09 Mar Can I get umbrella insurance if I don’t have car insurance?

 Q. Another way to protect assets is to purchase excess liability/umbrella insurance. However, I understand that it can only be offered if you have an underlying auto policy. What are the options if you’ve stopped driving or if you’ve given up your car and occasionally rent a car? The insurance protection offered on rentals is not very high.

A. Umbrella insurance, or a personal liability umbrella policy, is an important part of managing risk for your personal finances.

“This type of policy is designed to provide additional liability coverage in the event that you incur a claim in excess of your homeowners or auto insurance policy coverage,” said Steven Gallo, a certified public accountant with U.S. Financial Services in Fairfield. “Most insurance carriers require that you have a minimum of $300,000 in liability coverage on your auto policy and $500,000 on your homeowner’s policy.”

You may be able to qualify for an umbrella policy even if you don’t drive a car anymore.

“All you need to have is a homeowner’s or renter’s policy,” Gallo said.

If you occasionally rent cars, exactly how to covered would work if you had a claim while driving a borrowed or rented car would depend on the specific insurance carrier, Gallo said. Some carriers will require that you purchase a non-owned auto policy which would provide the required minimum liability coverage of $300,000.

The reason you need to first have auto, homeowner’s or renter’s insurance before getting an umbrella policy is that the umbrella policy offers coverage in excess of the underlying auto, homeowner’s or renter’s policy, said Michael Gibney, a certified financial planner with Highland Financial in Riverdale.

“It is possible to get a stand-alone policy, but it may be cost prohibitive,” Gibney said. “Your thought is a good one. If you are looking to only cover each time you are renting a car, then you should simply go with the policy offered when the car is rented.”

But, he warns, make sure you read the fine print, and before you rent a car, research these types of policies on the rental company’s web site so you know exactly what you’re getting or not getting.

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This post first appeared in March 2015.