What is an umbrella policy or an excess liability insurance policy, and should motorcycle owners buy one? And which type of umbrella policy should you buy to protect you in case you are involved in a motorcycle accident in California?
The terms “umbrella policy” and “excess liability policy” are interchangeable. An umbrella or excess policy is an insurance policy providing liability coverage and protection over and above your underlying bodily injury liability policy. Usually, umbrella policies will cover your house, your car, your truck, and your motorcycle, as long as you have adequate underlying policy limits on each of these things you own. The insurance companies that sell excess coverage have varying requirements as to what minimum underlying limits are required before the umbrella policy kicks in; however, usually, the minimum underlying limits are $250,000 per person.
Both bodily injury and all umbrella policies protect your assets if you have harmed someone through your own unreasonable conduct (negligence). If you are riding your motorcycle and you hit a pedestrian in the crosswalk, seriously injuring them, they could sue you and your personal assets could be at risk. If you are involved in a motorcycle crash while you have a passenger on the back, and that passenger is injured, they could sue you also. Let’s say you have a good motorcycle liability policy with $250,000 in liability limits; however, the pedestrian or your passenger has suffered injuries that would reasonably be evaluated at $500,000. If you have an umbrella policy, your underlying policy should pay the policy limits, and your umbrella policy should kick in from there. If you had no excess coverage, that pedestrian might be looking to your personal assets to satisfy any judgment they may win against you.
Umbrella policies are fairly cheap. I recommend a minimum of $1,000,000 worth of excess coverage. Since most umbrella or excess policies require that you have a minimum of $250,000 of underlying coverage, if you only had a $100,000 underlying policy, you would have to come up with another $150,000 out of your pocket before the umbrella kicked in. So, it is important to make sure that there is no gap if you are buying an umbrella policy.
The following is what I believe to be the most important information in this article: Not all umbrella policies are alike. All umbrella or excess policies cover your liability over the limits of your underlying policy and up to your excess policy limits. However, only some umbrella or excess policies provide excess coverage for uninsured and underinsured claims. To put it another way, all umbrellas should help to protect your assets, but only some umbrella policies cover YOU if YOU are injured by another party. If you are harmed by a hit and run driver, the Uninsured Motorist provisions of your underlying policy will provide coverage only up to the limits of that underlying policy. However, if you have suffered more serious personal injuries, will your umbrella policy provide additional coverage? Only if you have purchased an umbrella policy that also covers you for Uninsured Motorist and Underinsured Motorist Coverage. And, if the offending driver had some insurance, but did not have limits high enough to cover your medical bills and wage loss and your pain and suffering, then you have to seek additional recovery from your umbrella or excess coverage.
As a personal injury lawyer representing clients who have suffered serious and catastrophic injuries, I can work hard to maximize my client’s recovery; however, I cannot change the insurance policy that my client purchased before the accident happened. This means that sometimes, even though I have evidence sufficient prove a very high value for my client’s case, I may not be able to actually collect the full value of their case because there are not high enough policy limits. However, if my clients have purchased high uninsured and underinsured limits and also have purchased an excess policy with uninsured/underinsured coverage, the difference I can make in my client’s life will be much more meaningful.
To recap: I think that all California motorcycle riders are more vulnerable to suffering far more serious personal injuries in the event of a motorcycle accident, and so California motorcycle owners should purchase as high underlying liability and uninsured/underinsured limits as they can afford. Also, California motorcycle owners should purchase an umbrella or excess policy that includes uninsured and underinsured coverage in case the motorcycle rider suffers personal injuries and the offending driver doesn’t have enough liability coverage.
Please note that I am an attorney who has dedicated his life to representing clients who have suffered serious injuries through the wrongful conduct of others, and I do not sell insurance, and I do not own stock in any insurance companies.
Claude A. Wyle is a partner of Choulos Choulos, and Wyle, a San Francisco based law firm dedicated to representing clients who have been injured by the wrongful conduct of individuals, corporations, public entities, and businesses. Mr. Wyle also frequently sits as a Judge Pro Tem for the city and county of San Francisco.