Insurance umbrella or just liability???

14 Replies

I was considering getting a $1M umbrella policy for $22 a month. I went online to get a quote on Rental Property Insurance (USAA calls it that) for a SFH I am evaluating. The quote showed for an additional 45 cents per month, I can get $1M in liability coverage. Should I even bother with the umbrella policy? ***This will be my first investment property***

Thanks for any advice

Here is how they define the coverage:

Personal Liability - Each OccurrencePersonal Liability provides protection if someone makes a claim or files a suit against you (or someone covered by the policy) for accidental personal injury or property damage and the cost to defend any such claims or suits against you. Your limit of coverage should be high enough to protect the total value of your personal assets, including your home. Example: if someone slips and falls on your property and sues you, this coverage would protect you.

Hi Bryan,

So is the USAA policy the umbrella policy or the homeowner's policy on the individual property? Sorry, the post is a little confusing.

Personally, I always recommend an umbrella policy. It's cheap piece of mind. It can be much less expensive (in some states) and much less hassle than an LLC or other entity, which most people don't recommend for a single property.

For $0.45 per month, why not have the extra $1M in coverage?

@Eric Black  

The USAA policy is the homeowners policy.  Basically, it's $49 per month with $300K liability coverage.  I can got to $1M liability for a total of $49.45 a month.   

The USAA umbrella policy for $1m is $22 a month by itself.  

Sorry if it was confusing.   It just seems to me that the 45 cents is a pretty good deal vice the $22.  

Thanks for the clarification Bryan,

I would recommend the umbrella policy as well, even at the $22/month. I would also shop that around. The nice thing about the umbrella policies is they will cover anything over and above what your homeowners policy covers, and they will sometimes cover items not covered by your homeowners policy. Do your shopping and know what your policy covers and does not cover.

Best of luck!

Yeah, it's not really clear to me either. I think the distinction is whether you're talking about a personal umbrella policy (which IS liability insurance, but covers pretty much any claim made against you personally no matter where it happens) or just extended liability coverage on the rental property (if anything happens at the property, you're covered). At $0.45 a month, that's a no-brainer.

But  I also think having the umbrella coverage is a good idea. We tend to think of that type of insurance as protection from being sued by some jerk, but frankly, we all can make mistakes. And if you make a mistake that causes damage to someone else's life you want to have the ability to do what you can to make it right. That insurance would let you do that with out causing havoc to your own financial situation.

That is a cheap 1M policy.  Once you have multiple insurance carriers and polices the umbrella gets a lot more expense.

Frank Romine, Real Estate Agent in CA (#01957844)

Great question.

Liability insurance on your home just covers liability primarily arising from the home, but it also covers other areas as well. An umbrella policy will cover multiple things, such as secondary coverage on your personal liabliity, secondary coverage on your auto's, as well as multiple homes, both primary and rental, business pursuits, recreational vehicles, farms and equipment, vacant land. So the umbrella policy is a much more broad type of coverage.

If the additional million is only .45 a month, I would add that as well as getting the umbrella policy, and adding all the areas of coverage that make sense. I would also update or add addition homes, cars, business pursuits to the policy as you need them in the future.

The 1st rule in business is to learn how to make money, the 2nd rule is to learn how to keep it. Thats where insurance can help.

Sorry for delayed response.  Ever since BP upgraded I stopped getting notifications for some reason. 

The 45 cents is cheap and a no brainer.  I will probably do the umbrella as well.  I was mostly concerned with liability of the rental property.  But, for $22.45 a month it's a win either way.  

I also have umbrella via USAA and am happy w/ it.  Unfortunately they will only insure 4 places for homeowners insurance.

Hey Bryan, I use USAA too and love them. I would call them and have you explain the difference between the two, in conjunction with the normal homeowner's insurance you already pay for as well. Normally the umbrella is mostly liability anyway, so not sure what the additional coverage hits. Seems like I went through it all with them but I don't remember the explanation.

@Ali Boone  

The policy on the house will cover you up to $1m against lawsuits brought on by the tenants in the rental.  The umbrella policy is a standard policy.  I've used USAA since 1999 and I never even call other companies.  They are the best hands down. 

Oh, you aren't kidding. They aren't the cheapest out there but I too wouldn't even call for a quote from another company. They are amazing! I use them for everything I can.

Won't really need the umbrella unless you have multiple risk exposures.  That's what the umbrella's for.  I'd just up the liability till you get the next one.  Maybe if you own your own home in addition to the investment it's not a bad idea.  That would put you in the multiple risk scenario.

@Tim W.  

Thanks.  I'm thinking the same thing.  Either way they are cheap options. 

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