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thinking about my umbrella insurance
Old 04-02-2016, 10:41 AM   #1
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thinking about my umbrella insurance

I carry a 2M umbrella insurance policy. My annual umbrella insurance premium is about $900. This is higher than national average but I am in SoCal with 2 young drivers on my policy. I have not looked at it for few years. Now my liquid asset is 3M. Is it a good time to adjust my umbrella and increase to 3M as well?

Another question is, I have never involved with anything legal so far, so I really do not have any lawyer contact that I can call. Hope I never need to. But, if there is anything that I need to get a lawyer for, do I simply call my umbrella insurance first to see if their legal department can assist? Is there anything that they would not get involved, say divorce (not that I need it ever) ?
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Old 04-02-2016, 10:45 AM   #2
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Check with your state, but generally assets in 410K and IRA are untouchable, as well as some minor things like part of home.

Once you subtract those, the 2M might be sufficient.

If you were given notice of suit, call the umbrella ins. company as their lawyers will deal with it.

If you get a divorce it has nothing to do with umbrella insurance.
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Old 04-02-2016, 10:47 AM   #3
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Didn't know the costs varied that much, though maybe the young drivers (and the overall cost of living in your area) influence that. I have a $2M umbrella through USAA for $238 per year -- less than twenty bucks a month. Again, though, just DW and me, age 50 and 47, clean driving records in a low-cost area, and we don't own our residence.

And living in Texas I think that is sufficient since it (along with Florida and Oklahoma) have the strongest asset protection laws in the country for IRAs and homesteaded personal residences.

And yes, with an umbrella, like any liability insurance product, part of what you are paying for in your premiums is access to their legal team if needed to defend themselves (and you) from lawsuits.

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Check with your state, but generally assets in 410K and IRA are untouchable, as well as some minor things like part of home.
401Ks will be untouchable in many cases, since they are considered pensions by law, and pension plans are protected by federal law. IRA protections vary all over the map. Many states will protect them up to a certain amount (say $1M) but few states provide unlimited protection for IRAs (the three states I mentioned above do, last time I checked).

Keep in mind, of course, that these asset protections relate to civil lawsuits primarily. If there is a legal criminal penalty -- fines, restitutions, and so on -- these protections may not, and probably will not, apply.
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Old 04-02-2016, 11:35 AM   #4
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Thanks

With a quick google search, I see that in California where I live, qualified 401K is protected but not so with IRAs.
IRAs Could Be Fair Game in Lawsuits - LA Times

As to my primary residence, I also found this from Nolo.com article:
Can a judgment creditor foreclose on my home? | Nolo.com

"In California, for instance, a homestead exemption is available if:

the house is the debtor’s principal dwelling
the judgment debtor, or spouse, resided at the dwelling on the date the judgment creditor's lien attached to the dwelling and
the judgment debtor or spouse resided continuously thereafter until the date of the court determination that the dwelling is a homestead."

It does appear that excluding my primary residence, and 401K, my exposure is 2M. I will stay with that for now.
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Old 04-02-2016, 12:01 PM   #5
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I just paid the premium on my 2 million dollar umbrella. My cost is more in line with Ziggy29's. Also like Ziggy, I no longer have minor children as drivers on cars. Cost this year is $202.40. See what you have to look forward to fh2000?
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Old 04-02-2016, 12:33 PM   #6
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Here's a SoCal data point. We have 2M umbrella - we also have a rental landlords policy for our granny flat (same lot as our primary) - so the rental might increase the umbrella a bit. Our kids are not yet driving age - but we do have 2 kids under roof.. We pay $438/year for our umbrella policy.

I'm expecting it to go up as I add kids to insurance... which I'm discouraging for the near term. (Older son will be old enough to get his learners permit in a few months.... <<< shudder >>>> A very scary idea.)
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Old 04-02-2016, 12:37 PM   #7
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If you have $3M in assets and a $3M umbrella policy, there is nothing to say that you can't be sued for $6M. Or $10M, with future income attached to the suit. In practice, this usually doesn't seem to happen. I'm not sure why. Maybe a jury sees this and is happy to give away insurance company money but not an individual's assets?

I never figured to use the insurance company's lawyers for anything but a lawsuit. If I am charged with a crime, need to make a will or trust or prenup, go through a divorce, etc, I believe I need my own lawyer.
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Old 04-02-2016, 01:02 PM   #8
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FYI, Denver metro, my Farmers 2M Umbrella is $189 annually. One house, two vehicles, just me and wife, no kids. From the sampling, yours looks way higher than national average.
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Old 04-02-2016, 01:10 PM   #9
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I pay $575 for a $5M umbrella policy through Allstate. I'm also in Southern California - married but with no kids. I shopped around quite a bit and did find Allstate to be the lowest for $5M coverage.
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Old 04-02-2016, 01:28 PM   #10
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FYI, Denver metro, my Farmers 2M Umbrella is $189 annually. One house, two vehicles, just me and wife, no kids. From the sampling, yours looks way higher than national average.
I just checked mine. Also with Farmers in Colorado and for $2 mil. $255 with just me on the policy. I have three vehicles including an Audi TT which seems to raise the price on everything.
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Old 04-02-2016, 02:10 PM   #11
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I'm paying $305 for 1 Million Umbrella for 3 houses and 3 cars and a 22 year old driver.

Just switched Insurance companies and saved a thousand dollars on all the policies
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Old 04-02-2016, 02:16 PM   #12
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We pay $453 annually for $5mm umbrella liability policy with Electric Insurance...1 house, 3 cars, 3 drivers (1 is a teenager) in CT.
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Old 04-04-2016, 09:32 PM   #13
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Your umbrella policy is normally written by the same company that writes your auto insurance. They like to make sure that you are maintaining the underlying coverage limits of 250/500 or 300 combined single limits.

One detail about umbrella policies is that some companies include uninsured/underinsured coverage over your auto insurance limits. So if you have $250 UM with a $2M umbrella, you will get the $2M for the UM coverage extended over your auto policy limits. This could be a big deal in the event of a serious accident with an uninsured driver or one with low limits.
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Old 04-04-2016, 09:58 PM   #14
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I also have a $2m umbrella and mine is $486/yr.

I never got a warm comfortable feeling on how much I should carry, but as I look at it my insurer has 2 million reasons to bring their best lawyers to the table should I ever be in a situation where I need them.

One thing I did find out was that it was less expensive for me to increase my car and home policies to their max limits and then have a lower umbrella than to keep the limits I had and have a higher umbrella.... so if your auto and home policies are not at their max coverage then you may want to look at increasing those instead of increasing the umbrella.
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Old 04-04-2016, 11:29 PM   #15
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What about the additional cost of having to increase your car/auto coverage limits from 300k to 500k. Are you guys considering those numbers when figuring out your actual yearly umbrella costs?
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Old 04-05-2016, 07:56 AM   #16
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I have a quote from my insurance co for a $4MM policy around $450/yr, but I think now I should shop around.
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Old 04-05-2016, 12:54 PM   #17
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What about the additional cost of having to increase your car/auto coverage limits from 300k to 500k. Are you guys considering those numbers when figuring out your actual yearly umbrella costs?
No, but I wouldn't be comfortable at just $300k so it is a moot issue for me.
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Old 04-05-2016, 01:06 PM   #18
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Umbrella policies are written by auto insurers but they cover your home?

So it would be like someone gets injured on your property and it would cover those occurrences?

Other than cars, what other situations could make individuals with a lot of assets liable?
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Old 04-05-2016, 04:54 PM   #19
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Umbrella policies are written by auto insurers but they cover your home?

So it would be like someone gets injured on your property and it would cover those occurrences?

Other than cars, what other situations could make individuals with a lot of assets liable?
Is there anyone that does auto insurance but not homeowners insurance? If there is I bet they don't do umbrella policies.

Yes, if someone gets injured on your property. Or your dog bites someone. Or you get sued for slander or libel. Or anything else in this litigious society. Maybe you hit someone with an errant golf shot.
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Old 04-05-2016, 05:21 PM   #20
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Is there anyone that does auto insurance but not homeowners insurance? If there is I bet they don't do umbrella policies.

Yes, if someone gets injured on your property. Or your dog bites someone. Or you get sued for slander or libel. Or anything else in this litigious society. Maybe you hit someone with an errant golf shot.
When I was renting I had to have renters insurance in order to get an umbrella policy.
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