How Personal Umbrella Insurance Works

Personal umbrella starts where underlying limits end

A personal umbrella policy is excess liability coverage that begins paying once the liability limit on the auto, home or landlord policy beneath it is exhausted.

A personal umbrella does nothing on its own. The personal umbrella form attaches over scheduled underlying policies, so every vehicle, home and rental property in the household belongs on that schedule at the underlying limits the umbrella insurer requires.

A personal umbrella covers liability to other people and nothing else. Damage to the policyholder’s own house, vehicle or belongings stays with the property coverage on the policies underneath, where the personal umbrella form leaves it.

How a personal umbrella attaches to the policies underneath

A personal umbrella attaches at a stated point above the underlying policies, which is why an umbrella insurer reads those policies before issuing anything.

Three rules follow from the attachment:

• Each car, house, rental unit, boat and recreational vehicle in the household appears on the schedule at the required limit
• An underlying policy allowed to lapse does not push the loss upward; the personal umbrella pays only above the required limit, so the household owes that limit itself
• A household member who moves in or out, and a newly licensed driver, change the schedule and have to be reported

Texas Transportation Code §601.072 sets the state’s minimum auto liability limits, and an umbrella insurer requires underlying limits above that statutory floor.

What the personal umbrella form adds

A personal umbrella adds height and width at once: more liability limit, and a handful of liability causes the underlying policies leave out.

What a personal umbrella form typically adds:

• An excess limit for bodily injury and property damage, above the scheduled auto, home and landlord liability
• Personal injury wrongs the form names, such as libel, slander and wrongful detention
• Defense costs, which many forms pay in addition to the limit
• Claims brought over an incident abroad, when the form reaches that far
• Liability from unpaid board service for an association or a charity, when the form names it

Width is the part owners overlook. The added causes differ from one form to the next, so the form is the document to read rather than the limit.

What a personal umbrella does not cover

A personal umbrella covers personal liability, and both of those words do work in the exclusions.

Outside a personal umbrella form:

• Repairs to the insured’s own dwelling, vehicle or possessions, which sit with property coverage
• Medical bills for the insured and resident family members
• Income-producing work, professional advice and licensed services
• Operating rental property past the limits the form sets
• Deliberate acts and acts that are a crime
• Liability assumed in a written contract
• Injury to a domestic employee, which workers compensation rules answer

A side business run out of a Texas house is the common surprise. Commercial umbrella and excess liability sit on a different form and are handled on the business side of the agency.

Which policy answers first

A personal umbrella is second in line by design, so every claim starts with the policy that is first.

The claim	Which policy answers first	Where a personal umbrella can sit
At-fault crash injuring another driver	Personal auto liability	Above the auto liability limit
Guest or a dog bite at the house	Homeowners personal liability	Above the home liability limit
Tenant’s guest injured at a rental	Landlord or dwelling fire liability	Above that policy’s limit, where scheduled
A libel or slander claim	Often neither underlying policy	On the form, where it names personal injury
Damage to the policyholder’s own car	Auto comprehensive or collision	Nowhere; liability coverage only

The TDI Home insurance guide names personal liability and medical payments to a guest as the liability halves of a homeowners policy.

Where a personal umbrella and a commercial umbrella separate

A personal umbrella answers household liability and a commercial umbrella answers liability arising out of a business. The question is which side an activity belongs to.

Questions that place an exposure on one side or the other:

• Whether the activity produces income and is reported as a business
• Whether the work involves professional advice or a licensed service
• Whether employees, subcontractors or work vehicles take part in it
• Whether a lease or a client contract requires coverage naming a third party
• Whether rental property is run as an operation with staff

An exposure on the business side is not repaired by raising a personal limit. Commercial excess liability attaches over commercial policies instead, and a judgment above a household limit is collected from the household.

What to have ready before you ask an agent

Bring the declarations pages for the policies that would sit underneath. A personal umbrella is quoted off that schedule rather than off the house.

Have these in front of you:

• The auto declarations page, with the liability limits and every listed driver
• The home, condo or renters declarations page, with the personal liability limit
• Declarations pages for landlord and dwelling fire policies
• Every licensed driver, including anyone who moved in recently
• Watercraft, recreational vehicles and trailers, with year and length
• Liability claim history across the household, with dates and causes

Aulona Insurance Group places the coverage this question is about: Personal Umbrella Insurance in Texas. Luka Cenaj reads the underlying schedule on a recorded call before a limit is chosen.

Where Aulona Insurance Group is not the right fit

A personal umbrella depends on the policies beneath it, so an exposure the agency cannot write below is one it cannot answer from above.

Outside what the agency places on a personal umbrella:

• An umbrella above a vehicle the agency cannot write beneath it, meaning a vehicle at $150,000 MSRP or more, a vehicle built before 1981, a recreational vehicle and a heavy truck
• Any risk that has to go to surplus lines, which Aulona Insurance Group cannot place in-house
• Life, health, Medicare and disability, which the agency does not write at all

A household needing an umbrella above a vehicle on that list needs a market this agency does not hold, and the call says that instead of issuing a policy with a gap beneath it. Texas Home Insurance names the property coverage the agency does place.