An umbrella policy is excess liability coverage above the limits of underlying policies (landlord, auto, personal liability). Commonly used by real estate investors to stack liability protection.
Umbrella policies activate when underlying policy limits are exhausted. Typical limits: $1M, $5M, $10M increments. Cost is relatively low ($500-$2,500 annually) for the additional limits provided. Must be coordinated with underlying policies (same carrier often, or compatible minimum limits).
For LA multifamily owners with multiple properties, umbrella coverage is near-standard. Premises liability claims, tenant injury suits, and similar events can exceed standard policy limits. Umbrella coverage is cheap insurance against catastrophic claims.
From the Sterman LA Multifamily Glossary — defined the way a broker with $1.41 billion across 254 closed transactions actually uses these terms.
Michael Sterman, Senior Managing Director Investments, Marcus & Millichap.
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