The personal umbrella policy (DL 98 01 06 98) may be used as a stand-alone form, or in combination with homeowners and auto forms to cover most insureds' liability needs. It is a true umbrella in that it provides excess limits following underlying coverage forms, and also provides coverage for situations excluded or not addressed by underlying forms.

The umbrella, as does the personal auto policy (PAP), states that a private passenger type auto, pickup, or van will be considered to be owned by a person if leased under a written agreement with that person for a continuous period of at least six months. However, the definition of an “auto” in the umbrella is much broader than in the PAP. An “auto” means a private passenger motor vehicle, motorcycle, moped, motor home, or a trailer, farm wagon or farm implement while towed by a private passenger motor vehicle. This is in keeping with the umbrella's use as excess liability for a variety of motorized vehicles. Many companies permit endorsement of a motorcycle or moped onto the auto policy; others write separate motorcycle policies. Of course, if the umbrella insurer does not wish to cover a moped, for example, the vehicle may be excluded by endorsement.

Because the policy applies to an “occurrence” anywhere in the world, the umbrella form provides liability coverage for the named insured and “family members” while driving in, say, Europe. However, an insured contemplating this usage should be aware that the policy covers bodily injury and property damage only. There is no no-fault or medical payments coverage.

It is important to note that, although the umbrella does not provide any no-fault coverage, it does provide uninsured motorists coverage or underinsured motorist coverage so long as the policy is endorsed to do so. (In some states, an umbrella insurer is required by statute to offer uninsured or underinsured motorist coverage.)

The umbrella excludes coverage for property damage to property rented to, occupied or used by, or in the care, custody or control of the insured, but only to the extent that the insured is obligated by contract to provide insurance for such property. Note that the exclusion does not state that insurance should be in place, but only that the insured is obligated by contract to provide such insurance. Therefore, if an insured rents an auto, and the rental agreement states that the insured must provide insurance for physical damage to the rental vehicle, the umbrella will not apply regardless of whether or not the insured has obtained such insurance. (Remember that the physical damage section, coverage D, of the auto policy applies to a non-owned auto.) However, if the insured is not obligated by contract to provide insurance on property in his or her care, custody, or control, the umbrella provides coverage.

As stated above, definitions contained in the umbrella are broad. “Family member” includes a resident relative, a ward or foster child, or a person under age 21 in the care of either the named insured, or an insured over the age of 21. While there is no coverage for a person using an auto or recreational motor vehicle without a reasonable belief that that person is entitled to do so, the exclusion of coverage does not apply to a “family member” using a covered auto or recreational motor vehicle. Therefore, if  the insured's daughter “appropriates” the car keys from her mother's handbag and drives off in the family auto, the daughter is covered.

The umbrella form provides liability for the ownership, maintenance, or use of a covered “recreational motor vehicle,” which means an all-terrain vehicle, dune buggy, golf cart, snowmobile, or other motorized land conveyance designed for recreational use off public roads. Golf carts and dune buggies are frequently endorsed onto the auto policy; the umbrella thus provides excess liability over the underlying limits of insurance.

The umbrella form provides coverage not addressed in the personal auto policy. Although the umbrella excludes bodily injury or property damage arising out of an act that is expected or intended by an insured to cause the injury or damage, bodily injury or property damage resulting from the use of reasonable force by an insured to prevent or eliminate danger in the operation of an auto is excepted from this exclusion.

For a complete discussion of the form, and a listing of endorsements that can be used to modify coverage, see Personal Umbrella Policy. Print subscribers will find this discussion beginning on page B.1 in the Dwellings section.