My umbrella insurance has been canceled. Can they do this?


Q. My two cars were destroyed by Hurricane Ida. My insurance company wants to cancel my umbrella insurance policy because now I no longer have a car. I have already paid the policy for the year. Can they do this?

– Disappointed

A. An important part of a good financial plan is managing risk with insurance, so it’s good to think about it.

Let’s see how it works.

An umbrella insurance policy, also known as top-up liability coverage, covers you for liability beyond what your underlying insurance like auto, boat, and home or tenant insurance coverage, said Deva Panambur, paid planner at Sarsi, LLC in West New York and assistant professor of personal finance at Montclair State University.

“Liability is a claim resulting from injury and damage to other people or property due to your fault,” he said. “Umbrella insurance policies are recommended for people with significant equity and are available at reasonable prices. “

Panambur said that most umbrella insurance policies will require you to have a specified amount of coverage in your underlying insurance policies.

He gave this example: A large insurance company requires you to have $ 300,000 in bodily injury liability and $ 100,000 in property damage liability in your auto insurance. They require that you have $ 300,000 liability coverage in your home insurance and $ 100,000 liability coverage in your boat insurance policy if you own a boat. Other insurance companies have similar requirements.

For an umbrella insurance policy to work, you must have underlying insurance coverage, he said.

However, he said, every insurance company is different and each has its own guidelines.

“Some insurance companies offer you umbrella policies if you only have home insurance or tenant insurance, ”he said. “If your umbrella insurance has been canceled because you don’t own a car and don’t have auto insurance, call them and ask if they are willing to issue you a policy based on your home or tenant insurance. . “

You may also want to consider purchasing auto insurance for non-owners, he said, noting that it’s generally cheaper than regular auto insurance because it usually doesn’t have collision or comprehensive insurance.

“You can also shop around to see if another insurance company is willing to write you a framework insurance policy without a car and auto insurance policy,” he said. “If you cancel your current umbrella insurance policy, you should be able to get reimbursement for the remaining term of your insurance. “

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Karin Price Mueller writes on Bamboo column for NJ Advance Media and is the founder of Follow NJMoneyHelp on Twitter @NJMoneyHelp. Find NJMoneyHelp on Facebook. Register for‘s weekly electronic newsletter.


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