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Protecting Your Business Against the Umbrella Liability Insurance Crisis in 2020

There is currently a crisis in the Umbrella Liability insurance market.  

As we discussed in our previous article, the insurance industry periodically goes through a “hard market,” a period in which insurance rates rise sharply and some coverage becomes more difficult to find. We’re in the midst of such a hard market now, which is causing abrupt increases in insurance rates and reduced availability.  

The hard market is affecting different lines of coverage in different ways.  Some lines of insurance coverage are still relatively stable, while others, such as property insurance for coastal property, are being disrupted.  

However, Umbrella Liability Insurance is one of the coverages that has been the most sharply disrupted.  

How is umbrella liability insurance being disrupted?

Umbrella claims awards have been rising during the last several years.  These increased claims costs are primarily being driven by the rising cost of auto-accident claims and the general rise in jury awards in many jurisdictions. Further, many real estate companies have obtained their insurance through Umbrella Risk Purchasing Groups. These groups have seen a sharp rise in the cost of premises liability claims, causing many insurance companies to dramatically recalibrate their premiums or even leave the market entirely.  

The premium increases in the Umbrella Insurance market are mostly affecting the first $10 million in coverage.  It isn’t uncommon to see premium increases of 25% or more in this “burning layer” of Umbrella coverage for even the cleanest loss-free industrial and real estate companies. These sharp increases are adversely affecting pricing all the way up the Umbrella stack to the highest limits being purchased.  

Companies with adverse loss history, truck-heavy exposures, or other exacerbating circumstances are seeing even sharper increases or sometimes even reductions in the availability of insurance coverage. And, naturally, as the market deteriorates and more companies are aggressively shopping to replace their coverage, brokers and underwriters are being overwhelmed with applications, so many deals are only getting done at the very last minute.  

Umbrella Liability insurance is a vital coverage for almost every company, so this disruption in the Umbrella market is creating havoc for budgets and forcing many insurance buyers to rethink the limits and scope of their coverage.  

What should you do as an insurance buyer?  

You may not be able to completely avoid the repercussions of the current hard market, but there are a few steps you can take to prepare your company for the best outcome.

Be aware of changes to your policy. 

We’ve been advising our clients, well in advance of their renewals that they will likely see increases in their Umbrella Insurance premiums at the next renewal.  As best we can, we try to forecast what these increases will be, and our estimates differ depending on the client and our assessment of that company’s specific risk profile and loss experience.

Review your underwriting file.

We’re helping our clients to get in front of the renewal underwriting process by conducting early renewal reviews of their loss experience or by pushing back on adjusters that have, in our opinion, over-reserved certain claims.  

Consider some operational adjustments.

There are certain counties in the South and Southwest that have seen unusually high jury awards and settlements, and some clients are considering geofencing their truck fleets around those counties. Some clients also have problematic buildings or problematic products or contracts.  These should be identified, and possibly sold, discontinued, or avoided.  

Hope for the best, prepare for the worst.

We’re advising our clients that, even if they have great safety and claims records and take all the right steps, they may still see only bad options at renewal.  Our clients, armed with this information, have more time to adjust their own budgets, pricing, operations, and expectations. 


Umbrella Liability insurance is a vital coverage for almost every successful business, and we’re actively working with our clients to manage their Umbrella coverage choices and options through the hard market.

If you’re looking to enter the new year with a solid understanding of your commercial insurance coverage, our insurance consultants are here to help.

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