The Need for Higher Liability Limits Is Critical

// December 8, 2016
Reading Time: 3 minutes


“In a lawsuit, where damages can run to millions of dollars, [homeowners and auto liability] limits are simply insufficient,” says Ray Martin of MoneyWatch. He goes on to explain that insureds can lose their life savings in a large claim. A financial loss could significantly damage their reputation, finances and career.

The same article encourages insureds to seek an excess liability or umbrella liability policy to supplement their existing coverage. The USLI Excess Comprehensive Personal Liability and Personal Umbrella products could be used to give your insureds the “peace of mind” they need.

While both types of policies are designed to “kick in” when the underlying liability limits have exhausted, many insureds struggle to recognize the key differences between an excess liability policy and umbrella liability policy. It is important to clarify these differences so your insureds obtain the proper coverage for their needs.

Homeowners or dwelling fire policies typically offer liability limits starting at $100,000 through $1 million. An excess liability policy provides an additional layer of coverage, or higher liability limits, on top of these underlying policies. An excess liability policy is also “follow-form,” which means that it incorporates all of the provisions of the underlying policy, including definitions and exclusions (Nonprofit Risk Management Center). The USLI Excess Comprehensive Personal Liability product can be used to provide liability limits up to $5 million for 1-4 family dwellings, condo units, RV lots and vacant land.

In a recent claim, our insured was entertaining friends at her home. During the party, one of the guests tripped and fell down the stairs. The claimant suffered extensive injuries, requiring him to undergo multiple surgeries to repair. Due to the significant cost of medical bills, the payout for this claim totaled $350,000. The insured’s underlying liability policy limit was $100,000, and our Excess Comprehensive Personal Liability policy had a limit of $400,000. The underlying carrier paid their full policy limit, and USLI paid the remaining $250,000. If our insured did not have our excess liability policy in place, she would have been personally responsible for paying the remaining $250,000 to the claimant.

Contrary to an excess liability policy, an umbrella liability policy provides an additional layer of coverage on top of several underlying policies, which could include home, auto, recreational vehicle and watercraft. An umbrella liability policy can also provide first-dollar or “drop down” coverage for exposures that aren’t covered by the underlying policies. For example, the USLI Personal Umbrella product, which offers limits up to $10 million for preferred applicants, currently provides first-dollar coverage for any non-owned watercraft that is less than 26’ in length and 301 in horsepower.*

An umbrella liability policy can also protect your insured from claims associated with auto accidents. According to the National Safety Council, the number of traffic fatalities increased approximately 8 percent in 2015. In just the first half of 2016, this number has already increased another 9 percent compared to the same period in the previous year. Statistics like these undoubtedly emphasize the importance of having higher umbrella liability limits in place.

It is essential for your insureds to protect their personal assets in order to prevent a liability claim that causes financial ruin. If you need to increase the liability limits of your insured’s current coverage, look no further than USLI! We now include an Excess Comprehensive Personal Liability quote with every primary Comprehensive Personal Liability quote for no additional work!

Contact your Personal Lines underwriter for more details about our Excess Comprehensive Personal Liability and Personal Umbrella products.

As always, thank you for your support and business!

*The maximum policy limit in FL is $5,000,000, and the maximum policy limit in AL, MS, NH and VT is $1,000,000.

 width=Written by Danielle Conner
December 8, 2016

Contact Brian Hogan,
Vice President, Product Team Leader | 888-523-5545 Ext. 2388