What Are Underlying Liability Limits?
What Are Underlying Liability Limits?
Underlying liability limits are the minimum amounts of liability insurance the umbrella carrier may require you to maintain on certain primary policies before the umbrella layer begins.
Auto Liability
Personal auto policies may need to maintain specified bodily injury and property damage liability limits before the umbrella can sit above the auto exposure.
Home or Landlord Liability
Homeowners, condo, renters, or landlord policies may also need a minimum personal liability or premises liability limit.
Other Liability Policies
Motorcycle, recreational vehicle, watercraft, rental property, or other qualifying liability exposures may also need to meet the umbrella carrier’s requirements.
Why Does the Umbrella Require Minimum Primary Limits?
Personal Umbrella insurance is generally designed to provide additional liability protection after the applicable underlying policy reaches its covered limit.
A qualifying auto, home, landlord, or other primary liability policy generally responds first to a covered claim involving that exposure.
If a covered liability claim exceeds the applicable underlying limit, the umbrella may provide additional protection subject to its own terms.
Reducing primary limits below the umbrella requirement can create a gap or leave the insured responsible for part of a loss that should have been covered by the underlying policy.
Vehicles, rental properties, motorcycles, boats, youthful drivers, and other liability exposures should be disclosed so the umbrella carrier can determine which underlying policies must be maintained.
What Should You Check Before Buying or Renewing an Umbrella?
Review the entire household liability picture rather than looking at the umbrella policy by itself.
Review every household vehicle, driver, youthful operator, motorcycle, RV, or other vehicle that may create a liability exposure.
Include the primary residence, rental homes, vacation properties, vacant property, or other real estate that may need to be scheduled or supported by underlying liability coverage.
Compare the umbrella carrier’s minimum requirements with the liability limits currently shown on the underlying policies.
New vehicles, new drivers, rental properties, boats, motorcycles, or other changes should be reported because they may affect the umbrella and its underlying requirements.
Do Your Auto and Property Policies Meet Your Umbrella Requirements?
Best Formula Insurance can help review your Personal Umbrella, auto liability, homeowners liability, landlord coverage, motorcycles, watercraft, and other underlying policies to make sure the limits work together.