Asset protection - what do you do?

[eytonxav]

Agree with what Ziggy said. I have an umbrella policy and most of my assets are in retirement accounts. Of course taxable assets are probably fair game.

 

[Animorph]

Umbrella policies require you to have certain levels of coverage on your auto policy. My USAA umbrella policy requires me to carry $300K/$500k bodily injury and $100k property damage limits.

+1

Umbrellas coordinate with auto and homeowners (renters I suppose as well) policies. No need to add more than required to auto policies beyond that point.

 

[FANOFJESUS]

Is it true one should insure equal to their assets?

 

[samclem]

Most umbrella policies are in the millions so the insurance companies have incentive to defend you.

That legal defense is one of the main values of an umbrella policy.

 

[REWahoo]

Is it true one should insure equal to their assets?

I'd say it depends on where you live. See Ziggy's post above (#3).

 

[CoolChange]

Umbrella Policy

Nothing. I just avoid litigation at all costs professionally and personally...keeping a low profile, staying out of trouble in general, and by remaining single.

This describes my current approach.

I have actually inquired about an umbrella policy a couple of times with my insurance agent; and, they have talked me out of it both times. This does seem like a layer of protection that I should add; but, like adding more fiber to my diet, is just something I have not pursued yet.

I would appreciate thought on whether an umbrella policy should be with the same company as the home and/or auto or be diversified to a separate company.

Has anyone here actually had to utilize the protections of an umbrella policy and willing to share details, outcomes, process and such?

 

[REWahoo]

I would appreciate thought on whether an umbrella policy should be with the same company as the home and/or auto or be diversified to a separate company.

Since the coverages on the policies are all coordinated you will likely get better rates by staying with one company.

Has anyone here actually had to utilize the protections of an umbrella policy and willing to share details, outcomes, process and such?

Thankfully, I can't speak to this one.

 

[MichaelB]

I have actually inquired about an umbrella policy a couple of times with my insurance agent; and, they have talked me out of it both times. This does seem like a layer of protection that I should add; but, like adding more fiber to my diet, is just something I have not pursued yet.

I would appreciate thought on whether an umbrella policy should be with the same company as the home and/or auto or be diversified to a separate company.

Has anyone here actually had to utilize the protections of an umbrella policy and willing to share details, outcomes, process and such?

Some insurers will only provide umbrella if they also cover auto or homeowners. USAA requires homeowners (IIRC) and State Farm requires auto (our case). Why would an agent talk you out of buying coverage from them - unless they don't sell it.

 

[Katsmeow]

Is it true one should insure equal to their assets?

Obviously this is a personal decision as to how much to insure for just like with any other insurance. However, I have personally always felt that the amount of insurance to obtain has to do with one's exposure not the amount of your assets. Having said that, there is an argument to be made that if someone has NO assets or minimal assets there is nothing really there to protect and most (but not all) claims could be hypothetically eliminated through bankruptcy.

Let's say, however, you have $1 million in non-exempt assets and so you get $1 million in insurance since that equals your assets. That's fine if someone makes a $500,000 claim against you. But what if the claim is $5 million? Assume you lose and the insurance pays off $1 million. The claimant then theoretically comes after your $1 million in assets and takes those and then you still owe $3 million. You could theoretically file bankruptcy to wipe away the ongoing liability (assuming the case is one that can be discharged) or, if you don't (or can't) then the judgment hangs around and if you get money in the future the creditor could try to collect whatever you get. (Obviously all this depends on state law)

Has anyone here actually had to utilize the protections of an umbrella policy and willing to share details, outcomes, process and such?

Not personally for me as an individual. But I've had dealings with umbrella coverage in my work. Every policy is different and you can't totally generalize at all. Typically if there is a primary policy then the primary carrier defends until that policy is exhausted. At that point the umbrella carrier may or may not have a a duty to come in and defend. That is policy specific.

The most important thing for most people to know is that you must pay attention carefully as to when notice is required to be given to the umbrella carrier. Sometimes, when a claim comes in, people think it is a small claim (below the limit of the primary policy) and don't give notice to the umbrella carrier. Then, later - often much later - they realize the claim is a big claim that theoretically could exceed the limits of the primary policy so they give notice to the umbrella carrier. Then the carrier refuses to cover on the ground that notice is late. For that reason it is very, very, very important to always look at the notice requirements to make sure notice is given in the time and manner required.


Just for the obligatory CYA - None of this is specific legal advice to anyone here. This is general information. You should absolutely consult with your own attorney on anything legal related and should not rely on anything that I say whatsoever. I'm not your attorney.

 

[REWahoo]

The most important thing for most people to know is that you must pay attention carefully as to when notice is required to be given to the umbrella carrier. Sometimes, when a claim comes in, people think it is a small claim (below the limit of the primary policy) and don't give notice to the umbrella carrier. Then, later - often much later - they realize the claim is a big claim that theoretically could exceed the limits of the primary policy so they give notice to the umbrella carrier. Then the carrier refuses to cover on the ground that notice is late. For that reason it is very, very, very important to always look at the notice requirements to make sure notice is given in the time and manner required.

CYA duly noted, but if the claim is against your auto policy and your umbrella policy is with the same carrier, this requirement to notify should not be an issue, correct?

 

[HighRoller]

Is it wise for people to disclose the details of their asset protection plan to strangers on the internet?

Easy answer

 

[Katsmeow]

CYA duly noted, but if the claim is against your auto policy and your umbrella policy is with the same carrier, this requirement to notify should not be an issue, correct?

Incorrect.

Obviously this may depend upon policy provisions, but often who you have to give notice to is different between primary and umbrella policies even with the same carrier.

Also sometimes people give the policy number of the primary policy when giving notice and might not mention the umbrella policy and that might be considered notice only on the primary policy even though both policies are with the same carrier.

Another thing is that there may be subtle differences in the carrier even though they are part of the same "family" of carriers. That is, the primary policy might be with X Insurance Company while the excess is with X Indemnity Company, etc. or even the primary with X Insurance Company while the excess is with X Insurance Company of New York.

Sometimes, the primary and umbrella policies have different provisions as to how to give notice and when it is to be given as well.

If both policies were with the exact same company and both had the same address for notice to given and both had the same notice requirements - if it was me, personally, when I gave written notice I would put in my notice the policy number for both policies and not just the primary policy. Obviously - all this depends upon specifics of the policies in question.

 

[REWahoo]

Same insurance co (USAA), same address for notification, same policy numbers for homeowner, auto and umbrella except for a two digit suffix. You really think they could get away with refusing to cover me under my umbrella policy because I failed to include those two digits when I notified them of a loss under my auto or HO policy?

 

[SumDay]

Has anyone here actually had to utilize the protections of an umbrella policy and willing to share details, outcomes, process and such?

Unfortunately, I have. I won't go into too much detail (to keep search engines from picking up on certain keywords) but I had an unsavory tenant try to sue me to gain ownership of a house because they said my dad's estate wasn't probated properly.

I had coverage on the house as well as an umbrella policy, both with the same company. I was assigned a Jr. lawyer at a very aggressive litigation firm in my city. They got the case dismissed with prejudice, so it's a done deal.

It still cost me in excess of $10,000 to get them evicted (+4 months), but the legal fees for the lawsuit were taken care of, which I believe were about $22,000.

As I said, it's a much longer story, but I believe Uncle Sam has some special plans for this clown. And, they are also watched by local and federal law enforcement agencies. I could write a book....

And now you know why I hate investment real estate. But I will forever be a customer of the agency who covered my back side for this lawsuit.

 

[Katsmeow]

Same insurance co (USAA), same address for notification, same policy numbers for homeowner, auto and umbrella except for a two digit suffix. You really think they could get away with refusing to cover me under my umbrella policy because I failed to include those two digits when I notified them of a loss under my auto or HO policy?

It is not a risk that I would take if it was me. I would personally include both policy numbers in giving notice. I think that lessens uncertainty and would be the more prudent course of action for me to take.

 

[REWahoo]

It is not a risk that I would take if it was me. I would personally include both policy numbers in giving notice. I think that lessens uncertainty and would be the more prudent course of action for me to take.

Thanks. Better safe than sorry...

 

[photoguy]

Is it true one should insure equal to their assets?

The rule of thumb I've been told is net worth + 1M. Obviously I think also depends on other factors like the value of your human capital (e.g., think high income profession even if net worth is low) and how much of your assets are protected.

But the cost is very low (I think I was quoted $200/1M coverage and $300 for 2M for CA which is probably more expensive than other states) so you can also think of it as buying "peace of mind" for peanuts.

 

[imoldernu]

#1 umbrella policy
#2 lawyer son

 

[CoolChange]

...As I said, it's a much longer story, but I believe Uncle Sam has some special plans for this clown. And, they are also watched by local and federal law enforcement agencies. I could write a book....

And now you know why I hate investment real estate. But I will forever be a customer of the agency who covered my back side for this lawsuit.

Thank you for the personal experience. Do you mind sharing the name of the insurance company you use?

These kinds of stories keep me from becoming a landlord. So, another thank you for helping me avoid those headaches.

Have you considered at least selling the rights to this story to one of the made for TV producers if you are not going to write that book? If you do write the book, please advertise here or at least PM me; it sounds like it could be a fascinating an cautionary tale.

Some insurers will only provide umbrella if they also cover auto or homeowners. USAA requires homeowners (IIRC) and State Farm requires auto (our case). Why would an agent talk you out of buying coverage from them - unless they don't sell it.

My agent, who family has used for years, said they had only written a few policies and never seen one invoked. They seemed to consider it a waste of money for me. <cynical>Probably also a waste of time for them since I am guessing comissions on those policies are terrible.</cynical>

I think my company just requires certain minimums on homeowner and auto insurance but does not require those policies to be with their company.

...The most important thing for most people to know is that you must pay attention carefully as to when notice is required to be given to the umbrella carrier. Sometimes, when a claim comes in, people think it is a small claim (below the limit of the primary policy) and don't give notice to the umbrella carrier. Then, later - often much later - they realize the claim is a big claim that theoretically could exceed the limits of the primary policy so they give notice to the umbrella carrier. Then the carrier refuses to cover on the ground that notice is late. For that reason it is very, very, very important to always look at the notice requirements to make sure notice is given in the time and manner required....

Thank you for all of the information but especially for this bit of which I definitely was not aware.

 

[Katsmeow]

Thank you for all of the information but especially for this bit of which I definitely was not aware.

You're welcome. Obviously every state has different laws and various policies are different so always important to know what is required with your policy and the applicable state law.

One thing that bothers is that most people never actually read their insurance policies and often think (wrongly) that every homeowner's policy is like every other policy, for example. In reality there can be big differences among policies of the same type.

 

[SumDay]

Thank you for the personal experience. Do you mind sharing the name of the insurance company you use?

It's one of the big ones that has the letters F A R M in it. PM me if you want more info.

Glad I was able to plant a seed of doubt about the joys of investment real estate. It's not for the faint of heart.

 

[pb4uski]

FWIW when I was pricing my umbrella (with the same carrier as my auto and home coverage) it was actually more expensive for me to to keep the auto and home coverages that I had at the time and get a bigger umbrella than it was to maximize my auto and home coverages and buy a smaller umbrella. My total coverage limit (umbrella and underlying) were the same but the pricing was different.

 

[Buckeye]

Umbrella policies require you to have certain levels of coverage on your auto policy. My USAA umbrella policy requires me to carry $300K/$500k bodily injury and $100k property damage limits.

I just got my umbrella policy renewal from USLI/USAA with a 20% increase tacked on. Not a happy camper. I emailed them to see if they have another provider. I'm sure the problem is FL and not USLI but it was worth an email. Soooo much fraud in this state but there is no incentive to reduce it because there is no control on premiums.

I loved it when CA passed an insurance price control law in the late '80's, early '90's. It was the fraudsters worst nightmare because the insurance companies could no longer tack on huge increases to cover the increased fraud and there was huge motivation to clean things up.

 

[jollystomper]

#1 umbrella policy
#2 lawyer son

I'm close. Umbrella policy plus lawyer sibling, in-laws, nieces and nephews whom I always remember with a small but meaningful gift on their birthdays, marriage anniversaries, and Christmas.

I've had the umbrella policy for close to 20 years. I think a lot has to do with what your activities involve. As was shown earlier it is a must if you own rental properties.

An addition thing to consider - keep silent about finances and don't let folks know what you have, don't flaunt any wealth, and make them think you're just getting by.

 

[SumDay]

An addition thing to consider - keep silent about finances and don't let folks know what you have, don't flaunt any wealth, and make them think you're just getting by.

+1. Exactly why I drive a 10 year old car and have far less house than we can afford.