This makes no sense to me and I work on the outer edges of the insurance industry.

My umbrella is an "add on" to my homeowners insurance. I recently re-married. My premium went up one-third. I do understand that my husband is (and should be) covered by my umbrella BUT I am told because his daughter lives in a house he owns (although we live in "my" house) that I must also cover her AND her vehicle - ?

No question - she does not live with us, does not drive our vehicles and, in fact, has no access to our vehicles.

This simply doesn't make sense to me. Does anyone have any insight? (My agent and I have gone around and around with this and he doesn't really have an explanation.)

Hmm, the Umbrella policy covers all vehicles and homes you own and now including "his" house. In my state, and it sounds like in yours too, that everyone in a household is required to meet the liability standards for the Umbrella policy regardless of whether they are actually listed as a driver on your policy. [I've seen this in the case of adult children who maintain the home address for mailing while in college even if they have their own auto policy.] So it seems like she is being counted because she lives in a house that is being covered under the Umbrella.

Is his property listed as a "rental dwelling" since he no longer lives in it? (It doesn't matter if he's not actually charging her rent.) But by changing the status of the property from personal use to commercial use (ie. Rental Property), that changes her status to a tenant and therefore should release him (and you) of the added liability.