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How Does an Umbrella Policy Differ from a Comprehensive Personal Liability (CPL) Policy?
As mentioned in the answers listed below, Umbrella policies and Comprehensive Personal Liability (CPL) polices are very different.
An umbrella policy, which is usually purchased in conjunction with an automobile and/or homeowner’s policy from the same company, is designed to act as a second layer of liability protection after the limits in the underlying policies have been exhausted.
However, a CPL policy is designed and intended to provide ‘first defense’ coverage in the event of a liability claim.
The reason why many investors need CPL coverage is simple:
- Most dwelling policies only contain ‘premises’ liability protection – NOT ‘personal’ liability. This means that there may be coverage in the event of a property-related injury, but there is no coverage for ‘personal injuries’ such as wrongful eviction, invasion of privacy, slander and defamation, unfair housing, and so on.
- Purchasing a CPL policy provides this missing ‘personal liability’ protection in order to compliment the ‘premises’ liability in the underlying dwelling policy
- If you are an out-of-state investor, you cannot usually extend the umbrella liability from the policy you purchased in your home state over the properties that you own in a different state. This means that you NEED a CPL policy!
