A Personal Umbrella Policy (PUP) is a necessary addition to insurance protection for most insureds. Are you aware of the importance of this valuable coverage? One of the best ways to understand the need for a personal umbrella is to review actual claims examples. It is very clear that an incident arising from just normal daily activities can expose all of us to the potential for a large claims suit.
Listed below are actual RLI PUP claims. These claims show the very real consequences of situations that quickly exhaust underlying liability limits and threaten the net worth of the people involved.
Excess UM/UIM Claim Scenario
The Insured was driving legally on a highway when she was rear ended by another driver. The collision caused the Insured’s vehicle to hit a barrier and bounce into a light pole. The other driver attempted to flee the scene on foot but was apprehended. He was uninsured, does not have a driver’s license and was cited for numerous violations.
The Insured sustained two broken ribs, three broken teeth, contusions to her lungs and lacerations to the head. After the insured’s primary insurance company tendered its full Uninsured Motorist limit, she was still left with $260,000 in medical expenses. The RLI Personal Umbrella Excess Uninsured Motorist coverage paid the remaining expenses.
Auto Liability Claim Scenario
The Insured was driving southbound on a road and passed two orange construction signs, "Road Work Ahead" and "Shoulder Work Ahead." As the road went uphill and curved slightly to the left, there were six barricades along the fog line (white lines on outer edge of the road) with a construction water truck parked just ahead of the sixth barricade. 
The insured barely missed the sixth barricade, struck the front bumper of the water truck, hit another barricade and then struck the claimant, a laborer exiting the water truck. After impacting the worker, she struck several more barricades before correcting back onto the roadway. The claimant was thrown between 20 to 30 feet and sustained a fractured sternum and brain/spinal injuries. RLI PUP Policy paid out the policy limit of $1 million.
Watercraft Liability Claim Scenario
Our insured was operating his ski-boat with two friends on a Texas lake. An inner tube attached to a rope was held down by a cooler at the rear of the boat. The cooler dislodged and flew out of the boat. As the insured turned the boat to retrieve the cooler, the inner tube blew out of the boat, its rope uncoiling and catching one of the passengers around the leg, launching him into the air and onto the boat deck.
The Passenger’s injuries included complete tears of his right knee ligaments and tendons, requiring surgery. In addition, he sustained a substantial injury to his right hip. He was totally disabled for approximately six weeks, unable to drive and has additional lost business income. The primary insurance company tendered its full policy limit which was $500,000 short of the total claim amount. The insured's RLI Personal Umbrella policy paid the remaining amount of $500,000.
Premises Liability Claim Scenario
The insured engaged a contractor to replace and install a new dock on the lake behind his house. After beginning the work, the contractor pointed out to the insured that a tree needed to be removed in order to get the old dock out of the water. The insured had a backhoe and proceeded to knock the tree down, allowing for the dock to be placed on the ground out of the water. As they were leaving the lake, the contractor pointed out another dead tree that should be knocked down. Even though the insured had the contractor move farther away to a safer area a limb hit the contractor on the head and neck. The underlying insurance coverage limits were paid out, and his RLI Personal Umbrella ultimately paid the $800,000 balance for this claim.
More scenarios
Claim Scenario #1
The Insured’s 18 year old son was driving the Insured’s car on a short trip to the store with his girlfriend, the Claimant. The car left the roadway and struck a tree. The Insured’s son told the police that a vehicle cut him off, but there were no witnesses and no evidence of any impact with another car. The Claimant has no recollection of the accident.
The Claimant, a 19-year-old college student, was hospitalized for over a month with multiple fractures and internal injuries. She was in a wheelchair but is now able to walk with crutches and continues with physical therapy. She has a right drop foot as a result of the injuries. The Insured’s personal umbrella policy limit was paid.
Claim Scenario #2
Claimant, age 2, was on the Insureds’ property with his grandparents who were there to care for two horses owned by the Insureds. The Insureds were out of town on vacation. The Claimant was kicked by one of the horses, taken to the emergency room, and then life flighted to a larger hospital.
The Claimant was given a 5 percent chance of survival and underwent surgery for a cracked skull (a piece of which was missing) with 30 percent damage to the right side of his brain. He survived and is residing in a neighboring state at a rehabilitation center. A large payment was made under the personal umbrella policy.
Claim Scenario #3
The Claimant and Insured have been longtime friends, live on the same street, and the Claimant had been to the Insured’s home on many occasions. The Insured lives in a home with a brick patio which had been constructed in the 1960s. Bricks were replaced one year before the incident. An area of the patio is bordered by an 18 inch retaining wall with a flower bed between the wall and the brick patio.
The Insured, Claimant, and another Friend met at a club, had a few drinks, and all returned to the Insured’s home where they sat on the patio in lawn chairs and continued drinking. At approximately 11:00 PM, the Insured went inside to the kitchen. The Friend also entered the house to call a cab.
When the Friend went back outside, the Claimant was no longer on the patio. He found the Claimant unconscious on the ground on the other side of the patio retaining wall. The Claimant remembers falling, but does not remember how it happened.
According to the Insured, on other occasions when the Claimant had been at the home, a patio table was in front of the retaining wall. The table had been removed, exposing an area of the wall.
The Claimant, age 56, sustained a spinal cord injury which rendered him an incomplete quadriplegic. He underwent surgery and was on a feeding tube for several months. He was able to return home 6 months after the incident, but continues to suffer partial paralysis of his arms and legs. He uses an electric wheelchair to get around his house and requires assistance with some activities of daily living.
The Claimant owned his own business and was married 1 month before the incident. His wife now cares for him at home. The settlement to the Claimant exhausted the underlying coverage&limits and payment was made under the personal umbrella.
For more information on the RLI Personal Umbrella contact us today!