An auto owner was insured under a personal automobile and a personal umbrella policy from the same insurer. The auto policy's limit was exhausted, responding to the claim where a person, given permission by the vehicle owner to use the car, struck several persons on the side of a roadway. The injured parties sought coverage under the umbrella and the insurer filed for a declaratory judgment. The carrier argued, successfully at the lower court, that it had no obligation to respond to the loss. The injured parties looked for the opinion of a higher court.

Click here to see how the higher court determined whether the living situation between the auto owner and the permitted driver made the latter a dependent under the umbrella policy.

While the above loss situation did not result in the driver securing coverage, it does not change the fact that personal automobile risks can be substantial. Therefore, it can be critical to make use of the significant, additional layer of protection available from umbrella policies. While the term, "umbrella" is not as popular as it once was, it is still accurate as it provides excess coverage that supplements what is provided by primary policies that cover residences, vehicles, and other personal liability policies such as dwelling liability, boatowners, motorcycles and personal recreation liability.

Even when primary policies are written for higher liability limits, they may still be inadequate when an accident involves injury to several persons or destruction to highly valuable property. Therefore, a policy that steps in when initial coverage is exhausted is critical.

Click here for an excerpt of wording on underlying coverage requirements found in the AAIS Personal Umbrella Section found in PF&M.

While umbrella policies were, for many years, only seen as a niche product for those with high, personal net worth, that is no longer the case. Unfortunately, the greater need for higher levels of liability coverage is due to an increase in the number of lawsuits and the propensity to seek higher levels of recovery. Further, there are more activities that may result in more serious harm to others. Consider injuries to others involving mishaps with hunting, hosting events involving alcohol, accidents at parties involving ziplines, or trampolines and pool parties.

A course of action that is always useful is to take steps to identify situations where a need for additional coverage is more likely.

Click here for an excerpt of a list of exposures that could indicate a need for additional protection from the Personal Risk Survey found in Advantage Plus.

Be open about what is at the core of handling exposures faced by individuals, their activities, and interests. Above we mentioned the use of a tool to assist with exposure identification. But paying attention to others after asking "What do you like to do when you're not working?" Don't let your focus waiver when information is shared. You often receive a great deal of information about what is important to a person. That information may lead to your exploring situations that may reveal unaddressed exposures. Hobbies, collections, and serious leisure interests are often accompanied by liability exposures that represent coverage gaps.

Click here to see an article on creating a niche market, which includes umbrella sales, from the archives of Rough Notes Magazine in Advantage Plus.