Read the episode transcript
Aaron (00:00)
Hello, everybody, welcome to the Speaking of Insurance Podcast. My name is Aaron Bollinger. Today we are going to be talking about one of the most important aspects of all of insurance in California, the personal umbrella insurance market and the recent insurance movements in terms of companies coming in and out of California and what this implies to you, your future financial stability and protection, and how I hope to encourage you, if you don't have an umbrella, to pursue one.
Aaron (00:27)
As a cost-effective way of protecting your assets. So we spent a lot of time discussing homeowners' insurance, wildfire risk, and insurance companies leaving California, of course, and the difficulty of finding affordable coverage. But there is the insurance market of umbrella insurance that is having very significant changes. Stricter underwriting guidelines, fewer options in certain segments, higher premiums, and insurance companies becoming much more selective about the risks that they are willing to insure.
Aaron (00:57)
So today we're gonna talking about Markel, which is an insurance company that writes a lot of different things. You can see them on the workers' comp side, potentially the homeowner's insurance side, mostly on an excess lines basis, and definitely in the personal umbrella market, at least historically. And what's happening with them and the umbrella insurance business? the recent welcoming of monoline, the recent announcement to stay in California of this insurance company, who they are.
Aaron (01:23)
And why insurance companies are becoming increasingly concerned about large liability lawsuits, who would have thought? I mean, who would have thought that in California, with all of the litigation and all of the lawsuits and everything that's happening in the state, that there would be some big claim settlements? Really hard to predict, obviously, that. but I also wanted to share some surprisingly shocking statistics.
Aaron (01:50)
about some of these lawsuits, the automobile accidents and the dog related injuries that we are seeing across the market and what umbrella insurance can do for you there or not do for you there. again, this is actually going to be an actionable podcast. So what consumers can actually do about this and what what you as the the customer should have rights to understand and should understand and stay up to date in. Because the right reality of the situation is is that you can have the best homeowners insurance ever, the
Aaron (02:18)
Best auto insurance, highest auto insurance coverages, and still have a massive gap in your overall financial protection if you do not have this feature of insurance. So let's let's get on right into it. So, first, I think it'd be good to preface this for those of you who are unfamiliar with what umbrella insurance actually is. So think of your home and auto insurance as your first layer of liability protection, kind of like the base of a cake or the foundation of a house.
Aaron (02:45)
Let's say that your auto policy has $250,000 or $500,000 in bodily injury liability coverage. So that's just the first number right there, or yeah, on a per person basis. Let's just say that it's $500,000 combined single limit coverage that you have, and your home has $300,000 premises liability on the personal liability side. Those are kind of just the base, the structure of the house, the base of the cake, and then the frosting that goes on top of it.
Aaron (03:14)
It doesn't change what the base of the cake is. It just goes on top of it and it adds the additional layer. And so think of this as as the rest of the house, the rest of the cake that protects it from the things that it already protects for, if that makes sense. So if your homeowner's insurance covers, you know, wildfire and earn that's a bad example.
Aaron (03:40)
If your homeowner's insurance has a specific liability claim and you made sure that the li
Aaron (03:48)
A personal umbrella policy generally provides another layer of that liability insurance above the qualified or approved underlying policies of insurance. So if you're involved in an automobile accident and you're found legally responsible, and the total coverage covered damages and the total covered damages are around $900,000. For this example, suppose that your underlying auto liability is that $500,000 number.
Aaron (04:16)
There's an extra $400,000 there of a gap. And that's where an eligible $1 million umbrella policy could potentially cover the remainder of that $400,000. Obviously, this is subject to the policy's terms, but if you have a good insurance broker who understands the umbrella insurance market, they'll be able to give you the answers to the specific questions of what specific parts of the auto insurance accident examples would be covered if you so ask them to do so or ask me to do so.
Aaron (04:46)
So without that additional layer, you could be personally responsible for the uninsured portion of the damages. I think some of this might be redundant, but it is good to remind and to make sure that the substantial amount of money that is otherwise left unprotected, that four hundred thousand dollars, is understood to be covered in most cases by the umbrella insurance company. And that is, of course, a a lot, a lot of money.
Aaron (05:10)
And the biggest misconception that I hear is that umbrella insurance is only for extremely wealthy people. So people who have, let's say they own a house and two cars, they they wouldn't think twice potentially about saving some money on their insurance and not getting an umbrella policy. I would 100% question this. If you own a house, you should have umbrella insurance. If you own a house, that's your biggest asset. It's also your biggest liability. If you have cars and you're driving, that's a huge liability. There's a world where that
Aaron (05:37)
level of financial success and and your portfolio of your house can potentially get almost ruined by a lawsuit or an event that happens that's out of your control that maybe exceeds the limits of your existing policies, in which case you would have definitely wished that you do have that umbrella insurance as the additional layer that we had talked about. So like if you drive a car, if you own or rent a home, or you rent out a home and are an investment property owner.
Aaron (06:07)
Which is 100% something that is worthwhile to look into if you do own investment properties. If you have children who drive, children who drive is a huge one. My dad, the second that I got my car at 16, I think before that actually, he had umbrella insurance. He he's one of the OGs, you know, us insurance brokers. We were up to date on these things. And it it was a lot cheaper back then, of course. But the reason it's a lot cheaper back then was because there were less claims being filed above the
Aaron (06:33)
Policy limits of the existing ones. And so it's it's all the more reason and all the more of an indication as to
Aaron (06:41)
The use and potential severity of these events and how the insurance companies are actually held liable for paying out a large part of these substantial and hugely consequential claims. If you have guests come over to your house ever, that is a huge liability exposure. If you have a dog, that is a huge liability exposure. And so again, if you answered yes to any of those questions, the car, the owner rent, the children who drive, the dog, the rental properties.
Aaron (07:11)
the guests who come over to your house, you have some level of potential liability exposure that can be in certain events absolutely catastrophic, in which case you would have wished that you listened, listened to the speaking of insurance podcast and had acquired the four, $500, $600, $1 million umbrella policy or higher in specific circumstances. And so this doesn't mean that everybody needs the same umbrella limit. No, it doesn't, it's not just like a yes. I answered yes to that question. I do have a dog. I should go get
Aaron (07:41)
Strictly five million or strictly one million. No. A household with a $200,000 net worth can have a very different situation from somebody who does have that $10 million in assets. But still, the consequences, I'm a firm believer that the consequences are actually probably more in terms of the inability to come back from a potentially horrible lawsuit or a potentially horrible auto accident or event that happens at the house for the people.
Aaron (08:09)
Who are of a lower net worth because they have less of the capital at their disposal to pay out claims by themselves or sell their existing assets, it can put them under financially, which is a horrible circumstance. And again, an example of a case where they had wished that they had spent a few hundred dollars on the umbrella insurance or the thousands of dollars on umbrella insurance, regardless of the financial situation and assets, and all the more r meaningful and impactful.
Aaron (08:38)
Regardless of the net worth. So what matters is that you actually understand the financial consequences of these serious claims, Understanding the events at which these umbrella insurance claims are triggered. And so that's the starting point for today's conversation. We're going to delve a little bit deeper. So let's look about let's look at what's happening across the insurance industry. CRC group.
Aaron (09:01)
Published its 2026 State of the Market report. And there is a particularly interesting finding about umbrella insurance. According to that report, some personal umbrella insurance premiums in California have doubled or tripled. Now that doesn't mean that everybody's premium is double or tripled. I'm sure you'd know that if it has, but those are market observations involving certain accounts and programs. And so individual renewal results can be different. But the fact that we're seeing a any sort of increases of this magnitude is
Aaron (09:29)
Very important to classify, understand, and reason with. If there are higher premiums that are doubling and tripling, that means that the insurance company is having to pay out more claims, which means that there is a higher risk for these types of lawsuits to happen to individuals. So I pose the question: would you rather have the insurance company on the hook for a few million dollars, or would you rather have yourself on the hook for a few million dollars? Of course, might be a dramatic oversimplification of the reality of the situation, but
Aaron (09:58)
It comes into what we had talked about before and what I always emphasize, which is liability, or just claim severity in general. Basically, when a serious liability claim happens, how much does it ultimately cost the insurance company? And in this case with umbrella insurance, it's millions of dollars, or at least hundreds of thousands of dollars, or maybe, maybe you barely exceed the threshold and it's thousands of dollars. But still, the second that that claim gets triggered is the second that the insurance company becomes the people and the financial entity.
Aaron (10:25)
Behind and supporting you as opposed to you having to support yourself. So I think that insurers are particularly concerned about the automobile accidents and the serious and severe injuries that we're seeing, especially with the medical costs and long-term disability payouts that we're seeing and the litigation, of course, that that is so frequent a topic. But another thing, another
Aaron (10:47)
Insurance study is Brown and Brown. So Brown and Brown posted their 2026 personal insurance market outlook and they described a tighter umbrella insurance underwriting experience with some carriers requiring automobile liability limits of $500,000 combined single limit. So if you work with us at Bollinsure, we don't actually require fully, strictly $500,000 combined single limit. It'd be an amazing world if everybody had that, but
Aaron (11:15)
The majority of the umbrella insurance companies that we work with operate at the 250,000, 500,000, 100,000 range. And so again, the property insurance damage of 100,000, the per accident or total payout of 500,000, and then the, per person payout of the claim of 250,000. So you don't need the full $500,000 of combined single limit because there are actually a lot of insurance companies that don't write that. I can think of a few off the top of my head, but
Aaron (11:43)
If you have an umbrella policy that adds millions of dollars of protection on top of the existing automobile limits, it would be redundant to pay for the higher coverages if you can just have almost ish the minimum on the auto insurance side that it would cause the umbrella to trigger. So imagine you get into an accident that's let's say it's it's a five million dollar claim on the freeway and you have $500,000 combined single limit coverage.
Aaron (12:13)
That would almost be the exact same thing as having the 250,000, 500,000, 100,000 if you had a $5 million umbrella to go over both. And so I think that frankly, working with an independent insurance broker opens up these different avenues to these different insurance companies, these different markets that we're going to discuss, because the combined single limit market on the auto insurance side of those higher limit thresholds is getting lower and lower. And so your eligibility for the
Aaron (12:42)
Umbrella insurance, while it does stay higher, but there is some room potentially for optimizing your current insurance coverages. Now, I would never advise you to lower your insurance coverages. Do not do that. But if you have a solid plan with an insurance broker and they've advised you that the underlying limits of the umbrella policy are met, and that that means that in the event of a huge consequential claim, that the umbrella insurance would kick in under cover covered policy terms and
Aaron (13:10)
cover the excess amount as it's intended to do over the auto insurance, then lowering your coverages to that threshold could potentially be a way to cover the excess cost of that umbrella insurance in the first place. So just a thought. But the change is is huge for for the market. So they used to accept lower limits. They used to accept maybe $300,000 for these coverages. And now they're they're
Aaron (13:38)
Posing a problem and it's starting to become problem for consumers. So not only might the umbrella market become more expensive, but the insurance companies may also start to require you to increase your underlying auto insurance before you're eligible. We've seen that with some of our insureds. Luckily, we have the ability to replace as a broker with a different umbrella insurance company. And so when a company that comes in and says on a renewal, hey, we need you to increase X, Y, and Z coverage.
Aaron (14:05)
And maybe we don't meet the underlying requirements with the auto insurance company in terms of they don't write that needed amount of coverage that they want us to increase to. So, like company A says, Hey, we're writing the umbrella. We want company B, who's the auto insurance, to increase their coverages to 500,000 combined single limit. Company B doesn't do that, then we can go to company C and say, Company C, we work with you on a lot of umbrella insurance. Can we just keep coverage?
Aaron (14:33)
Your company B's coverage is the same, and then go over to company C for the umbrella insurance for equal protection. And oftentimes the answer is yes. And so honestly, increasing those limits and replacing your coverage can multiply the cost of your total insurance program if you do have to do that and do have to comply. And so reaching out could be the difference between doubling, tripling premiums, potentially, of course.
Aaron (15:01)
Or maybe twenty ten, twenty percent increase in premiums and possibly saving money if you do look at replacing with an independent broker. Little plug there for Bollinsure, but it is what it is. so when somebody says that their umbrella insurance went up, the issue isn't always just the umbrella insurance premium. Sometimes it's just the entire structure of their liability insurance, the auto insurance side as well. And so obviously just strictly looking at premiums of one policy kind of, you know, doesn't give the whole picture as to the entire insurance program.
Aaron (15:30)
Which is what matters most. So if you're in the insurance business, you know Markel. If you're in the workers' comp side, possibly a smaller contractor, you've heard of Markel. If you're a homeowner in some brush, possibly in California, you've heard of Markel. What is up with Markel? Markel is a recognizable name in specialty insurance, and this obviously includes umbrella insurance. And as the California umbrella insurance market has become more restricted.
Aaron (16:00)
One of the questions that agents and consumers are asking is which insurance companies are still accepting to business? There have been concerns about reduced umbrella availability, the carrier restrictions that we've discussed, and insurers pulling back from certain parts of the market. So Markel might very well want to write, let's call it homeowner's insurance, but maybe they'd want to scale back on their umbrella. That's might not be the case right now. We're gonna go into it, but it's it could definitely be just a change in the appetite.
Aaron (16:27)
And so it's important to distinguish between an insurer restricting new business, discontinuing a particular distribution program. So just like not selling a line of business, or an example could be AAA not renewing specific homes in your brush, or any insurance company not renewing specific homes within a specific radius or or feet distance to brush. So that could be a part of their restricting the distribution of their existing program. The restricting of new business could be, hey, we're not writing new policies.
Aaron (16:55)
And non-renewing certain accounts is a separate thing. So the non-renewing part is something that could happen from a discontinuing of a program of an insurance company. And then there's obviously just exiting a state in its entirety. So those four things the discontinuing of a specific program, the restricting of new business, the non-renewing of certain accounts, and completely exiting a state. Those are four different states, literally, pun intended.
Aaron (17:21)
That an insurance company can be going through for specific lines of business that they do right. And that's based off of capacity. That's based off of their financial burden, maybe that they've taken on from the losses that they've had to pay out. It could be a multitude of factors that are included in there. And so I haven't confirmed a complete California personal umbrella market exit for Markel. So I don't want to represent that as an established fact. What we can verify is that Markel has publicly acknowledged increasing pressure in its personal umbrella business.
Aaron (17:50)
During its July 30th, 2026 earnings call, Markel Group discussed a higher current accident year loss ratio within its personal umbrella line. Its programs and solutions division reported a combined ratio of 94% for the second quarter compared to 91% a year earlier, with personal umbrella losses among the factors contributing to the increase. a combined ratio measures and ensures underwriting losses and expenses relative to earned premiums.
Aaron (18:17)
So that 94% is a bit of a high number. A ratio below 100% generally means underwriting profit before investment income, while a ratio above 100% indicates an underwriting loss. But the important detail isn't just the ratio of 94%. Markel's chief financial officer, their CFO, also discussed increasing the company's expected loss estimate for personal umbrella business during the quarter. In simple terms, the company adjusted its expectations because it was seeing concerning claims experience trends.
Aaron (18:45)
Market trends on the personal umbrella side. And this helps explain why insurance companies may become more selective, even when they're still writing existing business or new business.
Aaron (18:56)
You can require customers to carry higher underlying insurance limits. You can increase premiums. If you're an insurance company and you realize that claims are costing more than you had previously anticipated, you have those options. You can even become more selective about drivers, vehicles, properties, and other exposures. We see a lot of umbrella insurance companies not want to insure people above a specific age.
Aaron (19:16)
Which is understandable due to the higher risk of a catastrophic loss with those older drivers, with younger drivers as well. They want you to be in the perfect sweet spot. They want a 30-year-old driver who's got the eyesight of a hawk, who's got the reflexes of the cheetah, who's, just super but also as slow as a sloth on the road in terms of just at that 60 to 65 mile an hour, They want the perfect customer. Obviously, nobody is a perfect person, but.
Aaron (19:39)
That's that's the ideal person that they're looking for. And that's where you see the more discounted rates. But as younger drivers get added to policies and schedules, as as older people look to get eligible for umbrella programs, there's definitely some more struggle. So the decisions of these insurance companies definitely do affect agents as well, as well as the policyholders. Long before it's ever announced, we feel this pressure of the market withdrawal or the the pushback from the insurance company on new business. And so I would like to say that the
Aaron (20:09)
Issue and the lesson from Markel is bigger than any single insurer. It's that the economics of umbrella insurance are changing. And that's why consumers shouldn't assume a policy of available last year will necessarily be available to them with the same terms this year. It's an unfair expectation, especially on the umbrella insurance side, given all of the potentially catastrophic implications for these insurance companies and their reinsurance companies. And so
Aaron (20:35)
With this bad news or this potentially negative news on the California umbrella insurance side, there are insurance companies that are taking a different approach. One of the most interesting recent developments came from Monoline, an insurance company who we work with, a bull insure that writes standalone umbrella insurance. But let's clarify the terminology. A monoline insurance company is simply a policy that provides a particular line of insurance without requiring you to bundle multiple policies with the same company.
Aaron (21:05)
Monoline with a capital M-O-N-O, L-I-N-E, is also the name of a company specializing in standalone personal umbrella insurance solutions. On September 10th, 2026, Monoline's co-founder and CEO, Ben Phillips, published an official announcement explaining the company's commitment to California. And the message was that Monoline intends to remain active in the state rather than withdraw. According to the announcement, California is the company's largest market. Let that sink in.
Aaron (21:32)
California is the company's largest market. Monoline has also said it is maintaining its existing underwriting appetite and developing an additional excess and surplus lines option for people who might be of the underwriting class that would be ineligible for their regular standard admitted. And so here's the detail that I found specifically interesting, though. Monoline specifically reaffirmed that it intends to continue accepting qualifying underlying auto liability limits. Whoa, whoa, whoa, mouthful. Accepting qualifying.
Aaron (22:01)
Underlying auto liability limits of $250,000 per person and $500,000 per accident. That is colossal. We've seen as independent insurance brokers who work actively with umbrella companies a requirement of that $500,000 combined single limit. This is huge news. This is ridiculous.
Aaron (22:22)
This is great news for people who are looking to get umbrella insurance in California. The fact that there are still companies that are allowing people to maintain realistic underlying auto liability limits simply because of the existing carriers who are writing auto insurance in California and how many of them do not write $500,000 combined single limit coverage. And so this matter matters hugely because other insurance companies and programs have been increasing this underlying requirement. So
Aaron (22:50)
You might be eligible for certain monoline umbrella programs without increasing your current auto insurance limits, which would be outstanding. And so obviously, depending on your auto insurance and insurer, the difference in underlying premium for having to increase it to accommodate another insurance company could be very meaningful. So Monoline does have additional requirements though.
Aaron (23:12)
Its published guidelines include a qualifying primary residence policy with at least $300,000 in personal liability coverage, an approved underlying insurer, and other eligibility conditions. So this isn't just a situation where you can purchase an umbrella over any existing insurance policy standalone. No, they want a primary residence policy with at least $300,000 in personal liability coverage. So these details definitely still do matter.
Aaron (23:36)
It also describes its umbrella limits from ranging from one to five million, along with an additional, again, excess and uninsured motorist coverage feature. That feature will be the topic of another podcast. And it is one of the most crucial parts of all of umbrella insurance and liability exposure, the uninsured and underinsured motorist coverage. But here's the broader takeaway. In a market where some traditional insurance programs have become more restrictive, specialty providers are starting to create alternative solutions.
Aaron (24:06)
And that can be particularly important for California consumers and customers who already have difficulty finding affordable home and auto insurance. I think it is super important to understand the details that come into the underwriting process of these insurance companies, the loss experiences that a lot of them have had. The reason behind the increase in premiums is not just, hey, these insurance companies are making tons of money. It's also because they are paying out claims.
Aaron (24:34)
And that these claims on the umbrella insurance side are potentially catastrophic. And so if you have anything to cover, any assets, any personal liability, any cars, any of those questions that we had gone through, I would argue that you should 100% look into getting an umbrella insurance policy. And so, of course, California's umbrella insurance market is changing. And I think it's important to pay attention. The rising liability, claim costs, stricter underwriting requirements, and fewer options for certain types of risks.
Aaron (25:03)
The recent Markel financial disclosures show that personal umbrella losses are an issue even for established specialty insurers like themselves. At the same time, companies like Monoline are publicly committing to California and developing alternative ways to provide coverage. And all of this is happening while the potential financial consequences of serious liability claims remain substantial. The lesson isn't that everyone needs to rush out and purchase the largest umbrella insurance policy that they can find. It's that consumers should understand what they have, what they're exposed to, and where their current protection.
Aaron (25:33)
Could fall short. At Bull Insure Insurance Services, our goal is to provide and help people understand their insurance options, compare coverages, and make informed decisions about managing risk. If you haven't reviewed your underlying liability limits or your umbrella insurance recently, it's worth having that conversation. Thanks for tuning into the Speaking of Insurance podcast. I'm Aaron, and we'll see you all in the next episode. Thank you so much for listening.
