Personal Umbrella Myths Debunked: Myth #1

Over the years, the Big "I" has encountered several persistent myths about umbrella coverage in the marketplace. This is the first in a series of articles where we'll tackle and debunk these myths one by one.

Personal Umbrella Myth#1

A personal umbrella is something agents only need to offer to wealthy customers.

Personal Umbrella Truth

Because anyone can be sued, everyone needs a personal umbrella.
Both agents and customers are guilty of thinking that a personal umbrella is only for the wealthy, but that couldn’t be further from the truth. Here are some tips to help your customers understand that they need an umbrella even if their last name isn’t Rockefeller.

1. Explain in layman’s terms what an umbrella is: an affordable way to protect themselves if someone sues them for more than what’s covered by their basic policy. Make it simple and don’t use insurance jargon that leaves your customer glassy-eyed. Sending them this short video would be a great start.
   
2. Provide real life examples of claims that have impacted “the average Joe.” Most customers would purchase an umbrella if they understood its value in a personal, relatable way.
   
3. Clarify that a single judgment can exceed their savings, the value of their home and other assets…putting their FUTURE earnings at risk. Renters are especially vulnerable to judgments that garnish wages and future earnings.
   
4. Remind clients that an umbrella covers defense costs. Besides the threat of a costly judgment, your customer will also have to pay for a defense, even if the suit is frivolous. A defense attorney may charge anywhere from $100 to $1,000 per hour…but a personal umbrella pays defense costs in addition to the insured’s limit of coverage.
   
5. Show that an umbrella is an affordable way to obtain a lot of coverage. Depending on the insured’s location, a personal umbrella averages just $300 in premium…that’s around $25 per month for $1 million in personal liability protection.

Don’t forget to document that you’ve offered your customer a personal umbrella. This Personal Umbrella Offer/Decline Form explains to a customer very simply what an umbrella is and why they need it, and then has them indicate whether they want or decline more information. The form makes it easy for you offer an umbrella to every client, and gives you a document to file away as a protection against “failure to offer” E&O claims.

Armed with these simple tips, you’ll find it easier to write more personal umbrellas. IIAT members have access to the RLI Personal Umbrella, which offers limits of up to $5M and excess UM/UIM nationwide.

RLI Personal Umbrella

Access a stand-alone Personal Umbrella Program through RLI Insurance Co.

Learn More