Small Investors and Umbrella Insurance...Waste of Money?

[Daren H.]

I currently own 6 single family rental homes in my own name (value ~700K total). I have landlord policies on each. The general/personal liability coverage on each policy is $100K. I also have the general/personal liability coverage extended from my primary residence policy to all of my rental policies which offers another $1M in coverage. On top of this I have a $1M general liability umbrella policy. In order to have the umbrella policy I am required to have full auto insurance coverage at $250K each person/$500K per accident (which drives up my auto policy significantly by the way). I don’t have auto loans so I could be saving money with just carrying liability auto insurance instead of full coverage. In my opinion and assessment, there is significant coverage in place for claims before the umbrella policy would be necessary making it an unnecessary expense or at least a very very low probability of being used. It feels like insurance companies are making easy money (low low low risk) with umbrella policies which is further aided by higher auto insurance premiums in my particular case.

I could increase my primary residence liability coverage at a much cheaper rate than having the separate umbrella policy. I could then drop my auto insurance coverages to save money. For most small investors, are umbrella policies really necessary if you can get adequate coverage extended from your primary residence general/personal liability? What are your thoughts?