Risk & Business Magazine JGS Insurance Risk & Business Magazine Spring 2018 | Page 26

UMBRELLA CLAIMS
BY: KEN HAGER, AAI, CIRMS
PRINCIPAL, JGS INSURANCE
Atypical Umbrella Claims
Do You Have Enough "Sleep Insurance"?
I
am often asked what is the proper
insurance limit a company should
purchase: $1,000,000? $5,000,000?
$10,000,000? Or perhaps no
umbrella at all? What do you think
a proper limit should be? There is no easy
way to answer that question, and one
size definitely doesn’t fit all. Think about
this question, pick a number, and write
it down now before you read the rest of
this article. To help you make that very
personal decision, I thought it appropriate
to discuss what an umbrella is and what
it isn’t and share some unusual claims
that we have experienced through our
umbrella program.
An umbrella in simplest terms refers to
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additional limits (known as excess limits)
of liability insurance to protect you from
catastrophic claims. An umbrella will
typically afford you higher liability limits
over your primary liability policies, also
known as your underlying schedule. It
is important that you review all of your
liability policies, which may include
general liability, automobile liability,
foreign liability, professional liability,
directors and officers’ liability, employer’s
liability, employment practices liability,
and perhaps liquor liability depending on
your business exposures. A general rule of
thumb is when purchasing an umbrella,
you list any and all primary liability
policies on the “underlying schedule.”
If you have a policy, say directors and
officers, and it isn’t listed on the umbrella
liability schedule, then you will find
yourself with a gap or no additional
liability limits than the primary policy.
Why is this important? As I explain to
my clients, an umbrella policy is basically
“sleep insurance,” peace of mind knowing
that in the event of a catastrophe, you
have enough dollars to pay against any
claims rendered. Most people understand
that a bad auto accident can eat through a
million dollars of automobile limits pretty
quickly, especially if there are fatalities.
Many of the claims we see are due to
this very issue and is one of the driving
(pardon the pun) forces of claims against