Does Your Personal Umbrella InsuranceGive You The Coverage You Need? policies are most often thought of as the ultimate protection if you face a claim or lawsuit based on liability arising from the use of your personal vehicle. But, like anything else, it pays to be a wise consumer and understand the basics of what is and isn’t covered.

In Ohio, you’re required to have liability coverage for your personal vehicle. Liability insurance provides you with protection for your liability to others. You can also purchase physical damage coverage which provides you with protection in the event of damage to your own vehicle. Such coverages are common with most automobile policies.

Uninsured vs. Underinsured Motorist Coverage

Even though Ohio law requires drivers to carry liability insurance, many remain uninsured, while others carry only the minimum required insurance. As added protection, many Ohioans purchase uninsured motorist coverage (“UM”) and underinsured motorist coverage (“UIM”). UM coverage protects you if a person without insurance (whether they never had it, or their policy lapsed) causes you a loss. UIM coverage comes into play when you’re damaged by someone with lower (sometimes significantly lower) liability limits than your policy. This allows your insurance to make up the difference so you’re more fully covered.

UM and UIM insurance are a worthwhile investment on all your personal vehicle policies. These coverages protect you, your vehicle and your vehicle’s occupants from losses caused by uninsured or underinsured motorists.

For the highest level of liability coverage, many opt for a personal umbrella liability policy. The key purpose of this policy is to protect you from liability that you may cause others, but at a lower rate than your primary insurance.

Why Purchase An Umbrella Policy?

  • An umbrella liability policy can increase insurance coverage beyond the limits of the primary insurance while providing significant additional protection – up to the limits of the umbrella policy.
  • An umbrella policy may also improve your protection for liability such as false arrest, slander, liable and invasion of privacy.
  • While your primary automobile liability insurance may be capped at $250,000 per incident, a personal umbrella policy could provide as much as $5,000,000 worth of liability coverage, depending on underwriting decisions.

Umbrella Policy Exclusions

Remember that an umbrella policy, like your primary insurance, is nothing more than a contract between you and your insurance company, so read it carefully and understand what’s covered and what’s not.

Typically, umbrella policies written in the last 10 years expressly exclude any UM or UIM coverage. So if your primary automobile liability is capped at $250,000, and you have a UM or UIM claim in excess of that amount, your umbrella policy won’t make up the difference. Consequently, if you suffer a $1,000,000 loss, your primary automobile liability insurance of $250,000 may be the most you can recover against the uninsured or underinsured motorist who caused the claim.

Like UM and UIM coverage, governmental vehicles are also typically excluded from umbrella policies. In Ohio, vehicles belonging to political subdivisions often have governmental immunity from damages they cause. Basically, if you get hit by a police cruiser, you can’t sue the subdivision that owns it, even if the cruiser was at fault. In instances of governmental immunity, you must make a claim against your own automobile liability insurance. But what if your claim exceeds your primary automobile liability coverage? Unless your umbrella policy has a specific “UM endorsement,” you may not have any additional coverage from your umbrella policy. The amount of your claim above your primary coverage becomes your loss.

In both of these scenarios, additional protection may be available from your umbrella policy, but it’s likely to be at an additional cost. However, that cost should be weighed against the additional protection. If the purpose of your umbrella policy is to not only protect you from significant liability that you may cause, but also significant liability of uninsured and underinsured motorists, and those with governmental immunity, then it makes sense to confirm the coverage you have in place. Ultimately, you want to be sure that the money you’re paying for an umbrella policy is providing you with the protection you seek.

Charles C. Ashdown is a partner in the Litigation Department and General Business Department. He has experience with litigating significant personal injury claims and assisting business owners with updating their insurance coverages.