Any need for extra umbrella insurance if I own a few properties?

[Atul Mohlajee]

Is there a need for extra umbrella insurance (extra 1 million or extra 2 million ), over and above regular individual insurance of $1 million on each individual property I own. I own 11 properties with biggest one being a 6-flat bought for $567000 this June. Others are 2, 3 flats, SFH's, condos, townhomes etc. Insurance company has been trying to oversell and just wanted to know others views on this. If I am sued on all 11 properties, individual coverage of 1 million each will be separately available and applied to each property.

Thanks.

[Rod Hanks]

Your agent knows your situation and would be able to give you the best advice. But the cost of a 2 mil umbrella is minimal considering the risk you have. (homes,cars,boats,etc.) If you have a car accident and kill a family of four your auto liability limits will be exhausted pretty quickly and then the umbrella will respond. The umbrella wraps around auto, home, and toys liability. Any good attorney will run an asset check and will go after everything. Your home insurance liability won't respond in that case, only an umbrella will after the auto limits are exhausted.

[Sierra Crisp]

I worked as an insurance agent for six years. I would definitely purchase an umbrella. As stated in the previous comment, an umbrella policy works on top of your existing auto and home limits. It is a great product to have especially if you have a rental. Tenants often feel at home in your rental and due to this, seem to do things that are more likely to result in injury or liability issues. I had one even before I owned rental properties. The cost of an umbrella is usually around 200-300 dollars per year if you only own a couple rentals and just have one vehicle. The Benefits and protection are so great, and the cost is so minor...

[Eric H.]

Generally speaking an umbrella policy is rated for 2 key risk factors; assets that you may lose if sued, and exposures that increase your likeliness to be sued. When it comes to units that you own, every bathtub, stair step, hand rail, linoleum floor, rusty nail, splinted fence, exposed tree root,  fireplace and electrical outlet is a potential exposure. If any of the repair/rehab work was done by you and not by a licensed contractor your exposure is magnified even more. Most people who own rental property would be best served with umbrella coverage equal to or grater than the total cap rate value of their property. 

Every state is different consult an insurance professional in Illinois.

[Ralph R.]

Atul Mohlajee I have a personal umbrella for the car accident scenario. Then business umbrella over all my property. All cars, houses, toys carry $500,000 liability. Makes The umbrellas come next. The total liability is 1.5 mil total on each insured item. I'm not sure how much a guy needs. I've never heard of a landlord being sued for negligence or liable for any huge amount. I'm sure it happens but remember we are highly regulated. If your following the laws and maintaining the properties your fairly safe to begin with. The car accident thing is your greater risk I believe. No expert here though. RR

[Karen O.]

Originally posted by @Sierra Crisp:

I worked as an insurance agent for six years. I would definitely purchase an umbrella. As stated in the previous comment, an umbrella policy works on top of your existing auto and home limits. It is a great product to have especially if you have a rental. Tenants often feel at home in your rental and due to this, seem to do things that are more likely to result in injury or liability issues. I had one even before I owned rental properties. The cost of an umbrella is usually around 200-300 dollars per year if you only own a couple rentals and just have one vehicle. The Benefits and protection are so great, and the cost is so minor...

Wouldn't the cost be dependent on the amount of insurance purchased? 

[Tim Puffer]

@Atul Mohlajee - Are all of those properties in your personal name, or are they in an LLC?

[Alex Olmo]

I have 5 units and I have an umbrella policy. Paying for insurance stinks until you need it. Protect yourself

[Atul Mohlajee]

Thanks for all these great responses.  I have decided to purchase 1 million umbrella policy after reviewing all your view points.

[Sierra Crisp]

@Karen O. the amount that you purchase plays a factor in price. If you purchase a 2 million dollar policy you may pay 100 dollars more than the 1 million. For most people the one million is sufficient. Keep in mind that this is in ADDITION to you underlying limits. So if you have 500 thousand dollars of liability on your auto, you effectively have 1.5 million dollars of coverage. (At least in California. Insurance guidelines can vary slightly by state.) We actually charged more depending on your underlying insurance. 

 - how many drivers are in the household

- how many cars are you driving

- how many homes do you insure

- do you have a pool

These things all play a role in your cost, even if they aren't huge increases. We charged 10 dollars more per year for every pool, 10 dollars for every car, and 25 for every extra driver. (55 dollars if that driver was under 25.)

[John Mocker]

Atul,

Have your agent check out PersonalUmbrella.com.  The have a good product for someone with multiple units.  If you have all your policies with one company there are advantages to keeping the umbrella there.  But, if you have different companies on different properties then PersonalUmbrella.com may be a good possibility.  If I remember correctly, they can do up to 40 total units (3 family dwelling = 3 units).

[Atul Mohlajee]

Thanks all again.  I will ask my agent.