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Do you carry Excess Liability Coverage
Old 04-29-2015, 12:02 PM   #1
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Do you carry Excess Liability Coverage

I am looking for info on what others carry for Excess Liability Coverage? Do you carry enough coverage to cover your Net Worth? If not what goes into your decision making? If funds are in 401K's IRA's, are those funds susceptable to judgements in litigation?

And finally if you have sufficient insurance to cover your networh, but you are sued for twice the amount, aren't we in just as bad a spot as if we had none?

I'd love to hear your responses.
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Old 04-29-2015, 12:08 PM   #2
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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!
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Old 04-29-2015, 12:11 PM   #3
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We carry 3 mill excess over a 500K CSL auto and 500K liability on house policy. Our respective professions scream "rich" to many people...

Issue for me isn't so much net worth as income--garnishment would suck and an unpaid judgment would be nasty for our business reputations.

401k/IRA are safe--particularly if you choose, or are forced into bankruptcy (IRAs have some exceptions, dependent upon state--but to extent they are rollovers from qualified plan, no worries).

I don't get worried about the "getting sued for twice as much" hypothetical, since the lawyers who would be bringing that type of complex suit typically aren't going to be insane. (Plus, we live in the only US jurisdiction in which plaintiff is not permitted to obtain defendant's insurance policy--at least as long as we aren't in federal court.)

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E.T.A. Like the goddess of wisdom, our policies do not cover our net worth--due to the treatment of retirement funds in bankruptcy.
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Old 04-29-2015, 12:13 PM   #4
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Just renewed mine. $1m umbrella coverage would be $258 and $2m would be $460. I have enough so that base policy + umbrella ~ our net worth.

The way I figure it is that if something were to happen and we were sued that the insurer would have millions of reasons to mount a vigorous defense since their money would be in line before my money.
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Old 04-29-2015, 12:18 PM   #5
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I actually changed my policies based on some similar threads I read here. I increased my auto insurance, and got an umbrella policy for the first time.
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Old 04-29-2015, 12:22 PM   #6
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We carry an umbrella policy for approximately the total value of our investment accounts (not our total net worth). More than half of that amount is in retirement accounts with whatever protection from judgments that would provide. It's not by design that we chose an amount that matches our investment accounts, it just happens to be that amount now.

I didn't really give it a lot of thought, but my key thoughts are:

1) The additional coverage of the umbrella policy is not at all expensive;

2) in the (hopefully) unlikely case that we ever would be sued, I want good lawyers in my corner. I think the insurance company has those.
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Old 04-29-2015, 12:26 PM   #7
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Just upgraded from $1M to $2M, the cost went from $400 to $680. Our insurance company doesn't offer anything larger.


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Old 04-29-2015, 12:34 PM   #8
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Umbrella coverage is relatively cheap, so why not?
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Old 04-29-2015, 12:38 PM   #9
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2) in the (hopefully) unlikely case that we ever would be sued, I want good lawyers in my corner. I think the insurance company has those.
What rockyj said. We carry $2m. Cost is $285/year with AAA.
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Old 04-29-2015, 01:11 PM   #10
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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)
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Old 04-29-2015, 01:18 PM   #11
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Totally depends on how much is protected in 401k's etc. I have a 1m umbrella and less than that in taxable accounts (i.e. non-401k), so even if our taxable got wiped we'd still have plenty to live on to make it to SS at least.
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Old 04-29-2015, 01:19 PM   #12
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I got enough coverage to give my insurance company some motivation to mount a vigorous defense in case I ever get sued.
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Old 04-29-2015, 01:30 PM   #13
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$2M umbrella here
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Old 04-29-2015, 01:32 PM   #14
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Totally depends on how much is protected in 401k's etc. I have a 1m umbrella and less than that in taxable accounts (i.e. non-401k), so even if our taxable got wiped we'd still have plenty to live on to make it to SS at least.
Are you saying that $$ in 401Ks and IRAs are somehow protected from litigation?
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Old 04-29-2015, 01:39 PM   #15
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Are you saying that $$ in 401Ks and IRAs are somehow protected from litigation?
Yes, but the degree of protection varies by state.

See this link for more info: Is a Retirement Plan Safe From a Lawsuit? | Finance - Zacks
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Old 04-29-2015, 02:10 PM   #16
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Yes, but the degree of protection varies by state.

See this link for more info: Is a Retirement Plan Safe From a Lawsuit? | Finance - Zacks
Note the 401k protection is a federal law (ERISA I believe) , IRA's do vary by state.
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Old 04-29-2015, 02:47 PM   #17
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Originally Posted by Golden sunsets View Post
I am looking for info on what others carry for Excess Liability Coverage? Do you carry enough coverage to cover your Net Worth? If not what goes into your decision making? If funds are in 401K's IRA's, are those funds susceptable to judgements in litigation?

And finally if you have sufficient insurance to cover your networh, but you are sued for twice the amount, aren't we in just as bad a spot as if we had none?

I'd love to hear your responses.
I don't, but I have thought about it recently. I am generally pretty negative on insurance. I dropped life insurance when I was 40.

I gave the umbrella insurance some consideration when a bicyclist ran into my wife's moving car. He ended up on her windshield then flew off when she slammed on the brakes. He suffered minor injuries, but enough that some loser law firm made her life miserable for the next three years. Throughout this period I wondered what would happen if we lost in court.
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Old 04-29-2015, 03:20 PM   #18
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Originally Posted by pb4uski View Post
Just renewed mine. $1m umbrella coverage would be $258 and $2m would be $460. I have enough so that base policy + umbrella ~ our net worth.

The way I figure it is that if something were to happen and we were sued that the insurer would have millions of reasons to mount a vigorous defense since their money would be in line before my money.
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?
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Old 04-29-2015, 04:04 PM   #19
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I think you need to evaluate your risk and exposure to determine how much umbrella you need. People with swimming pools, dogs, boats etc. need a higher umbrella protection than folks without. Also people overestimate the judgement amount awarded by the courts in personal injury cases. In our case I am reluctant to rollover my 401K from my former employer for the liability protection (but also because it has no administrative fees and has all of my favorites index funds) our IRAs and Roths have some protection and our home is protected under the homestead exemption. Our taxable accounts are our main exposure.

A few months ago I found some information on injury settlements and jury awards in my county which is in a high cost of living state:

# 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 the average)

We no longer have a swimming pool, no kids in the house, no dogs and a 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 basic liability coverage would be sufficient protection.

If we get a judgement in excess of $1.5 million which based on the above data is unlikely and if they decide to come after our unprotected assets we will not be devastated.
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Old 04-29-2015, 04:30 PM   #20
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Originally Posted by athena53 View Post
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!
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.
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