Auto insurance and umbrella liability

What is adequate coverage for car insurance and when does the line get crossed for over- coverage? Our State Farm agent is trying to get us to buy a umbrella policy and then it has to have 250/500/100 in order to have the umbrella policy ! It seems to be never-ending. We are paying SF thousands of dollars every year in insurance for car, home, now umbrella,etc.
And, two years ago, when we had water in our basement, SM said our policy did not cover water back up ! Any advice or resource info?

Terry Says:  Ha – I understand your frustration with insurance.  BUT, it all depends on how much exposure you have when it comes to considering “umbrella” insurance.  The actual umbrella policy is very inexpensive, and is sold in million dollar chunks.  But to make sure that the insurance company isn’t too exposed, they demand you have appropriate underlying coverage — thus the limits your agent required.

So keep the two things separate.  There’s a lot to complain about in the way that insurance companies pay YOU!  (In fact, one company is running great ads about how frustrating it is when you have an accident and the company won’t pay to replace the full car!)  And yes, there are always caveats in the policy.  Most people don’t know that basement flooding must be covered under a separate Federal flood insurance program.  Similarly, things like “replacement cost” vs current value will trip you up when it come to repayments.  And “wind driven” vs “water penetration” are fine distinctions when you have a mess — but could make all the difference in your coverages.   So always ask your agent about every worst thing you can imagine –and make sure they are all covered.

But the “limits” of your insurance are a separate topic.  In our litigious society if you are a public figure or are assumed to have “deep pockets,” you are more of a target — and that’s something you really want to have covered.  (Also note that the coverage on an umbrella policy likely does not extend to your business dealings.  If you are exposed there you’ll need other types of insurance such as malpractice, libel, etc.) Just ask your agent about your worst nightmares.  The agent will be only too delighted to sell you coverage — at a price!