Insurance companies and their agents are promoting sales of extra liability insurance to individual customers, touting its relatively low price and availability. But there is a catch or two.
People buy the extra liability insurance, often called "personal umbrellas," to avoid losing their savings, investments, property, and other assets if they are sued. Umbrellas usually cover $1 million to $5 million of claims - $1 million the most common amount bought.But many of the people who need it most find it hard to get because insurers are wary of their occupations. Professional politicians and writers, for instance.
And hard-to-insure customers often have to pay at least $500 a year - four times as much as the average consumer.
In addition, most companies require a consumer to buy auto or homeowners' insurance from them - or both - before they will sell additional liability coverage.
The policies help people who are sued for reasons not related to their business pursuits. A malpractice suit against a surgeon, for example, would not fall under the personal umbrella. Umbrellas start paying for defense costs and lawsuit settlements or awards when the limited liability coverage in their auto or homeowners' policies is exhausted.
It is standard practice now for agents to sell umbrellas along with homeowners' insurance, and people are buying them because "people are terrified. They read the papers and they hear about these enormous suits," said Rene Liegeot, owner of Community Insurance Inc. in New Britain, Conn.
Customers "listen now a little bit more than they used to" when the L.W. Button & Son Inc. agency in Rocky Hill, Conn., suggests purchase of an umbrella, said Susan C. Button, a principal. Because people are more aware of lawsuits and court awards, "there's a little more curiosity factor," she said.
The Insurance Information Institute, an industry-backed public relations organization, recently launched a promotion of umbrellas. The institute had no data on how profitable the business is, and individual companies say that the line is either "a wash" or profitable.
"I would encourage people to consider it," said Robert Hunter, owner of an umbrella policy and president of the Virginia-based National Insurance Consumer Organization. "It's a good way to give yourself a lot of protection for a very minimal amount of money," said Hunter, a critic of the insurance industry.
Hunter said that he pays about $135 a year for his policy. Nationally, umbrellas typically cost $100 to $125 a year for $1 million of coverage for a one-home, two-car and no-other-frills family. Add a boat, a second home, or more cars and you will pay more.
If insurers believe your job makes you a more likely target for lawsuits, most of them won't sell you an umbrella at all. Your agent then will have to go through a broker, who can usually find a specialty insurer, and the prices start around $500 a year.
Some mainstream insurers such as Great American Insurance Co. of Cincinnati and Middlesex Mutual Assurance Co. in Middletown, Conn., list occupations that make people ineligible for their umbrellas: entertainers, professional athletes, newspaper and magazine writers, broadcasters and labor leaders among them.
Insurers also exclude professional politicians, and some reject or hesitate over law enforcement officials, newspaper editors and publishers, other authors, judges and clergy.
While some companies stand firm on occupations that they will reject, others say that they will consider them on a case-by-case basis, deciding whether the risk is low enough to accept.
"If you have a good client who's been with the company, certainly you can talk to them (underwriters). It's not a flat rejection," said Robert J. Dallesander, a Windsor agent and president of the Professional Insurance Agents of Connecticut Inc.
Aetna Life & Casualty Co., for instance, is wary of entertainers and high-profile business executives, but "we won't say we won't cover this at all," said Steven D. Marks, assistant vice president, Personal Financial Security Division. "It's generally not that black and white."
Great American, for example, says that it will consider clergy, judges and school board members. It advises agents that among the prohibited are "insureds whose activities and reputation, personal or professional, arouse strong antipathies."
The Hartford Insurance Group says that it writes umbrella policies on well-known people and others that other companies would reject, including politicians and journalists.
Though companies shy away from insuring people in the limelight, consumer advocate Hunter had no problem buying an umbrella, though he is nationally known for blasting the industry. He listed his occupation on the application as "actuary" since that is how he makes his living and says that he is not paid a salary by the consumer organization.