(February, 2011)

This article offers a variety of claims that had been processed, defended and paid under various personal umbrella liability insurance policies offered by different insurance companies. In the opinion of those concerned, underlying insurance was inapplicable. Keep in mind that that different policies vary in both coverages and exclusions.

BOATING

Situation 1 - The insured chartered a sailboat for a race. During the race, the mast broke and struck a member of the crew, who was seriously injured. No primary coverage was available to the insured, but a personal umbrella liability policy was applicable.

Situation 2 - During their vacation, a family rented an inboard-outboard boat. The boat was rated considerably in excess of 50 horsepower. While (towing and) watching his water-skiing child, the insured ran into and seriously injured another person. His homeowner's policy (Section II) was not applicable because of its exclusion of owned or rented inboard and inboard-outboard watercraft of more than 50 horsepower. His personal umbrella liability policy was applicable.

CIVIC ACTIVITIES

Situation 1 - The insured was a member of an incorporated school board. He and other school board members were sued by a school teacher for defamation of character. The question was raised whether the business pursuits exclusion of his personal umbrella liability policy applied to the claim. It was decided that civic service of this nature was not "business activity" and that personal acts in connection with his school board duties were eligible for coverage.

Situation 2 - The insured, which was on a school board, was sued individually by a dismissed teacher who alleged racial discrimination. The umbrella policy provided defense coverage for the claim.

Situation 3 - An insurance agent who was a member of a city school board agreed with a board decision to "not re-hire" a particular teacher. The decision was due to the recommendation of the school's superintendent. The superintendent adequately documented the teacher's inability to perform her job. As a result of this action, the board was sued and each of the members was included in the suit as individual defendants. The teacher alleged that she was deprived of her civil rights.

The city attorney advised that, under the city code, it could provide a defense for the board, but not the individuals. The agent's umbrella carrier supplied him with an attorney. Several other board members carried similar insurance and their insurers agreed to the same attorney. Fortunately, it was found that the statutes of the state permitted a local school board to provide defense for individuals in such a matter and the expense was eventually paid by the board. Furthermore, the case was thrown out of the Federal District Court.

Situation 4 - The insured, who was a municipal commissioner, allegedly slandered two policemen. His personal umbrella liability policy provided coverage against the claim.

Situation 5 - The insured, who had never been a politician, ran for governor. His campaign focused upon corruption in state government. He was subsequently sued for libel. The insured's umbrella insurer paid for the cost of his defense as well as the judgment awarded to the claimants.

PERSONAL INJURY

The following incidents were also handled by their respective umbrella insurers:

Situation 1 - It was alleged that the insured libeled the claimant (who was a state legislator) in a newspaper column.

Situation 2 - The claimant alleged assault and wrongful detention by an employee of the insured. The insured owned a farm and the claimant was a reporter attempting to get a story.

Situation 3 - The insured was sued for defamation of character. It was alleged that he slandered the claimant by stating that the claimant embezzled funds and was also immoral. The claim was covered under the insured's personal umbrella liability policy, subject to the retained limit. Personal injury coverage was not included in the underlying comprehensive personal liability insurance.

Damage to Property in Custody of the Insured

Situation - The insured borrowed a tractor from a neighbor and seriously damaged it. His personal umbrella liability policy covered the loss, subject to the self-insured retention.

Foreign Territory Claims

Situation 1 - The insured was driving a rental auto in Jamaica and was involved in a fatal accident. Very limited coverage ($10,000) was available from the rental company. The underlying automobile policy carried on his cars in the United States excluded losses occurring outside of its territory. His personal umbrella liability policy was applicable.

Situation 2 - The insured rented an automobile in France and was involved in a serious accident. Only limited coverage was available to him there. His umbrella responded.

Liability Assumed By Contract

An insured contacted a driveway contractor and asked that they pour a driveway for her. She signed what she thought was a simple purchase agreement without reading it. The contract contained a provision that held the contractor harmless. The contractor negligently poured half a load of cement down a storm sewer. When the city demanded compensation, the contractor produced the agreement containing the "hold harmless" provision. The ensuing claim against the insured was handled by her personal umbrella liability insurance.

Rented Motorcycle Claim

The insured's son, a college student, decided to rent a motorcycle for the day. He was involved in a serious accident. The insured's underlying automobile liability insurance and homeowner's Section II (personal liability) insurance did not cover the ensuing third party claim. The insured's personal umbrella liability policy did.