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Old 04-29-2015, 04:52 PM   #21
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What rockyj said. We carry $2m. Cost is $285/year with AAA.
Same coverage and almost exactly the same premium here too.
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Old 04-29-2015, 08:44 PM   #22
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I do not understand why coverage is tied to your net worth? Wouldn't the reasonable amount of loss upon lawsuit be the amount to cover? If one had $2million in insurance and 2 million in assets any lawyer worth his salt would see he could sue and win 4 million,no? When deciding how much to cover is amount of assets even relevant? Worst case from what I gather would be the sued for the wrongful death of a spouse over age of 18 with children. From what I have seen the average award in such a case is over 2.5 million dollars, with 25% of all cases exceeding awards of 4 million wouldn't that be a reasonable amount of coverage?
The reality is that any low-life who can find a low-life lawyer to take their case can sue anyone for as much as they want so of course it is possible that I could get sued for more. But since my my insurer is one the hook for the first $2.5 million or so between base policy coverage and the umbrella they have a high incentive to provide a vigorous defense.

I don't know anyone who has an umbrella for more than their net worth as you seem to be suggesting. Are you an insurance agent?
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Old 04-29-2015, 09:36 PM   #23
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We have one. The thing is that if you are ever sued for big amounts, the insurer has lots of incentive to work with you.
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Old 04-29-2015, 09:55 PM   #24
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Oh good info Athena. Our house is in the name of a trust. I did just speak with our broker and he is waiting for the underwriters to give him quotes for 3 and 4 million (we have 2 at the moment after 1,000,000 on our auto policy, but only 100,000 on our home.) Based on your response he is looking into adding the trust as additional insured on both the homeowners and the umbrella. Good info. We will see what the quotes come in at. Our 2MM is $365, but I am guessing it is that low due to the 1MM on each auto.
how is your house protected by a revocable trust. From a quick web search it appears a irrevocable trust can provide protection as the property is out the person's name, but a revocable trust can be quickly undone.... so the person can undo thisl

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A revocable living trust, on the other hand, does not protect your assets from your creditors. This is because a revocable living trust can, by its terms, be changed or terminated at any time. Due to these terms, the trust creator maintains ownership of his assets. Therefore, a creditor could force the owner of a revocable living trust to terminate the trust and surrender the assets.
from Two Types of Trusts: Which Protect Against Creditors? - EstatePlanning.com
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Old 04-30-2015, 06:19 AM   #25
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The reality is that any low-life who can find a low-life lawyer to take their case can sue anyone for as much as they want so of course it is possible that I could get sued for more. But since my my insurer is one the hook for the first $2.5 million or so between base policy coverage and the umbrella they have a high incentive to provide a vigorous defense.

I don't know anyone who has an umbrella for more than their net worth as you seem to be suggesting. Are you an insurance agent?
+1 It is all about incentive to protect you.
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Old 04-30-2015, 06:44 AM   #26
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"So what happens if you have a net worth of 1 million dollars and have a 1 million dollar umbrella policy but have a 2 million judgement against you? Are you then broke? (or worse)" -- Car Guy

Back in the day, I was a civil trial lawyer. Some things to note: First, many or most cases settle before a judgment is ever reached. This means that if the injury is worth, say, $2MM, then the plaintiff (and his lawyer) are likely to take less to eliminate the high cost of trial, and the real risk of losing, or getting less from the jury than plaintiff hoped to get.

Second, the insurance company will often want to settle to keep legal costs under control, particularly if the amount sought in settlement is less than the policy limits.

Third, the courts (the judge) will often be pushing -- hard -- for settlement. Court dockets are usually overcrowded, and judges want cases to settle to clear the backlog.

Fourth, even if there's ultimately a judgment against you (assuming settlement negotiations fail AND you lose at trial), then you can still negotiate a settlement even with a judgment. When those negotiations occur, quite often the plantiff's lawyer and his client will take less than the full judgment amount to avoid chasing assets that are time-consuming and expensive to reach (e.g., jointly held assets like a house, a retirement plan protected by ERISA or state law, etc.).

So, even in the worst case scenario, the amount of net worth is seldom fully exposed, and the plaintiff and his lawyer are likely to aim for, or ultimately get, less.

So with $1MM in net worth and $1MM in coverage, all hope is not lost.

Personally, I have $2MM in coverage, and my net worth is higher than the $2MM.

YMMV, I am not your lawyer, disclaimer, disclaimer, yadda yadda.
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Old 04-30-2015, 06:55 AM   #27
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Insurance companies are pretty good at estimating risk. Comparing the yearly rate to the potential payout gives one some idea of how likely one is to use the insurance.
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Old 04-30-2015, 06:58 AM   #28
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Don't forget many assets are exempt from judgements.

Exempt assets include:
Homestead exemption for Real Estate (150k per person in my state)
401k
IRAs (check your state law)
Defined Benefit Pensions
Social Security, SSDI
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Old 04-30-2015, 07:15 AM   #29
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ours is more expensive since we cover multiple teen (male) drivers and have a boat. I do like the peace of mind and it is worth the cost to us.


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Old 04-30-2015, 08:17 AM   #30
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Originally Posted by Mo Money View Post
"So what happens if you have a net worth of 1 million dollars and have a 1 million dollar umbrella policy but have a 2 million judgement against you? Are you then broke? (or worse)" -- Car Guy

Back in the day, I was a civil trial lawyer. Some things to note: First, many or most cases settle before a judgment is ever reached. This means that if the injury is worth, say, $2MM, then the plaintiff (and his lawyer) are likely to take less to eliminate the high cost of trial, and the real risk of losing, or getting less from the jury than plaintiff hoped to get.

Second, the insurance company will often want to settle to keep legal costs under control, particularly if the amount sought in settlement is less than the policy limits.

Third, the courts (the judge) will often be pushing -- hard -- for settlement. Court dockets are usually overcrowded, and judges want cases to settle to clear the backlog.

Fourth, even if there's ultimately a judgment against you (assuming settlement negotiations fail AND you lose at trial), then you can still negotiate a settlement even with a judgment. When those negotiations occur, quite often the plantiff's lawyer and his client will take less than the full judgment amount to avoid chasing assets that are time-consuming and expensive to reach (e.g., jointly held assets like a house, a retirement plan protected by ERISA or state law, etc.).

So, even in the worst case scenario, the amount of net worth is seldom fully exposed, and the plaintiff and his lawyer are likely to aim for, or ultimately get, less.

So with $1MM in net worth and $1MM in coverage, all hope is not lost.

Personally, I have $2MM in coverage, and my net worth is higher than the $2MM.

YMMV, I am not your lawyer, disclaimer, disclaimer, yadda yadda.
Thanks for your response but my post was really intended to be a rhetorical question. As many have already commented, I think a million dollar or more umbrella policy would help to encourage the insurance company to fight for you. (That is really why I have one too) However I did learn something. I didn't not know that 401k's and IRA's had some protection. But even with that, I'll still keep my policy.
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Old 04-30-2015, 08:19 AM   #31
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how is your house protected by a revocable trust. From a quick web search it appears a irrevocable trust can provide protection as the property is out the person's name, but a revocable trust can be quickly undone.... so the person can undo thisl from Two Types of Trusts: Which Protect Against Creditors? - EstatePlanning.com
Bingy Bear; you may be right but after reading Athena's situation it occurred to me that the policies should be in the name that is on the deed and or list the trust as an additional insured. My insurance agent agreed that it was a good threshold question to pursue withe the underwriter and also thought that the umbrella liability policy should carry the same endorsement in the event that a claim was based on the home policy.
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Old 04-30-2015, 08:24 AM   #32
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"So what happens if you have a net worth of 1 million dollars and have a 1 million dollar umbrella policy but have a 2 million judgement against you? Are you then broke? (or worse)" -- Car Guy Back in the day, I was a civil trial lawyer. Some things to note: First, many or most cases settle before a judgment is ever reached. This means that if the injury is worth, say, $2MM, then the plaintiff (and his lawyer) are likely to take less to eliminate the high cost of trial, and the real risk of losing, or getting less from the jury than plaintiff hoped to get. Second, the insurance company will often want to settle to keep legal costs under control, particularly if the amount sought in settlement is less than the policy limits. Third, the courts (the judge) will often be pushing -- hard -- for settlement. Court dockets are usually overcrowded, and judges want cases to settle to clear the backlog. Fourth, even if there's ultimately a judgment against you (assuming settlement negotiations fail AND you lose at trial), then you can still negotiate a settlement even with a judgment. When those negotiations occur, quite often the plantiff's lawyer and his client will take less than the full judgment amount to avoid chasing assets that are time-consuming and expensive to reach (e.g., jointly held assets like a house, a retirement plan protected by ERISA or state law, etc.). So, even in the worst case scenario, the amount of net worth is seldom fully exposed, and the plaintiff and his lawyer are likely to aim for, or ultimately get, less. So with $1MM in net worth and $1MM in coverage, all hope is not lost. Personally, I have $2MM in coverage, and my net worth is higher than the $2MM. YMMV, I am not your lawyer, disclaimer, disclaimer, yadda yadda.
Thank you Mo Money for your insight. I think it will come down to what the incremental cost will be for the third or fourth million of coverage. Oddly we are less likely at this point in our lives to be sued with no youthful drivers, quiet lifestyle, retirement status, however as our NW has grown we have become increasingly cautious and prone to take whatever steps we can to protect our assets. The aging process no doubt.
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Old 04-30-2015, 10:56 AM   #33
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I do not have an umbrella policy but after several threads on this topic (and a couple of recent auto accidents in our area), I called my insurance company today to get quotes. My homeowners currently carries a half million on both vehicle and house (in case someone falls. While I do not typically like insurance, in todays society I don't think that is enough and it's no where near my net worth. It does seem to be about (1) getting a little leverage so your insurance company is more on the hook and will held defend (2) a bit more peace of mind at a relatively cheap cost.

Until now, anyone working in my yard or on my house that was not insured had to sign a piece of paper stating "they would not sue me and take full responsibility for choosing to do the work", disclosure regarding knowledge that I had a dog, etc. My sister had a friend that visited her home, fell and sued her. It wasn't much but still it is the point of the matter.

Hopefully putting something in place will greatly reduce the risk of someone taking all of my available assets. Thanks to the poster for restarting this topic.
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Old 04-30-2015, 11:14 AM   #34
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"My sister had a friend that visited her home, fell and sued her. It wasn't much but still it is the point of the matter. "

Really....I'm not sure I would call this person a "friend"!


We've had a $1M umbrella policy for the past 10 years. May consider upping to $2M next time we renew.
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Old 04-30-2015, 11:27 AM   #35
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I am trying to understand putting a personal residence into living trusts. This doesn't protect the asset at all and I suspect it may lead to issues with homestead exemption. The only think I can think of is probate issues; but, we have beneficiary deeds in many/most states that automatically convey the property.

For those of you who have their home in a living trust, can you explain why?
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Old 04-30-2015, 12:26 PM   #36
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"My sister had a friend that visited her home, fell and sued her. It wasn't much but still it is the point of the matter. "

Really....I'm not sure I would call this person a "friend"!


We've had a $1M umbrella policy for the past 10 years. May consider upping to $2M next time we renew.
Agreed.

Quotes I received today. 1 million = $115, 2 million = $202 and 3 million = $276. Same company as my homeowners and auto so there were some nominal credits. For now, am going with the 2 million since it is in addition to the other half million under homeowners. Still doesn't cover all of net worth and future income but it's a start. More than I had that is for sure.
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Old 04-30-2015, 01:03 PM   #37
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Agreed.

Quotes I received today. 1 million = $115, 2 million = $202 and 3 million = $276. Same company as my homeowners and auto so there were some nominal credits. For now, am going with the 2 million since it is in addition to the other half million under homeowners. Still doesn't cover all of net worth and future income but it's a start. More than I had that is for sure.
What state are you in? I pay $368 for 1 million with the same company as my homeowners and autos.
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Old 04-30-2015, 03:40 PM   #38
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What state are you in? I pay $368 for 1 million with the same company as my homeowners and autos.
Virginia and an hour inland from the coast. What state are you in?
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Old 04-30-2015, 03:45 PM   #39
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Virginia and an hour inland from the coast. What state are you in?
MA 25 minutes outside Boston.
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Old 04-30-2015, 04:29 PM   #40
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We've got a $2 million Umbrella. It doesn't cover our total net worth but I'm hoping it's enough to cover most of the worst cases. Anything that's not in IRAs is in a Revocable Trust so I'm not sure they can attach our other assets. The house is titled in the trust and the trust is an additional insured on our Homeowners policy. Just realized it ought to be on our Umbrella as well!
Athena; Our home is in a Revocable Trust as well. I contacted our insurance agent yesterday regarding naming the trust as additional insured on the home and was told today that we would have to rewrite our homeowners policy in the name of the Trust and it would have to be insured as a "Rental". We would then have to have a Renter's Policy to cover our personal property. I am waiting for the quotes, but I'm anticipating higher overall premiums. Does any of this ring a bell with you?
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