Curious about umbrella liability policy experience

[Grandlakeokie]

Have had an umbrella with USAA for many years. Very cheap insurance.

A number of years back we use to RV with two other couples. The DW of one couple was a little inebriated, and fell while entering the other couples RV. Long story short, friendship ended with $175K lawsuit. It maxed out the homeowner's policy so other couple had to pay some out of pocket.

It's a tough world out there, especially when it comes to money.

[haha]

Excellent! Get drunk, fall down, sue your erstwhile friend, collect $175K. Where is Tony Soprano when you need him?

Ha

[urn2bfree]

How do assets held in trust affect the calculation of assets at risk? I understood the trust cannot be sued, so not sure how to calculate size of umbrella to insure since essentially all my assets are in trust.

[KingB]

Quote:

Originally Posted by urn2bfree How do assets held in trust affect the calculation of assets at risk? I understood the trust cannot be sued, so not sure how to calculate size of umbrella to insure since essentially all my assets are in trust.

Should assets on a 401K be excluded too?

[DoingHomework]

Quote:

Originally Posted by urn2bfree How do assets held in trust affect the calculation of assets at risk? I understood the trust cannot be sued, so not sure how to calculate size of umbrella to insure since essentially all my assets are in trust.

If you are talking about a revocable living trust then it won't do you much good if you are sued. That's something you should definitely talk with you attorney about. revocable trusts used for estate planning are for convenience and estate tax management, NOT for asset protection or taxes.

[Sarah in SC]

I use personalumbrella.com for the umbrella coverage. We have normal liability coverage with different companies for auto, RV, home, and boat, as it was cheaper that way. I get new quotes every other year on liability coverage and change if I find equiv coverage for less. Use a broker.

[ERD50]

Here's a comment/question I had on umbrella policies, from (!) 5 years ago.

http://www.early-retirement.org/foru...tml#post482351

an excerpt:

Quote:

Related to increasing your coverage, please check my logic on umbrella policies. I am unable to make the connection between 'how much assets I have' and 'how much coverage I should have'. Example: Say you have $1M 'protected' assets, $1M 'other' assets. I keep hearing that the 'conventional wisdom' says you should have a $1M umbrella policy. But, if you get sued for $2M or more, the insurance covers $1M, and they take your unprotected $1M. So it seems to me, the amount of coverage you want is dictated more by how much you think you might get sued for, rather than how much you have to protect - right? In the above case, a $2M lawsuit with a $1M umbrella; your unprotected assets are wiped out, whether they were $1.00 or $1M. So what good was the insurance? So if you need an umbrella equal to the amount you might get sued for to protect yourself (how can you predict that?) - it seems to be unrelated to how much assets you have. In fact, it almost seems more important to have a lot of coverage if you have smaller assets. Don't you risk an increased chance of losing it all in a suit? In the above example, if I had $3M unprotected assets, and got sued for the $2M, I'd still have $2M left (ins covered $1M I paid $1M), but if I have $500K in unprotected assets - I lose it all.

-ERD50

[Buckeye]

Quote:

Originally Posted by Sarah in SC I use personalumbrella.com for the umbrella coverage. We have normal liability coverage with different companies for auto, RV, home, and boat, as it was cheaper that way. I get new quotes every other year on liability coverage and change if I find equiv coverage for less. Use a broker.

Checked their quote against the cost of my policy through USAA and I'm below by about 10%. I assumed USAA was competitive but it's good to have data.

[Sarah in SC]

Good for you, Buckeye. No access to USAA for us, unfortunately.

[Da Nag]

Quote:

Originally Posted by ziggy29 And it may be obvious to many, but it's worth repeating anyway -- if you are potentially liable for something, NEVER make it known that you have an umbrella or the sharks will smell blood in the water knowing there's a chance you're good for $1 million or more.

About 10 years back, my wife was in an relatively minor auto accident - her fault. We were sued, and part of the process required us to answer a deposition - by mail, not in person. There were several questions about disclosing any and all insurance, including policy liability limits.

I ignored those questions, simply replying they had no relevance. I've no idea if this would have held up if the opposing attorney pushed things - as a settlement was reached with our insurance company before things went to trial.

Certainly good advice on not offering up policy specifics...but I've always wondered if push came to shove, if one can be forced to disclose via a deposition.

[Buckeye]

Quote:

Originally Posted by Sarah in SC Good for you, Buckeye. No access to USAA for us, unfortunately.

I'm wondering if the difference is the commission.

[Nords]

Our daughter is getting ready to buy a car. She's nearly 20 years old with her own savings and some NROTC income, so the discussion came up with USAA on whether to keep her on our policy (until she graduates from college) or to split her out on her own policy.

They quoted a hypothetical 2004 Honda Civic sedan on our policy: minimal personal injury protection, liability for our assets, plus towing & roadside assistance. No collision or comprehensive. If the car was put on our Mom & Dad policy then she'd pay $65/month because of our honkin' big liability limits. If she paid for her own separate policy then it'd be $50/month because she essentially has no assets.

If she plowed into a schoolbus full of lawyer's kids, USAA would look at who was paying the policy premiums (our daughter or Mom & Dad) and whether we were claiming her as a dependent on our tax returns.

Although her status as a full-time student means that we can declare her our dependent, we don't need to do that. It's better for her to pay her own insurance premiums (even if she's reimbursed or gifted by us) for her to build her own payment record.

Anyone else had to parse through the legal & financial issues of this decision?

Quote:

Originally Posted by Buckeye I'm wondering if the difference is the commission.

I wonder if it could be the claim rates, or that USAA has a much broader client base with a relatively efficient claims process of fewer man-hours.

They have a "skunkworks" division that tries to come up with new/faster ways to process claims. One of their ideas was a digital camera attached to a 10-foot pole for taking photos of roof damage while standing on the ground. Sounds pretty silly until you multiply the time savings, the reduced danger (of ladders or hanging out windows), and thousands of roof-damage claims.

[EveryLady]

Quote:

Originally Posted by ERD50 Here's a comment/question I had on umbrella policies, from (!) 5 years ago. http://www.early-retirement.org/foru...tml#post482351 an excerpt: -ERD50

Like you, have the same question and don't intuitively grasp the connection between liability total on an insurance policy and assets. Years ago when I took out the first umbrella policy, an attorney friend recommended $1 million. His rationale was that $1 million was then large enough that a court might well consider my having it as evidence of "responsible" behavior and subsequently limit liability to the policy total. Dunno how valid this POV is/was or what the equivalent amount today would be.

[Buckeye]

Quote:

Originally Posted by Nords Our daughter is getting ready to buy a car. She's nearly 20 years old with her own savings and some NROTC income, so the discussion came up with USAA on whether to keep her on our policy (until she graduates from college) or to split her out on her own policy. They quoted a hypothetical 2004 Honda Civic sedan on our policy: minimal personal injury protection, liability for our assets, plus towing & roadside assistance. No collision or comprehensive. If the car was put on our Mom & Dad policy then she'd pay $65/month because of our honkin' big liability limits. If she paid for her own separate policy then it'd be $50/month because she essentially has no assets. If she plowed into a schoolbus full of lawyer's kids, USAA would look at who was paying the policy premiums (our daughter or Mom & Dad) and whether we were claiming her as a dependent on our tax returns. Although her status as a full-time student means that we can declare her our dependent, we don't need to do that. It's better for her to pay her own insurance premiums (even if she's reimbursed or gifted by us) for her to build her own payment record. Anyone else had to parse through the legal & financial issues of this decision? I wonder if it could be the claim rates, or that USAA has a much broader client base with a relatively efficient claims process of fewer man-hours. They have a "skunkworks" division that tries to come up with new/faster ways to process claims. One of their ideas was a digital camera attached to a 10-foot pole for taking photos of roof damage while standing on the ground. Sounds pretty silly until you multiply the time savings, the reduced danger (of ladders or hanging out windows), and thousands of roof-damage claims.

With regard to claiming your daughter as a dependent, the facts are the facts whether you claim her or not.

[tryan]

Quote:

It's a tough world out there, especially when it comes to money.

One of DW "friends" (we don't see them anymore) sued a neighbor after her kid taunted thier dog and got bit. What was once a tight group of friends on a cul-desac is now Hatfields vs McCoys. Some are MOVING OUT. Really sad.

Rumor is the insurance settlement was 6 figures ... but nobody is telling.

FWIW, I got bit by the neighbors dog in the 70's ... nearly ripped my ear off. The owner came and aplogized (with the dog). That was good enough for us. Times have changed.

[ziggy29]

Quote:

Originally Posted by KingB Should assets on a 401K be excluded too?

Well, in *general* these will be protected regardless of your state, unlike an IRA where the protection varies widely depending on state law.

General legal concepts, of course, are no substitute for qualified legal consultations with attorneys well-versed in the asset protection laws of your own state.

[Sarah in SC]

Quote:

Originally Posted by tryan One of DW "friends" (we don't see them anymore) sued a neighbor after her kid taunted thier dog and got bit. What was once a tight group of friends on a cul-desac is now Hatfields vs McCoys. Some are MOVING OUT. Really sad. Rumor is the insurance settlement was 6 figures ... but nobody is telling. FWIW, I got bit by the neighbors dog in the 70's ... nearly ripped my ear off. The owner came and aplogized (with the dog). That was good enough for us. Times have changed.

This is the kind of story I have nightmares about, thanks to my work with rescue dogs. I've only had two bite incidents, one was a teenager walked up to a rescue dog and got bit pretty good and the parents were old-school "you shouldn't go up to a strange dog" people and wouldn't even let me pay to get the stitches! I kept waiting for the suit that never came.

The other was a dog that bit my brother. I paid for the stitches and still had to deal with all kinds of family drama, but the only good news was that he was so mad about my lack of interest in his quarter-sized injury that he didn't speak to me for a year!

I don't take dogs to any public places any more--just too many variables!

[Texas Proud]

Quote:

Originally Posted by tryan One of DW "friends" (we don't see them anymore) sued a neighbor after her kid taunted thier dog and got bit. What was once a tight group of friends on a cul-desac is now Hatfields vs McCoys. Some are MOVING OUT. Really sad. Rumor is the insurance settlement was 6 figures ... but nobody is telling. FWIW, I got bit by the neighbors dog in the 70's ... nearly ripped my ear off. The owner came and aplogized (with the dog). That was good enough for us. Times have changed.

Not all states have the same laws.... here the dog gets at least one free bite...

My son was sitting in our front yard when a dog ran up to him and bit him on the leg... the lady who owned it came by to apologize and offered to pay the DR bills.... when I sent them to her, we heard nothing... I did some research and found out our state laws...

All I was looking for was the Dr bills.... nothing more...

[tryan]

Quote:

This is the kind of story I have nightmares about, thanks to my work with rescue dogs. I've only had two bite incidents

Wow! This was also a rescue dog. The owner runs/coordinates the rescue effort for the state/region.

DW always said the dog is a big teddy bear and would "never harm anyone" ... but you never really know what you're adopting.

The commical piece is that the family who sued have maintained "the suit did not cost anybody anything" since insurance paid. Seems a bit naive given the neighborhood shake-up. DW was pushing me to purchase a house - before the suit - on the circle ... that idea has faded away (it's a good thing!)

The little tot has a Harvard size college fund from a incident he'll never remember (he was 3 yo).

[Sarah in SC]

Quote:

Originally Posted by tryan The commical piece is that the family who sued have maintained "the suit did not cost anybody anything" since insurance paid. The little tot has a Harvard size college fund from a incident he'll never remember (he was 3 yo).

Grrrr! That is what drives me crazy about stuff like that--the idea it doesn't "cost" anything! Be very glad you didn't get stuck in that 'hood.