Only wealthy clients need a personal umbrella. True or false?

Chances are, you’ve come across this myth when trying to sell an umbrella to a personal lines client. But although it’s not always the easiest insurance product to convince someone to purchase, a personal umbrella can actually bridge a lot of gaps in the average client’s insurance plan.

Here are three signs your client may need a personal umbrella—and how to make the case.

1) They drive. Maybe your client is the safest, most defensive driver to ever get behind the wheel. But no matter what their own driving credentials look like, they can’t say that about every other driver on the road—one in seven of whom is uninsured, according to recent estimates from the Insurance Research Council.

And that estimate doesn’t even include the number of drivers who carry state minimum auto limits. At a time when many individuals are under the false impression that auto insurance is a commodity, the likelihood of suffering a big loss after an accident with an uninsured or underinsured driver continues to climb.

“You see all these commercials—‘I saved $1,400 on my auto insurance.’ Well, that’s because you went from 300/100 limits down to the state minimum,” points out Ben Marks, vice president, marketing at Anderson & Murison, Inc. “In California, the minimum is 15/30. I can’t even go to the doctor for that.”

When you’re trying to explain the benefits of UM/UIM coverage to a prospective umbrella client, don’t get technical—just keep it simple: It pays for their injuries from an accident caused by the owner or operator of an uninsured or underinsured vehicle, and excess UM/UIM coverage from a personal umbrella pays after the primary auto policy’s UM/UIM limits are exhausted.

2) They have an income. In an environment that’s become increasingly litigious and plaintiff-friendly, your client doesn’t have to fall into the high net-worth category to become the target of a lawsuit.

“Sure, if you’re making $50,000 a year and you rent your apartment, you’re probably not a personal umbrella buyer. But there’s a good chunk of the economy out there that makes a lot more than that, and they need protection,” says Mike Bradley, president, PersonalUmbrella.com. “If you have a couple hundred thousand in assets and a $100,000 annual combined income, they’re coming after you.”

A single judgment could exceed the average client’s savings, home value and other assets—not to mention put future earnings at risk. Renters are particularly vulnerable to judgments that garnish wages, and today, something as innocuous as insulting someone over Facebook could land someone in a legal disaster for defamation of character, slander or libel.

“If you have a multimillion-dollar lawsuit, just the cost of defense alone is going to pay for the umbrella, whether or not you’re at fault,” Bradley says. “Having a claims adjuster who’s familiar with large lawsuits, who will hire the right attorney to defend you, is worth more than the umbrella you paid for if you have an incident. And if you’re liable, the payment and settlement won’t support you. If you don’t have a personal umbrella, a $1-million verdict plus defense is going to cost you a lot of money and hurt you for life.”

3) They want cheap insurance. Marks points out that the biggest obstacle to selling many personal lines is often that people are forced to buy them—the mortgage company demands a homeowners policy, the lender requires auto insurance, the landlord needs to see your renters dec page before issuing a lease.

So when it comes to a personal umbrella, Marks says, “people say, ‘I don’t need this coverage. Why do I have to buy this, too?’”

Marks encourages agents to open the eyes of their clients with questions like: What about your savings? What about your comic book collection? What about that boat you use to go fishing, or that little cabin on the lake?

“Look around your house. Look at your bank statement. Realize how much you’re going to lose if you don’t have this coverage in place,” Marks points out. “Dollar to dollar, pound to pound, the personal lines umbrella is the least expensive coverage you can pay for, for the amount of coverage you’re going to get.”

Jacquelyn Connelly is IA senior editor.