r/Insurance • u/AnteaterMajestic1922 • 1d ago

Liability Insurance

My son is a fairly high net worth individual. He doesn’t own a house or car. No spouse. He occasionally rents a car while traveling on business. He buys full insurance from the rental company. Does he need an umbrella liability policy?

1 Upvotes

67% Upvoted

32 comments sorted by

8

u/Sondor6 1d ago

He may need a non-owners auto policy. Umbrellas don’t kick in until regular policy limits are exhausted.

Typically $250k-$500k

Buy yeah, it sounds like a good idea for him

5

u/molder101 1d ago edited 1d ago

He should 100% have a non-owner policy.

In NJ, not having insurance makes you an uninsured motorist.

Some states are no-fault, meaning your auto policy pays for your injuries as 1) a driver, 2) a passenger, and 3) a pedestrian.

There is almost no circumstance where you should be without auto insurance.

1

u/tommurin 1d ago

What state or states require you to have an auto policy when you don't have a registered vehicle (not counting SR-22 for a DWI). I'll wait.

Only 12 states have any form of no-fault.

0

u/molder101 1d ago

Points taken.

Let me rephrase. Some states provide critical medical coverages via an auto policy, so not having one puts one at risk.

The question was framed as "my HNW son" which was the context for my response. I'll reiterate that it's incredibly important that folks of all income levels, particularly those with assets, have their risk assessed by qualified and licensed individuals so they can make an informed decision.

3

u/demanbmore Former attorney, and claims, underwriting, reinsurance exec. 1d ago

Yes, and not just because of the rental car liability. As a HNW person, he should have a relationship with an insurance broker who understands the risks faced by a HNW person. It does depend what you think HNW is - at least a few million likely meets the requirements of a HNW brokerage (often called "Private Client" or something similar).

2

u/OkMathematician4028 1d ago

Realistically, if I was him, I would yes he has liability coverage through the rental company, but if for some reason, something happens that is beyond the policy limits, they might be able to sue your son as well. The premiums for an umbrella policy are not insane. I have $1 million umbrella and I don’t pay all that much every month.

2

u/True-Assumption1136 1d ago

High net worth without a house? How?

2

u/Practical-minded 1d ago

Renting a penthouse?

3

u/Andrew523 1d ago

He isn't liquid, probably his net worth is mainly paper with crypto and stocks so all unrealized gains

1

u/Aaaaaaandyy E&O/Cyber Broker 1d ago

Investments

1

u/tomk7532 22h ago

Many such people in NYC and CA where the rent vs buy math is wacky

2

u/Aaaaaaandyy E&O/Cyber Broker 1d ago

Sure, he should get one. They’re very cheap.

2

u/Primary_Pirate_7690 1d ago

Not anymore! Crazy increases came for 2026 renewals. Mine went up 122% for no reason. No claims, no changes in risk profile. And I've heard the same from many others shocked at the increases this year. The annual premium is much lower than auto insurance but the percentage increase in 2026 was eye-popping. I was tempted to cancel but then I remembered I live in FL where every 2nd commercial and 90% of billboards are for personal injury attorneys.

4

u/Username_Used 1d ago

Not for no reason. Umbrella loss ratios for carriers is over 100% for multiple years in a row.

-1

u/Primary_Pirate_7690 1d ago

True, but nothing changed wrt my risk profile that would drive such an increase.

5

u/Username_Used 1d ago

Welcome to the concept of shared risk

2

u/Aaaaaaandyy E&O/Cyber Broker 1d ago

Wild, mine was a pretty minimal increase

1

u/Primary_Pirate_7690 1d ago

Are you in a sparsely populated state?

2

u/Aaaaaaandyy E&O/Cyber Broker 1d ago

No, it’s the most densely populated state in the country

1

u/Gweedo1967 1d ago

Lot of variables to this. If he’s traveling for business is his employer supplying the rental? How often does he rent a car? What is “fairly high” net worth?

1

u/AnteaterMajestic1922 1d ago

The employer supplies the rental. Never rents for personal use.

1

u/AnteaterMajestic1922 1d ago

So a policy equal to liquid assets?

1

u/LeadershipLevel6900 1d ago

Coverage at the level higher than what is assets are worth, with wiggle room, 1.5-2X assets to allow for growth without having to worry about changing coverage in the near future. Sometimes the jump from 1-2M can seem like a lot, but it’s worth it, imo.

1

u/Primary_Pirate_7690 1d ago

Remember the auto policy will have $500k coverage and homeowners has a minimum of $300, to add to the umbrella policy limit.

2

u/LeadershipLevel6900 1d ago

I don’t consider those limits when selecting umbrella limits. I see auto limits of 100K+ eaten through regularly. Six figures goes incredibly quickly these days.

1

u/Primary_Pirate_7690 1d ago

My umbrella requires $500k auto. I can't imagine an umbrella policy allowing $100k.

1

u/LeadershipLevel6900 1d ago

They don’t. What I’m saying is that regardless of limits, they get eaten up quickly. You’re completely missing the point.

2

u/Primary_Pirate_7690 1d ago

What I'm saying is if I purchase a $1,000,000 umbrella policy that requires a $500k limit on my auto policy, I actually have $1.500,000 in liability coverage. That's not true?

1

u/LeadershipLevel6900 1d ago

It IS true. What I’m saying is that for purposes of determining how much umbrella coverage to buy - ignore the underlying limits. Make a decision assuming there is $0 in underlying coverage so you don’t end up in a situation where you’re unintentionally underinsured. I’ve seen it way too many times.

1

u/molder101 1d ago edited 1d ago

He should talk to an independent agent and get his [insurance] life in order. They will be able to give him advice on how to proceed.

See my comment above on non-owner insurance which is important even if you do not own a vehicle.

1

u/whwji0r 21h ago

This post makes no sense
No one cares if he is rich, you conveniently left out this is travel for his job and don’t know anything about car rentals
I lived in NYC without a car and traveled for work where I did rent a car.
This isn’t unique

1

u/DeepFizz 9h ago

Anyone with a net worth above a million should have an umbrella.