Here, the Massachusetts court decided that competing excess insurance policies will apply equally to provide excess coverage even if one policy is a true excess policy and the other is a hybrid policy providing either primary or excess coverage, depending on the circumstances.
But this Massachusetts court ruling is the opposite of a decision made earlier in the same year by a Federal District Court in Texas. That Texas court held that a true excess policy sat above a hybrid policy in the insurance hierarchy, and therefore would not be triggered until the hybrid policy was exhausted. Unlike the equal application of the policies under Massachusetts law, the Texas court ruled that a hybrid policy is “excess by coincidence,” and thus sits at a lower tier of coverage than the true excess policy.
So, yes, please continue to ask your clients whether or not they have a personal umbrella policy. And, yes, having any type of umbrella policy is better than having no umbrella policy. But, as a professional financial advisor, remember that things are seldom as simple as they might seem. And, as is frequently the case, the devil is in the detail. Certainly, umbrella insurance is no exception in this regard. Now, the next time you are counseling your clients you will know the types of questions to ask after they confirm that they have a personal umbrella policy.
Kevin L. Glaser, CPCU, CIC, SCLA, ARM, AAI, AIC, ARM-P, AIS, is a nationally recognized speaker on the topics of insurance and risk management and is author of Inside the Insurance Industry (Third Edition). He is president of Risk & Insurance Services Consulting LLC.