Falling Waters State Park Campground, Chipley, FL, 11/05

Umbrella Liability Insurance For Full-Timers

On this page we will try to explain umbrella liability insurance and provide some guidance for whether or not you need it as a full-time RVer.

What is an Umbrella Policy?

An umbrella policy is an insurance policy that covers personal liability not covered by other types of insurance. It does this in two ways.

First, an umbrella policy kicks in when the liability limits of an auto, RV, or homeowners insurance policy are exhausted. For example, if you injure someone on the road and the injuries exceed the maximum amount that your auto or motorhome policy will pay, any additional liability will be paid by the umbrella policy.

Second, an umbrella policy covers injuries that are not covered or are excluded by your auto, RV, or homeowners policy. For example, say I were to write something about someone on this website or in our journal that was not true and caused harm to an individual. I could be personally liable for such an injury, but that type of injury would not be covered by any other insurance policy we have. Our "umbrella" policy protects us from the liability not deflected by our basic policies.

Umbrella Policy Myths

Myth #1 - Umbrella Policies Are Just For The Wealthy
This is simply not true anymore. Every day people are suing over the most trivial issues and juries are awarding outrageous damages. Friends are suing friends and family members are suing each other. People are looking at lawsuits as lotteries and everyone is a target.

With contingency fee lawsuits where the plaintiff doesn't pay the attorney unless he or she wins or settles, there is little risk to sue. There are severe sanctions possible against attorneys that file frivolous suits, but it's relatively easy to get past the "frivolous" standard.

Once a suit is filed, there are two things working against the defendent. First, lawsuits are expensive to defend and some people are forced into settlements even when they have done nothing wrong.

Second, juries are fickle and emotional and do not always follow the legal instructions given to them. You say that can be fixed by appealing? Well, juries determine the facts of a case, and appellate courts cannot change what the jury finds to be the facts. Appellate courts only determine if there was an incorrect application of law by the lower court (meaning the judge). Therefore, juries make clearly wrong decisions all the time that cannot be corrected.

Linda has been a jury foreman, and we both have seen the yahoos that end up on juries. We never want to be a defendent in any kind of jury trial because they can go either way.

Myth #2 - Umbrella Policies Are Expensive
Almost anyone can get an umbrella policy. The cost of $1 Million in coverage is in the $100 - $300 per year range. And each million in coverage after that is cheaper.

All that is required for low premium umbrella policies is that your other liability policies - auto, RV, homeowners - have basic liability amounts in the $250,000 - $300,000 range. That way the umbrella policy insurance company knows that the majority of the time, other insurance will take care of any claim. Low premiums come from low risk to the insurance company.

Myth #3 - Umbrella Policies Are Hard To Coordinate With Other Policies
All insurance companies can be a pain to deal with, but coordination of which policy is covering what is not a real problem.

It gets even easier when the umbrella policy is issued by the same insurance company or agent as your other policies.

Do You Need An Umbrella Policy?

We got an umbrella policy because it was relatively inexpensive at $128 annually for $1 Million in coverage. We don't have that much in assets, so was it really necessary?

For anyone with significant assets to protect, I would recommend an umbrella policy. Just understand that even umbrella insurance coverage in an amount to cover your assets may not be enough. Like any insurance policy there are certain exclusions, but more importantly anyone can find themselves in a liability situation that far exceeds their total assets.

Now let's consider that for a moment. Damages are awarded by juries in amounts that have no relation to assets or insurance. And punitive damages are usually not covered by umbrella policies.

Practically, however, attorneys know what assets and insurance defendents have through discovery. Generally, they will not seek more than the insurance coverage.

So a dilemma is created. Does one make getting sued more likely by having an umbrella policy or make the lawsuit for more money than it would have been without the insurance? Possibly. But what if that is not the case? What if assets are the target? Three seconds of dozing off at the wheel could wipe out everything you own.

Some say take the $128 premium and bump up your other policy limits to cover your assets. Some say to make yourself virtually "judgment proof" by having no assets other than your rig set-up and just enough insurance to cover that under the "you can't get blood from a turnip" theory.

So do you need an umbrella policy?
Weigh the premium against the coverage, your assets, your risk of getting sued, what would happen if you got sued, and your other coverages. Like the other insurance, you have to do the work and make the decision.

We originally determined that we did not have enough assets to justify an umbrella policy, but quickly changed our mind when we found out $1 Million in coverage was only $128 per year. It gives us a little more peace of mind in case we do something stupid, or we get into a traffic accident that we just cannot avoid with the amount of weight we are hauling.

Hope that discussion helped.