Uninsured Underinsured Motorist Coverage On an Umbrella Policy

Uninsured Underinsured Motorist Coverage On an Umbrella Policy

The Umbrella Insurance Ripoff

A young doctor came into my office today for serious injuries which he suffered when he and his family were struck head-on by a drunk driver.  He had graduated from medical school a few years back, as had his wife. He had his own neurology practice which he had started in 2010, and his wife worked as a family practice doctor. They were just starting their own family and had little ones, an eight-month-old and a two-year-old.

The injuries were severe. Both he and his wife suffered serious fractures and internal injuries. They were hospitalized for over 21 days. Luckily, their children came out of this one with relatively minor injuries.

Case Scenario

Stay with me a minute as I’m setting the stage.

  • The neurologist earns about 250K a year and his wife around 110K. Unfortunately, it will be months before either of them can return to work full-time.
  • Medical bills to date are estimated at over $350,000, and their combined loss of earnings will total minimally 100K until they return to work.
  • They had Blue Cross health insurance which paid the lion’s share of their medical bills but came to me to see if there was a way to proceed against the drunk driver.
  • They felt I’d be able to help them as they had the foresight to purchase a large ($1 million) umbrella policy on top of their $100,000/$300,000 underinsured motorist policy.

A little research on our databases quickly revealed that the drunk driver was working as a line cook and renting a house in South Sacramento – in other words, he had no significant assets.  He had minimal auto insurance.  They didn’t need me to get the 15K insurance of the drunk driver or even the additional 85K of their own insurance company. In a case this severe, almost all insurers will pay immediately because the bills were so high and the injuries so severe.

I informed them that even a very experienced personal injury lawyer such as myself really couldn’t help them because they could easily obtain the drunk’s policy just by asking.  Their own underinsured motorist carrier would pay immediately as well so there was no need for them to pay me a fee when they could get that money just by asking. Their medical bills and wage loss to date far exceeded the assets and insurance of the defendant.

“But how about our one million umbrella policy?”, the neurologist said. “We can go after that! That’s why I paid for it!”

Sadly, I needed to explain that the umbrella policy they paid for was useless in this situation.

“But my agent told me this would totally protect us!” both clients exclaimed.

The agent was wrong, and it’s a serious error I see time after time.  Many agents as well as most insured’s misunderstand what ordinary umbrella insurance protects against.

Here’s the Scoop

If you have a $100,000 /$300,000 auto insurance policy and a one million dollar umbrella, you or anyone driving your car with your permission is covered if they are negligent and hurt someone else in an accident.  If an injured party sues you, your auto insurance will pay up to $100,000 for a single injury and up to a maximum of $300,000 total if several people in the other car have serious injuries.  And if the other party has injuries more than $100,000, there are another one million dollars available under the umbrella to pay to the injured party or parties in the other vehicle.  So in total, you are protected up to $1,100,000 for severe injuries to one person or $1,300,000 protection for damages to all other people who may have been injured.

In other words, the auto policy and the umbrella protect you if sued because you are negligent.  However,  the ordinary umbrella policy does not protect you if you are if you or your family are injured by the acts of another.

There is a good way to protect you and your family if you are seriously injured by someone else’s negligence, but you have to know the magic words because most insurance agents don’t.

Liability and Uninsured/Underinsured Motorist Policy

I suggest that every person or family earning over $90,000 yearly purchase a $250,000/$500,000 liability and uninsured/underinsured motorist policy from their auto insurance. These are common limits at State Farm, Allstate, CSAA and most other into insurers.

Additionally, and here are the “magic words,” you want to buy an umbrella insurance policy for uninsured and underinsured coverage. This type of insurance not only protects your assets if you are negligent but protects you and your family up to the combined limits of your auto uninsured motorist coverage plus the underinsured umbrella limits if someone else is careless and injured you or your family.

If the doctors I spoke with had purchased the correct umbrella policy, there would have been $1,250,000 to pay for their damages including past and potential future lost wages.

Again, I suggest every family making a good living purchase an umbrella insurance policy for uninsured and underinsured coverage. The protection this type of policy provides is excellent, but you may have to look far and wide to find an insurance agency that sells this or even knows that this policy exists.

The cost of such policy is modest, little more than the standard umbrella policy. The two companies that I know of that sell these policies are US Liability Insurance and American Alternative Insurance (AAIC).

Locally, an insurance agency familiar with this type of umbrella policy is the Leland Agency. Their telephone number is 916-428-1309.

Sacramento Personal Injury Lawyers

I’m Ed Smith, a Sacramento Personal Injury Lawyer since 1982 and I urge you and your family to purchase the correct auto and insurance to protect you fully. Call me anytime at 916-921-6400 in Sacramento or 800-404-5400 elsewhere for free, friendly advice.

You can find my firm’s ratings on:

I handle serious auto, trucking, and motorcycle accident cases throughout the state of California.

I am a proud member of the Million Dollar Advocates.

See our prior Verdicts and Settlements.

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Editor’s Note: This page has been updated for accuracy and relevancy. [cha 8.20.18]