What Coverage Claims Occur Under Umbrella Insurance?

What Coverage Claims Occur Under Umbrella Insurance?

A fairly good rule of thumb might be that the larger the amount of loss the more tight-lipped insurance companies become about details. For that reason it is hard to have accurate information about umbrella insurance coverage claims.

Further, attorneys arguing large claims often will use the press to their advantage. The “facts”, as presented in newspaper accounts of the loss, can be distorted by skilled litigators who want to shape public opinion prior to trial. After the trial is over, usually settled outside the courtroom or in appeals hearing rooms, the amount of the settlement is often sealed.

The following two fictitious large losses are meant simply to illustrate the value of an umbrella

Umbrellas, or excess liability coverage provides coverage for claims by others for bodily injury, personal injury, or property damage for which you are legally liable. Coverage includes occurrences on or off your premises, additional limits of liability above your primary personal auto policy against auto-related liabilities, legal defense costs for a covered loss, normally worldwide.

Driver A was at fault for an accident that caused bodily injury to another driver. Driver A’s auto policy bodily injury liability coverage paid up to its limit: $300,000. The other driver will miss out on several large contracts for personal appearances because of her injuries and is suing you for $1,000,000, which you attorney tells you is a fair appraisal of the probable loss.  Your car insurance only covers $300,000 and has “put up” their limits by writing a check to the other driver for the full amount. If you have a $1,000,000 umbrella the umbrella company will pay the difference to $1,000,000 as you become liable. If you have a $1,000,000 excess liability policy the insurance company for that policy will pay up to an additional $1,000,000 over $300,000 for a total of $1,300,000 in protection.


Your young daughter told her friends in school that Mary Swanson didn’t have the grace necessary to be a cheerleader. Four days after she made that remark the school held the junior high cheerleading tryouts and Mary was not selected. Mary tearfully told her mother, who has a great deal of money, that your daughter’s statement had ruined her chances, because your daughter is an excellent cheerleader and quite popular. So, when the student body voted on who would be a cheerleader her “slanderous” opinion swayed the election.

Since everyone knows that only girls who were junior high cheerleaders become high school cheerleaders, Mary Swanson’s life has been irreparably ruined and the Swanson’s file suit for mental anguish.

A few years before you had decided to save a few dollars. You had gone against the advice of your insurance agent and had rejected his proposal to add an endorsement to your homeowners’ policy for personal injury insurance. Much to your chagrin, you now realize that endorsement would have protected you against liability loss due to slander.

Your attorney tells you that the odds of any court awarding so much as a dime to the Swanson’s are negligible. You smile and breathe a sigh of relieve until he informs you that the Swanson’s are politically powerful people. No right-minded judge is going to declare their suit “frivolous”. It will be allowed to run its course. Your attorney sadly frowns and tells you the Swanson’s have carefully selected a bulldog of an attorney who is known for producing volumes of costly paper.

Your attorney’s estimate is that your legal expense will run nearly $400,000.

Your cel phone rings and you recognize the call as coming from your insurance agent, who had told you that morning that your homeowners’ wouldn’t cover you.

He tells you that he was going through your file after your discussion that morning. He says that you have coverage for slander under your umbrella insurance policy for legal fees and any court awards up to the $2,000,000 limit you purchased.  The self-insured retention you must pay is minimal.

All of a sudden the suit becomes quite different. The umbrella insurance company attorney approaches the judge and asks for the case to be fast tracked which means you will stipulate the facts of the case and take it to jury trial without going through protracted discovery.

What could have been a devastating nightmare has been reduced to an inconvenience.

Other Enhanced Insurance articles related to Umbrella Insurance:

Whether to Buy an Umbrella Insurance Policy

Do You Need an Umbrella Insurance Policy

What Is Umbrella Insurance

Always Compare Coverage before Buying an Umbrella Policy

What Are Umbrella Insurance Coverage Discounts

What is the Normal Umbrella Coverage Rate Cost

Enhanced Insurance is not written by attorneys. If you’re looking for legal advice, you need to contact a lawyer. Further, insurance practices and forms change constantly and are varied from state to state. For definitive answers in your area, contact a local agent.

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