The Retirement Corporation of America

Do You Need Umbrella Liability Coverage?

UMBRELLA LIABILITY POLICIES give you protection in case you're sued over and above what you have through your homeowner's policy and your auto insurance policy.
They aren't just for the wealthy. If you don't have enough liability coverage to pay a court judgment against you, the person suing you can go after your home, your car, your investments or any other assets you have to get the money.

Umbrella policies typically cover damage or injuries that you or anyone else in your family, including your children's pets, may cause. This kind of coverage takes over after you've exhausted the liability insurance you have on your home and your car. For example, if your homeowner's policy only includes $100,000 of liability coverage, an umbrella policy would kick in after that, up to the face value of the umbrella.

You can buy an umbrella policy that gives you $1 million or more of coverage for a few hundred dollars or less a year. Deductibles range from $250 to $1,000.

Some insurance companies won't sell you an umbrella policy unless you also have your homeowner's and auto liability coverage with them or require you to purchase a specified amount of homeowner's and auto liability insurance.

An umbrella policy also covers personal injury to you or your family, something most homeowner's coverage doesn't include. Personal injury covers much more than it sounds like—everything from false arrest to eviction.

Umbrella Policy Exclusions

As with any other kind of insurance, there are things an umbrella typically doesn't cover. For example, you have to buy business liability insurance to protect you against lawsuits if you own your own company. A standard umbrella policy also doesn't cover punitive damages a jury may award someone who sues you. These are damages over and above the actual monetary losses the other party claims to have suffered.

Insurance Privacy Issues

It's a good thing to ask your employer and your insurance companies if they share your medical records with one another. In many cases, the answer will be yes. If you've ever gotten insurance from your employer or applied for individual life, health or disability insurance on your own, your medical records are probably in the Medical Information Bureau (MIB). This is a Boston-based company that provides comprehensive information to about 600 life insurance companies who may also offer health and/or disability coverage. The MIB has been around since 1902, but many people don't know it exists. It currently contains records on about 16 million individuals.

The idea behind the MIB is to combat insurance fraud by giving insurers a way to double-check information people put down on their applications when they go to buy insurance.

For example, a woman with a pre-existing condition such as rheumatoid arthritis may be afraid that mentioning it on her insurance application would cause the company to turn her down. But the company may find out this information anyway by requesting her records from the MIB.

Hospitals also keep records on patients who have been treated there. Chances are they will also send that information to the MIB. Many pharmacies also put your records into the MIB database.

You want to be sure that your own MIB records are accurate. The company estimates that about 3% of its records contain mistakes.

The MIB works in much the same way as a credit bureau. Under the Fair Credit Reporting Act, you have the right to see and correct all the information the three credit bureaus have on you. If your state has its own laws regarding the confidentiality of medical records, the MIB must also comply with them.

You can request a copy of your MIB file by visiting its website (www.mib.com).

The cost of a copy is $8.50 unless you've been denied insurance coverage because of your MIB record. You should get back a response with 30 days.

You can also get a copy of your MIB file by calling 781-751-6003 or by writing to MIB, Inc., 160 University Avenue, Westwood, MA 02090.