers me as they don't write policies for submerged land. While they may or may not win, or get an out of court settlement, I'm not on the hook for the settlement or legal fees if they try.

Once the decision is made to get umbrella coverage, the question becomes how much coverage is enough, but I suppose that is a topic for a different thread.

For me, 5M was easy enough to get. Including covering the house my wife and my vehicle, and the trawler, it was about $1K. In the cost boating, driving and home ownership, it's insignificant for peace of mind.

Ted

 

[MYTraveler]

For me, 5M was easy enough to get. Including covering the house my wife and my vehicle, and the trawler, it was about $1K. In the cost boating, driving and home ownership, it's insignificant for peace of mind.

Ted

Ted, thanks for your reply. I am not sure what you mean by covering the house, etc. If you mean providing liability coverage for third party claims arising out of your ownership and use of the house, etc., I agree. If you mean that a $5M umbrella policy protects your equity in your house, etc. (assuming that the total equity doesn't exceed $5M), I don't believe it does. For example, if your boat negligently sins a $12M boat, you will have $12M of liability, only $5M of which will be satisfied by your umbrella policy, leaving you with $7M of unsatisfied liabilities, which the injured party can recover by taking your house, etc. So, it seems to me that my question of how much umbrella coverage is necessary is more a function of how much damage one might do, rather than one's net worth. And in this day and age of run away jury verdicts, etc., I struggle with an answer that leaves with peace of mind. And even with $15M of umbrella coverage, I still worry. Oddly, additional coverage becomes increasingly more expensive. -Rick

 

[danderer]

In short, when the insurance companies are on the hook for both legal expenses and settlement, they're more willing to go to court as they're payout could be measured in millions as opposed to thousands.

Exactly.

 

[Hippocampus]

Agree with Ted. Unless you are judgment proof (no significant assets) an umbrella is cheap peace of mind. Also agree with $5m (or more depending upon your position). Not only for protection but also for further motivation for your carrier to put their best people to fight for you.

 

[MYTraveler]

Agree with Ted. Unless you are judgment proof (no significant assets) an umbrella is cheap peace of mind.

Above, I questioned how a $5M policy gives peace of mind, even if net worth is say only $3M, given the prospect of creating, for example, $12M of liability. Hopefully, Ted will respond in a way that will give me peace of mind, but right now I am worried. Hippo, since you agree with Ted, perhaps you could explain your reasoning? Or anyone else who has peace of mind?

 

[Jc180]

Can the umbrella policy take place of boat specific liability coverage?

 

[MYTraveler]

Can the umbrella policy take place of boat specific liability coverage?

No. The insurer prices its coverage with the expectation that another insurer is providing coverage under a primary policy. In that way, the umbrella insurer doesn't have to factor in the risk and administrative cost of dealing with small claims. My policy, which I understand to be typical, specifically conditions coverage on an underlying liability policy for each of my autos, boats, homes, etc. Ostensibly, if I inadvertently let coverage under a primary policy lapse, I have no coverage under the umbrella, although I question the enforceability of that provision. It would make more sense that the umbrella carrier not provide coverage for the portion of the claim that should have been protected by a primary policy (so that would be my expense), but remain obligated as to the balance of the claim, up to their limits of liability.

 

[O C Diver]

Ted, thanks for your reply. I am not sure what you mean by covering the house, etc. If you mean providing liability coverage for third party claims arising out of your ownership and use of the house, etc., I agree. If you mean that a $5M umbrella policy protects your equity in your house, etc. (assuming that the total equity doesn't exceed $5M), I don't believe it does. For example, if your boat negligently sins a $12M boat, you will have $12M of liability, only $5M of which will be satisfied by your umbrella policy, leaving you with $7M of unsatisfied liabilities, which the injured party can recover by taking your house, etc. So, it seems to me that my question of how much umbrella coverage is necessary is more a function of how much damage one might do, rather than one's net worth. And in this day and age of run away jury verdicts, etc., I struggle with an answer that leaves with peace of mind. And even with $15M of umbrella coverage, I still worry. Oddly, additional coverage becomes increasingly more expensive. -Rick

Ok, so my umbrella raises all liability insurance to $5M. There are different category requirements for the base insurance. As an example, I believe my automobile insurance had to be $300K in the base policy for the umbrella to raise it to $5M. I believe I needed $500K on the boat.

This has nothing to do with hull, home equity, or vehicle value, just liability. My home, boat and vehicles all have coverage for their loss.

Up to around $5M isn't difficult. As you go above that it becomes a more specialized market. Coverage is available but with larger coverage comes more scrutiny. If it were simple and reasonably priced to go from $5M to $15M, I would do it. If I was going to cruise 5 more years I might pursue it more. For now I just stay away from expensive boats.

If you price a policy per million, the premium diminishes for each additional million. The risk is very low that you will ever use the first million of coverage, but even lower that you will use the second, and lower still the third. My recollection was that the last Million of my policy was $120. Interestingly, to raise my trawler insurance from $500K to $5M was a $58 addition on the policy.

Can the umbrella policy take place of boat specific liability coverage?

As mentioned above you need base liability insurance to qualify for additional coverage under the liability, so no you still need boat liability insurance. BUT, many marinas require a million or more liability coverage if you staying any length of time. Phrased another way, insurance is required but usually not checked for less that a week stay. It's been my experience that boat insurance policies charge more than $58 to raise $500k to $1M.

Ted

 

[Hippocampus]

My limited understanding is insurance companies care little about you or the merits of the claim. Rather their concern is how to get it to go away in the least expensive fashion. Even if the claim has no merit if it’s cheaper to settle that what they will do. If you say I want it litigated and they say settle if you choose to litigate and lose it’s on you. If you say do what you want it’s on them if they lose.
The plaintiffs lawyers are of a similar mindset . If settling means more money for them with less work and expense and no chance of not getting paid they will settle. Given they are rarely paid by the hour but rather a percentage only when they win like the insurance vendor they care if they will make money with the merits of the case a secondary concern. System seems screwed up to me. Plaintiffs with legitimate claims make get short changed as the plaintiff lawyer might be incentivized to get the most money for him with the least risk and least amount of work. Defendants lose the chance to litigate frivolous claims as risk scares them off when insurance thinks is cheaper to just pay it out. Neither party is well served. By haven’t higher limits I think (but don’t know) the insurance vendor has more skin in the game and therefore more likely to fight for you.

Agree $1m liability seems de rigor to stay in a marina in most places I’ve been. Lately safe harbor demands they be named on the policy. My broker s getting tired of having his staff satisfy them. It’s one big company but as you move to a different SH you call the broker and send the stuff again.

 

[MYTraveler]

Ok, so my umbrella raises all liability insurance to $5M. There are different category requirements for the base insurance. As an example, I believe my automobile insurance had to be $300K in the base policy for the umbrella to raise it to $5M. I believe I needed $500K on the boat.

This has nothing to do with hull, home equity, or vehicle value, just liability. My home, boat and vehicles all have coverage for their loss.

Up to around $5M isn't difficult. As you go above that it becomes a more specialized market. Coverage is available but with larger coverage comes more scrutiny. If it were simple and reasonably priced to go from $5M to $15M, I would do it. If I was going to cruise 5 more years I might pursue it more. For now I just stay away from expensive boats.

If you price a policy per million, the premium diminishes for each additional million.

Ted

Thanks for your response. Oddly, my experience is that each additional million of coverage, for my personal liability policy, is more expensive than the prior million. My experience with commercial liability policies is exactly the opposite. The difference may be that insurers impose limits above which they are not willing to write. In the commercial context, that means umbrellas on top of umbrellas. In the consumer context, I suspect that far fewer insurers are willing to write excess coverage, with the result that premiums increase to reflect reduced competition. Additionally, in the commercial context, it is realtively easy for an insurer to understand and quantify a risk. With consumers, there are too many unknowns that significantly change a risk profile. In my case, it might be easy for an insurer to imagine that I spend all my time driving fast cars and boats (not referring to the boat in my profile pic, which rarely exceeds 10 knots, but instead a 60+ mph bass boat with a 150 hp motor and a 55+ mph pontoon boat with a 200hp motor) and several jet skis and snowmobiles and off road vehicles, etc., notwithstanding my impeccably clean driving record, claims history and background generally. As a result, $15M of umbrella coverage costs me a pretty penny, increasing it by another $10M would more than double the premium. I have tried to suggest that they write the additional coverage with a self retained limit of, say $2M (so that if there was a claim of, for example $20M, I would be liable for $2M (and thereby be highly incentivized to avoid significant risks) before they have any exposure. Unfortunately, from what I have seen, insurers are far less creative and flexible in the consumer market than they are in the industrial market.

 

[psneeld]

Above, I questioned how a $5M policy gives peace of mind, even if net worth is say only $3M, given the prospect of creating, for example, $12M of liability. Hopefully, Ted will respond in a way that will give me peace of mind, but right now I am worried. Hippo, since you agree with Ted, perhaps you could explain your reasoning? Or anyone else who has peace of mind?

My understanding is if you have a $12mil award against you...you are up against the whole $12mil. Whatever your liability will cover and includes any legal fees on your part, you still have to make up the difference with asset liquidation and possibly future earnings garnishment.

I have also been told that the higher your insurance, the higher the claim against you will be because it just means the insurance company will settle for higher if it looks like it is going that way.

Sometimes it pays to fight a suit claim.... my old boss had one against him (I was the towboat captain) by a contractor who had rented his barge and towboat to place it. The plaintiff sued the marina and the equipment renter and a few others that were all involved plus my boss who was the only one who fought it and the rest settled for well over a million I had heard.

By the time the others settled, heck the guy had plenty of money and I don't think he or his lawyer thought it great to press too hard on my boss....no award last I heard.

 

[Shrew]

The purpose of an umbrella is to increase liability coverage. In the event that someone decides to file a liability suit against you, the house or boat policy and the umbrella policy come into play to both pay your legal fees and any settlement of court award. In short, when the insurance companies are on the hook for both legal expenses and settlement, they're more willing to go to court as they're payout could be measured in millions as opposed to thousands.

The other thing that an umbrella policy does is that it provides liability coverage for things that you can't buy insurance for. As an example, your riding your bicycle down the street and a child runs out in front of you. She ends up in the hospital and a lawyer was riding the bumper on the of the ambulance. Umbrella covers you for the fact that there isn't bicycling insurance. I own land underwater. It's deeded property that is my boat slip. I only own the land as the docks, pilings, etc., are owned by the condo association. In the event that somebody backed into my slip, struck something, and claimed damage from something on my property, the umbrella covers me as they don't write policies for submerged land. While they may or may not win, or get an out of court settlement, I'm not on the hook for the settlement or legal fees if they try.



For me, 5M was easy enough to get. Including covering the house my wife and my vehicle, and the trawler, it was about $1K. In the cost boating, driving and home ownership, it's insignificant for peace of mind.

Ted

I understand the purpose of an umbrella policy. Thank you for taking the time to misunderstand my post.

I simply stated two facts. Please review.

 

[O C Diver]

Thanks for your response. Oddly, my experience is that each additional million of coverage, for my personal liability policy, is more expensive than the prior million. My experience with commercial liability policies is exactly the opposite. The difference may be that insurers impose limits above which they are not willing to write. In the commercial context, that means umbrellas on top of umbrellas. In the consumer context, I suspect that far fewer insurers are willing to write excess coverage, with the result that premiums increase to reflect reduced competition. Additionally, in the commercial context, it is realtively easy for an insurer to understand and quantify a risk. With consumers, there are too many unknowns that significantly change a risk profile. In my case, it might be easy for an insurer to imagine that I spend all my time driving fast cars and boats (not referring to the boat in my profile pic, which rarely exceeds 10 knots, but instead a 60+ mph bass boat with a 150 hp motor and a 55+ mph pontoon boat with a 200hp motor) and several jet skis and snowmobiles and off road vehicles, etc., notwithstanding my impeccably clean driving record, claims history and background generally. As a result, $15M of umbrella coverage costs me a pretty penny, increasing it by another $10M would more than double the premium. I have tried to suggest that they write the additional coverage with a self retained limit of, say $2M (so that if there was a claim of, for example $20M, I would be liable for $2M (and thereby be highly incentivized to avoid significant risks) before they have any exposure. Unfortunately, from what I have seen, insurers are far less creative and flexible in the consumer market than they are in the industrial market.

My guess is that above $5M you may reach the point where insurance companies are selling the portion above $5M to others. Everyone in the game needs to make a profit. Frankly I can't imagine how an insurance company sees the additional risk of the 5th million in my policy to be worth $120.

If you're that concerned about liability above $15M, you should look into LLC (Limited Liability Corporations) in Wyoming. I am told by my estate lawyer (wills ,estate plans and trusts) that it's the best protection for assets and investments as far as personal liability protection. You put your assets where they can't be touched or attached and then have a $5M liability policy. The injured party can either keep the lawsuit alive (paying significant legal fees) until you and your spouse pass away, or take the $5M now as full settlement.

Ted

 

[Hippocampus]

Problem is a LLC, professional corp, s or c corp only provide a vail of protection if it can be clearly demonstrated they were not set up just in order to provide protection from suit. They need to have an independent reason for their existence as well from my limited understanding.
Perhaps others more knowledgeable can comment but believe it’s unusual for the actual money paid out to exceed limits.

 

[O C Diver]

I understand the purpose of an umbrella policy. Thank you for taking the time to misunderstand my post.

I simply stated two facts. Please review.

I asked a close relative who spent almost 40 years in the insurance business for both personal and business lines. She said in 40 years of writing policies and processing claims she never saw a umbrella policy pay out.

She also claimed that in those same 40 years, she's never seen property get repossessed to cover an award exceeding a policy limit.

Ok, I've reviewed them. Without knowing how many umbrella policies she wrote the "facts" are relatively meaningless.

Umbrella policies by definition are an increase of liability insurance that is almost never used. I would expect usage to be around 1%.

Ted

 

[O C Diver]

Problem is a LLC, professional corp, s or c corp only provide a vail of protection if it can be clearly demonstrated they were not set up just in order to provide protection from suit. They need to have an independent reason for their existence as well from my limited understanding.
Perhaps others more knowledgeable can comment but believe it’s unusual for the actual money paid out to exceed limits.

It varies from state to state based on state laws. That's why picking the right state is important. It's not what state your suit is in, it's the laws of the state where the corporation is registered.

It's like liability waivers. Some states allow you to sign your rights away as far as lawsuits, with the exception of criminal negligence. Other states only view liability waivers as an indication of intent.

Ted

 

[AlanT]

T
Unfortunately, from what I have seen, insurers are far less creative and flexible in the consumer market than they are in the industrial market.

You are absolutely correct. In the industrial/commercial market the individual risk is underwritten (ie meaning it is assessed, rated and priced). In the consumer market we are all just rated as a group with little if any attention paid to individual risk, unless in the event of adverse loss history.

My background is marine/energy with limits of over $1bn negotiated, This is a very different world. I do still think that the OP should consider the merits of accessing an independent broker/agent (yes I realize they are two different animals) to procure both his yacht ins and an Excess or Umbrella. Independents have access to a multitude of markets.

I am with Chubb for my yacht ins, and several properties, but my umbrellas are with two completely different entities.

~A