If you’re an insurance professional, I’m guessing your personal auto insurance policy probably includes uninsured and/or underinsured motorists (UM/UIM)
coverage. coverage. Why? Because you know that, on average, at least 15% of drivers on the road carry zero a
auto liability insurance, according to the Insurance Research Council (IRC) as reported by the Insurance Information Institute (III).
In some states, that number is 20% to 30%. Of those drivers that do have liability coverage, it’s estimated that 20% to 40% only carry minimum or almost m
initial state required limits. If these numbers are to be believed, then it’s possible that 35% to 70% of all drivers have minimal or no auto liability coverage.
That’s likely why you carry UM/UIM coverage, hopefully at limits equal to your auto liability limits. It’s also a principal reason why, for several years, my personal line
s account includes an E&S personal umbrella policy. Why? Because the admitted carriers my agent represented all had a maximum limit on UM/UIM coverage, so I was una
ble to buy UM/UIM coverage at the same limit as the auto liability coverage I carried.
As insurance professionals we know that we can't rely on others to have the insurance or assets to cover the injuries to us that they may be legally liable for.
Wouldn’t we want to have access to the same coverage for ourselves and our loved ones as we do for total strangers under our own liability coverage? That’s the role of UM/UIM coverage.
According to numerous sources, probably at least 50% to 60% of renters carry no renter’s insurance. The most common reason cited is that renters believe
eve the landlord would be legally responsible for damage to their property, as if the landlord
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could be legally liable for a tornado or hurricane. In fact, it’s possible that the lease contract
ally absolves the landlord of such responsibility even if otherwise legally responsible for damage to a tenant’s property. But then consumers are p
robably no more likely to read a lease agreement than they are their insurance policies.
The 50% to 60% number, as high as it is, has declined in the last 10-15 years because of an increasing number of landlords, especially apartment complexes, now require renter’s insurance as a condition of occupancy.
These requirements, though, are more focused on liability coverage than any real concern that a tenant’s property is protected. But, even so, it’s the rare renter’s insurance requirement that establishes any minimum covera
ge or limit standards. In my October 21, 2024 column, I wrote about my son’s first apartment and how the management firm had a relationship with an entity t
hat could provide inexpensive renter's insurance. The policy being sold was junk, and I ended up guiding him to a responsible agency for coverage (including an umbrella policy).
The moral here again is that we can't rely on others to protect our personal property fr
om damage or to protect ourselves from liability claims and lawsuits. The same is true in com
mercial lines when it comes to leasing premises where the lessee has property of its own to protect, not to mention property of the landlord that the tenant may be responsible
ible for. But things can get more complicated in commercial lines.
For example, in January, policyholder attorney Chip Merlin blogged about a court case, St
eadfast Investments & Properties v. AmGuard Ins. Co., involving a commercial building that was
destroyed by fire. The building was announced by a tenant, perhaps under a triple net lease.
I wrote about the insurance pitfalls of triple net leases in my April 7, 2025 column with regard to the tenant, not the landlord, insuring a building. My advice in that col
umn is that it is almost always preferable that the lessor procures its own coverage on a building and not rely on the lessee to do so. I encourage you to read that earlier column online for import
tant details. In the Steadfast case, the owner was listed on the policy procured by the tenant as a loss payee and possibly thought that took care of some of the issues I outlined in my earlier column.
