Quote:
Originally Posted by tgitchel
Can you elaborate on that some, Patrick? What would be a scenario where this would come into play?
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Most car liability policies (that cover your legal liability if you hurt someone else) have reasonably low coverage limits, say $100,000 or maybe $300,000. Most people that have enough money to buy a Cobra also have decent insurance, and that includes an Umbrella policy that covers liability above and beyond that $300k or $500k that is in your base policy. The Umbrella policy may cover as much as two million or even five million dollars of liability -- and the premium is not very expensive. It can be in the neighborhood of a hundred or so dollars per million dollars of coverage, depending. But, and here's the
BIG BUT, your underlying coverage must meet the requirements of the Umbrella policy and your Umbrella carrier must know about the underlying coverage and risk. Here's the worst case scary scenario: Let's say you have wonderful, fully encompassing automobile insurance on all your regular cars and have a five million dollar umbrella policy to boot, all with GladHands Insurance. Then you go out and buy your new SPF Cobra and get an "Agreed Value" policy from "Classic Cobra Insurance" for what you paid for the car and you never really bother looking at the other coverages. Let's say the liability coverage on that policy is $250k. Then one day, while showing off, you plow your Cobra in to a couple of bystanders, killing one, injuring the other, and disfiguring your female passenger. You call up all of your insurers and GladHands tells you "we never knew about that Cobra, plus the policy from Classic Cobra didn't meet our requirements to begin with -- so,
SORRY, you ain't covered." You're then basically SOL as Classic Cobra Insurance tenders their coverage of $250k, exits, and says "you're on your own now, boy." You then go bankrupt and lose everything. Moral of the story: You must make sure that your Umbrella policy is also tied to your Cobra. Don't play "hide the ball" with your insurance carriers. Get everything out in the open with them and have them confirm, in writing, that you're fully covered. This is extra, extra important when you have more than one insurance company (like when the Umbrella carrier is a different carrier than your underlying policies). Most businesses (and some people) have multiple policies, and multiple carriers, and that's where their independent insurance agent comes in to help keep everything straight, make sure everything is covered, and to make sure that the policies complement each other and that you don't have any gaps in your coverage. Right now, if you're running around in a Cobra with less than a couple of million dollars of liability insurance your just playing Russian Roulette, IMO. Make sense? BTW, I'm sure there are some insurance agents on this forum that can chime in with a horror story or two.
