You might want to consider taking on an excess liability ("umbrella") policy, and using the same company for more than one policy. Image: William Potter/Shutterstock.com
By: FEDweek StaffMany federal employees carry professional liability insurance coverage, which can help shield them against legal costs related to suits brought against them due to their official actions. Managers and supervisors, plus law enforcement officers, in particular commonly carry such coverage.
While retirees typically are no longer at risk of such suits—except possibly for an action taken while still working and for which a statute of limitations has not expired—another form of liability insurance can become all the more important for estate protection.
Your homeowner’s and auto insurance policies probably include liability protection. However, those policies generally provide only $300,000 to $500,000 worth of coverage—not much in these days of huge awards for damages. You might want to consider taking on an excess liability (“umbrella”) policy that will take over if you incur damages beyond the limits of those policies. This could be a vital tool for protecting the assets you’ve built up over your life, and which you’ll need to live on for the rest of your life and want to pass on to your survivors as well.
Such coverage is relatively inexpensive, costing a few hundred dollars a year. However, if you want to buy an extremely large umbrella, most insurance companies will want to see financial statements to be sure you really need that much coverage.
Often, you’ll find that it pays to buy a package of home, auto and umbrella insurance. The lines may be blurred at times so it’s best to have the same company provide seamless coverage. Not only will you avoid gaps in coverage that way, you’ll likely get a discount on your premiums. In some cases, the same incident will affect your auto and your homeowners insurance—an item you normally keep at home might be stolen from your car, for example. If you have both policies from the same company, you may have to pay only one deductible instead of two.
Summary and added considerations:
How umbrellas work & sizing limits. Personal umbrellas commonly start at $1–$2 million and increase in $1M increments. Insurers usually require minimum underlying limits (e.g., $300k on homeowners and $250k/$500k or higher on auto). A practical sizing rule is to cover net worth plus exposed future income streams (e.g., taxable brokerage assets, home equity, rental equity).
What they cover. Beyond bodily injury and property damage, many umbrellas include personal-injury protections (e.g., libel/slander/defamation), worldwide coverage, and legal defense, which is often provided even if a claim is groundless (check whether defense costs are inside or outside policy limits). Some policies add uninsured/underinsured motorist umbrella coverage—valuable if you drive frequently.
Common exclusions. Umbrellas typically do not cover professional services or business pursuits, intentional acts, or certain watercraft and short-term rentals unless specifically endorsed. If you consult in retirement, volunteer on a nonprofit board, or own rental property, you may need E&O/Professional, D&O, or landlord liability coverage in addition to (or endorsed onto) your umbrella.
Coordination details to prevent gaps. Keep all named insureds consistent across policies, list all drivers, and confirm that each policy’s coverage territory, exclusions, and deductibles/self-insured retentions align. Ask your carrier whether a single-loss deductible applies when home and auto are both involved.
Shopping checklist. Verify required underlying limits, request quotes at multiple umbrella tiers (e.g., $1M, $2M, $5M), confirm defense-cost treatment and personal-injury coverage, and document any special exposures (boats, rentals, volunteer/board roles). Bundling usually lowers cost and simplifies claims handling.
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