To "umbrella" or not to "umbrella"...

[Walt34]

Yes for us too, $1 million.

I forget exactly what the premium is but it's just a little over $200/year.

And as others have noted if the insurance co. is potentially on the hook for $1 mil that is going to get a different level of attention from their lawyers than a $100k claim.

 

[SumDay]

We have it - <$400 a year. We had to use it too - a kook sued us (literally one of those who had $10) and the lawyers the insurance company retained were bulldogs. It was dismissed, with prejudice, toot sweet. It was such a strange case, I think I would have had trouble finding a regular trial lawyer to touch it. The coverage is well worth the piece of mind.

 

[DrRoy]

I have gotten quotes for this from my agent several times but never pulled the trigger. Seems like lots of you have it. Or are we only getting responses from those who do?

 

[2017ish]

I have gotten quotes for this from my agent several times but never pulled the trigger. Seems like lots of you have it. Or are we only getting responses from those who do?

yes.

I am surprised that we don't have a few no's. Maybe a poll is needed!

 

[RE2Boys]

Yep, $1M costs just under $300. Used to be closer to $200 but went up with teenage drivers. That's on top of auto liability of 5ooK/1M and $500K homeowner liability. All with the same insurance company.

 

[fh2000]

Maybe I should do a poll... ... kidding.

BUT ours is $819 for 2 mil. Does that seem expensive to everyone else?

Jack,

Mine is also 2M for $890 a year, so more than you. I am in Southern California with 2 young drivers.

 

[meierlde]

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.

 

[Cobra9777]

Yes, $1M. Our cost is higher at about $500/yr, mainly due to a large primary house with pool, 2 rental houses, 5 cars, and 4 drivers - two of which are in their 20s. Then again, those are all the reasons we have it... plus a lot of non-retirement assets to protect.

 

[swakyaby]

Our umbrella policy is for $1 million for a home and 2 vehicles. It's just under $200 a year, but if it included our motorcycle it would be an additional $100 a year.

 

[jjquantz]

Yes we have a $1 million policy for $132/year. We also had to increase some liability limit on our homeowner and car policy, as well, so the effective cost is probably more like $200/year.

 

[swakyaby]

We have it - <$400 a year. We had to use it too - a kook sued us (literally one of those who had $10) and the lawyers the insurance company retained were bulldogs. It was dismissed, with prejudice, toot sweet. It was such a strange case, I think I would have had trouble finding a regular trial lawyer to touch it. The coverage is well worth the piece of mind.

I would love to hear more from people who bought umbrella insurance and actually used it, and under what circumstances.

 

[aza455]

Yes we have a $1 million policy for $132/year. We also had to increase some liability limit on our homeowner and car policy, as well, so the effective cost is probably more like $200/year.

$132/yr is the lowest I have seen anywhere. If you could share the name of your insurance carrier, maybe we all could benefit...

 

[gayl]

Jack, It's more than mine but I'm bundled

 

[jjquantz]

$132/yr is the lowest I have seen anywhere. If you could share the name of your insurance carrier, maybe we all could benefit...

State Farm. I'm sure we're getting some kind of multi-line discount because we have our car, home, and (the remnants of) life insurance policy with them. But the expense line for the umbrella policy is $132/year.

 

[Jack_Pine]

Jack,

Mine is also 2M for $890 a year, so more than you. I am in Southern California with 2 young drivers.

Thanks, no young drivers but we have a place in FL with a pool. Appreciate it makes me feel better.

Some of what folks are paying seems incredibly low to me though....

 

[swakyaby]

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?

 

[pb4uski]

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.

 

[2017ish]

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.

 

[ERD50]

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:

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.

-ERD50

 

[athena53]

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.

 

[meierlde]

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.

 

[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.

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.

-ERD50

 

[Ally]

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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[RobbieB]

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.

 

[Fermion]

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.