All liability on an Umbrella, or per property

[Sam Johnson]

Hi all,

I'm about to close on a number of properties to take me from one owned to...more than one! This raises a question about insurance though: Given that I will have to pay ~$80 on each property to add $500k or liability protection, vs bumping up my existing single umbrella policy it seems to make sense to go for ZERO liability on each property and do the latter.

Is this sensible? The only potential flaw I can see is if I get sued on multiple properties at once - but I'm perhaps missing something.

Thanks!

Sam

[Jason Bott]

Originally posted by @Sam Johnson:

Thanks for the responses all. The quotes have come through from an Allstate agent outsourcing to American Modern so that we can cover multiple rentals under the same policy. They came back with $0 liablity - so I presume they are happy to allow it, I could add on $500k for $79 per dwelling.

@Darius Ogloza - it sounds like this may be the sticking point: if I have ONLY an umbrella and the claim is not substancial there's a potential the umbrella may not pay out. I'll dig into what minimum umbrella payouts might be.

@JD Martin it's worth noting that I got an umbrella quote for $2MM and they converted it to a commercial umbrella, so perhaps these restructions won't apply. It certainly sounds like I should check in with the insurer to verify if they have a per-property minimum.

Thanks again all!

Sam, you need to have a GL policy in order to place the Umbrella policy over the top.  

Close analogy would be to state you are not going to build the first floor & foundation of a building, only the 2nd and 3rd floor to save on the cost on the foundation.  

If your agent mistakenly sets up the above referenced program, and you have a $600k Liability pay out, you would most likely pay out of pocket dollar 1 to $500k.  The Umbrella would then pick up the claim payout from $500k to it's limit.

The Umbrella is priced out knowing it will only start paying claims after the GL has paid out it's limits.

Hope that helps clarify how these policies are meant to work.  Let me know if you have any other questions on it.