Real Estate Umbrella Insurance Q&A

This is an excerpt from our free “How to Sell High-Limit Real Estate Umbrella Insurance” eBook. Click here to download your copy.

Why does my property need high Umbrella limits?

The real estate sector, like many others, is seeing higher judgments and settlements being reached in liability cases, leaving property owners vulnerable to financial loss without the proper Umbrella limits in place. Several factors contribute to the spike in verdicts and settlements, including jurisdictional challenges and social inflation with views toward increased litigation and plaintiff-friendly juries. In addition, juries and courts place a higher standard of care and responsibility on landlords and management companies for security and safety on the premises. You also see broader contract interpretations, resulting in greater liability exposure for property owners.

Isn’t this covered in my General Liability policy?

General Liability policies typically provide $1 million/$2 million in liability limits, which is not enough to cover a catastrophic event that could jeopardize the property owner’s assets.

How do I mitigate these risks?

A reasonable standard of care for property owners and managers entails being proactive in maintenance and risk management. Those who take this approach, which includes having a written, property-specific plan for inspecting and maintaining every property element and following up immediately when hazards are discovered, are less likely to face a liability judgment.

  • Create a written property maintenance and risk management plan after identifying risks.
  • Ensure timely and regular inspections and quality repairs.
  • Always keep paper trails of everything done on the property, such as inspection reports, receipts, tenant maintenance requests, and any notices sent to the tenants and residents, etc.
  • Include detailed policies and procedures in the plan for each area of the property and each element within those areas:
    • Floor safety
    • Garage/parking lot safety
    • Elevator safety
    • Swimming pool safety (habitational risks)

I want to lower my limits. Why should I keep my current limit amounts?

Lowering Umbrella limits is not recommended due to the high cost of legal fees and the type of massive verdicts and settlements awarded over the last several years. Without proper limits, the property owner will face hefty out-of-pocket costs, reputational damage, and potential bankruptcy.

About Distinguished Programs

Distinguished Programs is a leading national insurance Program Manager providing specialized insurance programs to brokers and agents with specific expertise in Fine Art and Collectibles, Environmental and Construction Professional, Executive Lines, Inland Marine, Real Estate & Builder’s Risk, Community Associations, Hotels, and Restaurants. Property and Liability products are distributed through a national network of agents and brokers. Serving the same core markets and partnering with the most stable and reputable carriers, Distinguished’s high-limit Umbrella programs remain the clear choice in its area of specialty for superior coverage, competitive pricing, and attentive service. Through thoughtful innovation, stemming back to 1995, Distinguished Programs fosters growth and opportunities for its brokers, carriers, and employees.

View a full list of our programs and submit business with Distinguished.

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