Making the Case for Umbrella Policies

It goes without saying that one of the best ways to deal with a rainstorm is to carry an umbrella. Well, the same can be said about weathering any kind of “storm,” natural or manmade. Finding umbrella insurance leads can be difficult but employing a convincing cross-selling technique will offer you all the insurance leads you'll need to sell these policies.

If your clients don’t have an umbrella policy, they need one and as their agent it is your job to educate them on the reasons why. A good place to start is with a little background on the coverage.

Umbrella Policy 101

Umbrella policies, initially called "broad form third-party excess liability" but shortened down to umbrella because it was easier shorthand to use in cables, are worthwhile insurance tools as they provide the policyholder with another layer of protection. A typical umbrella liability policy provides the following protections, up to the coverage limits specified in the policy, typically $1 million:

  • Claims of bodily injuries or property damage caused by you, members of your household, or hazards on your property, for which you are found legally liable.
  • Incidents that occur on or off your property.
  • Auto-related liabilities going beyond your basic auto policy.
  • Non-business-related personal injury claims, such as slander, libel, wrongful eviction and false arrest.
  • Legal defense costs for a covered loss, including lawyers' fees and associated court costs.

The coverage will kick in once the policyholder’s other insurance coverage has been exhausted.

A Brief History of Umbrella Insurance

Umbrella policies have been around since the late 1940s. Lloyd’s of London issued the first policy to the Gulf Oil Company in 1949. The first U.S. companies to begin offering umbrellas included the Indemnity Insurance Company of North America (INA) in June 1957; Continental Casualty Company (CNA) in 1958; Employers Surplus Lines Insurance Company in January 1959; and The Travelers Insurance Company in September 1959.

There was once a widespread perception that clients didn’t need umbrella policies unless they were very affluent. However, these policies are also a good idea for anyone who is vulnerable to a loss: rental property owners, parents with young children and teenagers starting to drive, the owners of luxury cars and those with large mortgage payments, just to name a few of the likely candidates.

Helping Client See the Need for Coverage

One of the biggest roadblocks to selling these policies is the extra cost. During these tough economic times, many people are trying to trim their budgets wherever possible; not spend more on insurance. However, when you educate the consumer about what they may leave themselves exposed to financially without an umbrella plan, many will find themselves very open to a cost-manageable solution.

So, how do you identify clients who need an umbrella policy, and how do you convince them of the need? The following are a few simple, yet effective, strategies:

  1. Work the umbrella sale into the regular sales process for your entire sales force. Your team should ask every new client if they want an umbrella policy.

  2. Provide real world examples for situations that will impact your clients: having a teenage driver in the family, owning a business, being an avid thrill seeker, etc.  Point out to the client or prospect that if they have a great deal of liability or risk, an umbrella policy would give them peace of mind.

  3. Look through your existing client base, particularly for customers carrying higher limits on their automotive and homeowners/renters policies. Reach out to these customers, explaining how an umbrella policy may benefit them.

  4. Identify current clients that lease their property. Landlords are often surprised to find themselves entangled in disputes started by their tenants. For example: a tenant whose dog bites someone causing injury may find himself or herself in “hot water” legally. If the tenant does not have good insurance, however, the frustrated litigant may seek damages directly from the property owner. Pointing this out to landlords gives them the incentive to protect themselves.

  5. If your agency is located in or near an affluent area, you will want to educate your neighborhood about the need for an umbrella policy. Do this by regularly writing articles for the local community newspaper or magazine. Be sure to also dedicate some space on your company website and in your newsletter to the topic. And don’t overlook the power of direct mail. Purchasing a mailing list of people who live in some of the more affluent zip codes in your region could yield some gold nuggets for you.

When talking to a client or prospect about an umbrella policy, be sure to point out that if the unthinkable happens, they will appreciate having spent a few extra dollars for the peace of mind that comes with knowing they have adequate protection.

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    Jennie Baker August 22, 2013

    I find many clients are not even aware of this coverage. For those that are, if you can overcome the notion that umbrella policies are for the wealthy only, then yes umbrella insurance is a great sell.