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Old 05-10-2016, 06:14 PM   #41
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Some of what folks are paying seems incredibly low to me though....[/QUOTE]

$1 million policies seem relatively low unless you consider that most umbrella policies require higher policy limits of $100K/$300K for autos and $500k for homes, so the policies are really only covering a relatively smaller additional amount. But the $2 million policies put insurance companies at more than twice the amount of liability compared to the $1 million policies. Maybe that's why the $2 million policies are so much more expensive?
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Old 05-10-2016, 06:17 PM   #42
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YES (I have one $2M) cause it's cheap
+1 Had $1m but later increased it to $2m. Pay $466/year for $2m of coverage.

The way I look at it, my insurer has two million reasons to provide me with a vigorous defense of something should happen.
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Old 05-10-2016, 06:27 PM   #43
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I would love to hear more from people who bought umbrella insurance and actually used it, and under what circumstances.
That is going to be a much smaller universe--and explains the pricing.

We've had a couple of cases this past year implicating the defendants' excess coverages. (One of which involved coverage issues because of claimed nondisclosures in the application; wasn't a concern for us, as the guy could and did fund the award and then seek $$ from his insurer.)

The level of injury required to trigger this level of liability is, luckily, not common. IMO, the cost of umbrella is well worth paying--just in case.
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Old 05-10-2016, 07:14 PM   #44
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Note that in figuring networth for this purpose consider what assets are exempt in your state from bankruptcy attachment. In particular 401ks and depending on the state IRAs and in some states your homestead. So you don't really need to include 401ks in the umbrella, since they are otherwise protected.
What difference does that make? From what I understand, an umbrella insures you against the first $X in a lawsuit , it doesn't protect any specific assets.

As you say, depending on state laws, your IRA and/or homestead might be protected, but that's true whether you have umbrella insurance or not, isn't it?

From my post #7:

Quote:
Also, I don't buy the 'get enough insurance to match your net worth' guideline. You need enough insurance to protect how much you might get sued for. Example:

You have $1M NW, you buy $1M coverage. You get sued for $2M. They take your $1M insurance, and your $1M nest egg. You needed $2M coverage.
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Old 05-10-2016, 07:14 PM   #45
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That is going to be a much smaller universe--and explains the pricing.


<snip>The level of injury required to trigger this level of liability is, luckily, not common. IMO, the cost of umbrella is well worth paying--just in case.

I agree. Typically it's a catastrophic auto accident with multiple claimants and severe injuries (much more expensive than death claims). I did see one in which the insured rented an expensive vacation home and accidentally caused a fire that destroyed it. There's a liability section of your Homeowners policy that covers such incidents but the umbrella would provide coverage above that if necessary.
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Old 05-10-2016, 08:15 PM   #46
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What difference does that make? From what I understand, an umbrella insures you against the first $X in a lawsuit , it doesn't protect any specific assets.

As you say, depending on state laws, your IRA and/or homestead might be protected, but that's true whether you have umbrella insurance or not, isn't it?

From my post #7:



-ERD50
You have it correctly in Bankruptcy some assets are protected the protection depends on the state. In particular in Tx your primary residence is protected, and under federal law a 401k is protected. So if you loose a lawsuit above the limits you file for bankruptcy in which some assets are protected. So in that case you really don't need to include those assets in the umbrella limit.
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Old 05-10-2016, 08:47 PM   #47
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You have it correctly in Bankruptcy some assets are protected the protection depends on the state. In particular in Tx your primary residence is protected, and under federal law a 401k is protected. So if you loose a lawsuit above the limits you file for bankruptcy in which some assets are protected. So in that case you really don't need to include those assets in the umbrella limit.
I still don't see this. Let's take several cases with a $2M lawsuit that is covered by your umbrella up to its limit:

1) You have $1M total net worth, none protected, and a $1M umbrella, and a $2M lawsuit. You are left with nothing. The $1M umbrella did not 'protect' your $1M net worth. They got $2M.

2) You have $1M total net worth, $500K of that is protected, NO umbrella, and a $2M lawsuit. You are left with the $500K that was protected. They got $500K (and you got no legal assistance).

3) You have $1M total net worth, $500K protected, $500K umbrella (per your suggestion), and a $2M lawsuit. You are left with the $500K that was protected, same as with no umbrella. The $500K umbrella did not 'protect' your $500K of unprotected net worth. They got $1M.

4 (corrected)) You have $1M total net worth, $500K protected, $1M umbrella, and a $2M lawsuit. You are left with the $500K that was protected, same as with no umbrella, same as with $500K umbrella. They get $1.5M.

Now a larger umbrella:

5) You have $1M total net worth, $500K protected, $2M umbrella, and a $2M lawsuit. You are left with the $500K that was protected, same as with no umbrella, plus the $500K of unprotected net worth - the umbrella paid the entire $2M.

What you really want for your umbrella amount is the largest $ amount that someone sues you for (an unknown). But the $ protected in your State are protected regardless of umbrella amount - I see no connection.

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Old 05-10-2016, 09:10 PM   #48
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We used to have it when working. Our agent told us (hopefully correctly) that in Tx, our homestead, pension and 401k is protected. That's pretty much what we have in assets, so we make sure we have higher limits on our cars and home insurance. I could be wrong.



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Old 05-10-2016, 09:30 PM   #49
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It really is cheap, I think I pay a little over a hundred bucks for a mill, no biggie.

But no kids and I don't make a habit of smashing my car into other cars, buildings or people.
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Old 05-10-2016, 10:07 PM   #50
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As mentioned 401K and to some extent IRAs are protected from judgements. We plan to spend down our taxable while letting the 401K and IRAs grow. While we do have a umbrella policy now, I can see dropping it when our taxable account is under $30k or so. Sue me for 2 million, collect $200, hope your lawyer can cover his fees with that.
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Old 05-10-2016, 10:34 PM   #51
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I believe ERD50 has the correct idea.
It's useless to add up your assets and say that is the umbrella ins. limit you need.

Much better is to guess, how much is enough the other side will settle for (1M, 2M, 3M) and how hard the insurance company will fight to not pay (1M, 2M, 3M), and how much can you afford to pay to cover what is at risk (not 401K, etc).
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Old 05-10-2016, 11:25 PM   #52
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I don't have an "umbrella" policy yet, but did purchase an additional liability of $1M, for $700, on our house that is currently rented out until we retire next year in addition to our normal homeowner's policy which has $300K of liability built-in.
Once we are retired into the house with new cars purchased etc. then we will get an umbrella policy also to cover several million as just a CYA.
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Old 05-11-2016, 12:20 AM   #53
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I didn't realize retirement accounts were protected.
2/3 of our net worth is in retirement accounts.The other third is under 500k. There are 500k limits on our house & cars. Income is pensions & social security so maybe we're covered. I did get a quote of $386 for an umbrella. I thought it was high.
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Old 05-11-2016, 05:50 AM   #54
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Our agent told us (hopefully correctly) that in Tx, our homestead, pension and 401k is protected.
Yes, that's correct. Texas is one of three states, last I checked, which more or less fully protect IRAs and homesteads as well as pensions, without limit (a 401K is considered a pension under federal law). Florida and Oklahoma are the other two -- again, last time I checked.
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Old 05-11-2016, 07:06 AM   #55
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Yes. We also have umbrella policy. Bought it when shopping for new insurer and the savings from switching was more than enough to pay for the policy.
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Old 05-11-2016, 07:09 AM   #56
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This has been discussed here numerous times before. I think you need to evaluate your risk and exposure to determine the amount of umbrella policy you need. People with swimming pools, dogs, boats etc. need a higher umbrella protection than others.

Also most people over estimate the judgment amount awarded by the courts in personal injury cases. Our state protects IRAs and our home is also protected under the Homestead exemption. Our taxable accounts are our main exposure.

When I researched injury settlements and jury awards in my county which is in a high cost of living state I found the following:

# of cases 151
Average award $741,913 (inflated due to a $33 Million award against a gangster for wrongful deaths and few 5-7 Million medical malpractice awards)
Median award $15,500 (probably a better stat than average)

We no longer have a swimming pool, no kids in the house, no dogs and perfect driving records. And since we don't hire uninsured contractors we fall in the low risk pool and our current $1 Million umbrella to supplement the 300/500K auto liability and the 500K home liability coverage would be sufficient protection.

If we get hit with a judgment in excess of $1.5 million which based on the data above is highly unlikely they can only come after our unprotected assets and that's a risk we are willing to take..
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Old 05-11-2016, 07:17 AM   #57
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I have a $2mil policy with premium just under $400. Not the cheapest but not as high as many here.
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Old 05-11-2016, 07:23 AM   #58
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The way I figure it I spent a 35 year career building my wealth and while the risk that something unfortunate could happen and I could get sued and have a large judgement against me is low it exists nonetheless and I would be foolish not to spend $500 a year to protect 35 years of work and sacrifice.
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Old 05-11-2016, 07:26 AM   #59
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Yes... Peace of mind if nothing else.

Savings by putting all... cars, house and liability with one company.
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Old 05-11-2016, 07:59 AM   #60
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+1 on the peace of mind: pb4uski and imoldernu
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