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 26 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