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Good umbrella carrier
Old 12-29-2011, 09:08 AM   #1
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Good umbrella carrier

I will be retiring soon and will need to replace my employer provided umbrella coverage once I leave. Are there any carriers that people on this forum have found good and affordable? One carrier I am looking at would be about $500/year for $3m of coverage (which is what I currently have).

On coverage, what do you carry for coverage in relation to net worth? and why?
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Old 12-29-2011, 10:50 AM   #2
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A few years back I switched from Allstate to Geico. Allstate's price was about twice as much per year.

As for the amount, I cover about my net worth. Less than that, I wouldn't feel fully covered. More than that, I don't think is needed as if someone was to sue, they'd would be suing someone who doesn't have anything more to cough up
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Old 12-29-2011, 11:13 AM   #3
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As for the amount, I cover about my net worth. Less than that, I wouldn't feel fully covered. More than that, I don't think is needed as if someone was to sue, they'd would be suing someone who doesn't have anything more to cough up
AFAIK, it doesn't work as you imply. Instead, the insurance covers only the first dollars of a claim. So, for example, if you have $3m and insure for $3m, but you lose a suit for $6+m, you'd still be wiped out. A possible solution is to place assets into an irrevocable trust.
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Old 12-29-2011, 11:52 AM   #4
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A possible solution is to place assets into an irrevocable trust.
And if you did this, you'd need to do it *before* anything occurred that would give you a reasonable expectation of being sued. Otherwise it could be considered a "fraudulent conveyance" and could lose the protections it would otherwise have.

In other words, if you (generically) opened such a trust (or other vehicle that provided asset protection in your state) *before* your minor child torched a million dollar home, it would likely be legitimate. If you did it *after* that event occurred, it would likely be considered a fraudulent conveyance.
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Old 12-29-2011, 11:58 AM   #5
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I'm not an expert, but I do have umbrella coverage.

First place to check would be whoever you are using for homeowner's/renter's and auto insurance so that they are all coordinated (matching liability levels) and you get any bundling discounts. Your other insurance will cover the $XXXk of liability, the umbrella will cover the rest above that.

Umbrella insurance is like long-term care insurance. As GrayHare noted, it covers the first $3M and you cover the rest above that. So whatever makes you feel good is best. The cost is pretty cheap, and what are the chances that you will cause >$1M or >$3M worth of damage, medical costs, or pain and suffering?

The cost depends on your circumstances. Mine about doubled when DS's started driving. $500 seems reasonable without that particular problem, but of course shop around.
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Old 12-29-2011, 12:05 PM   #6
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Thanks for the input. While I realize that any bullet-proof solution like a trust or something like that might have its own hassles, I'm just looking for something practical. While I think that the chances of my (or DW) causing even $3m of damages is extremely remote, for ~$500 a year the peace of mind is good to have in the event some odd event caused damage to someone I presumably would not be wiped out.

Guess I'll shop around some.
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Old 12-29-2011, 12:12 PM   #7
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Thanks for the input. While I realize that any bullet-proof solution like a trust or something like that might have its own hassles, I'm just looking for something practical. While I think that the chances of my (or DW) causing even $3m of damages is extremely remote, for ~$500 a year the peace of mind is good to have in the event some odd event caused damage to someone I presumably would not be wiped out.

Guess I'll shop around some.
Look also at asset protection laws for your state and which assets are judgment-proof. Some states have stronger protections from lawsuits and creditors than other states in terms of homesteaded personal residence, retirement plans (401Ks, IRAs, pensions), insurance policies and annuities. In particular, Texas, Oklahoma and Florida provide the strongest protection, each providing basically unlimited protection for homesteaded residences, 401Ks, IRAs, insurance policies and annuities. Folks living in these states may not feel the same sense of urgency in terms of a massive umbrella policy if most of their net worth is tied up in these vehicles.
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Old 12-29-2011, 02:48 PM   #8
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I think one of the other major advantages of having an umbrella policy is that your insurer is going to fight to limit its (and your) liability. They don't want to pay, and they will provide a stiff legal defense on your behalf if the potential claim risk is high.
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Old 12-29-2011, 02:49 PM   #9
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AFAIK, it doesn't work as you imply. Instead, the insurance covers only the first dollars of a claim. So, for example, if you have $3m and insure for $3m, but you lose a suit for $6+m, you'd still be wiped out. A possible solution is to place assets into an irrevocable trust.
But, if I have $3m and someone gets a $6+m suit against me, good luck on the suing party collecting the remaining $3m . It's like landing on Boardwalk with a hotel when all I have left is Baltic.

http://www.ehow.com/info_8465080_muc...ce-should.html
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Old 12-29-2011, 03:23 PM   #10
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I think one of the other major advantages of having an umbrella policy is that your insurer is going to fight to limit its (and your) liability. They don't want to pay, and they will provide a stiff legal defense on your behalf if the potential claim risk is high.
Not to mention it's important not to tell anyone involved in the litigation that you have an umbrella policy. If they were thinking about suing for $500K but then hear you have a $2M umbrella, well, they'll probably sue for $2M now...
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Old 12-29-2011, 03:54 PM   #11
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When I bought an umbrella policy, they recommended an amount equal to or a little higher than my net worth, so that's what I got. Sure hope I never need it.
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Old 12-29-2011, 05:10 PM   #12
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I think one of the other major advantages of having an umbrella policy is that your insurer is going to fight to limit its (and your) liability. They don't want to pay, and they will provide a stiff legal defense on your behalf if the potential claim risk is high.
This is of course one of the advantages of having all coverages with one company, with the umbrella policy, they will bring more competent lawyers than without, and in addition you will not have companies playing against each other.
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Old 12-29-2011, 06:30 PM   #13
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When I bought an umbrella policy, they recommended an amount equal to or a little higher than my net worth, so that's what I got. Sure hope I never need it.
We cover ourselves for our gross worth.

Whoever's going to sue us isn't going to be so considerate as to leave us with enough to pay the mortgages...
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Old 12-29-2011, 07:03 PM   #14
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Our umbrella is about equal to our net worth as well... and $500 for $3MM seems very reasonable.
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Old 12-29-2011, 08:00 PM   #15
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My insurer won't sell umbrella coverage unless you have both home and auto with them, and they have to have the highest limits (otherwise you could have a gap in coverage between your primary policy and your umbrella policy). I'm paying about $170/yr for a $1M umbrella.

Unless you are mega rich or you cause a mega disaster, I think it's unlikely a plantiff will pursue your assets beyond your +$M umbrella insurance. Most attorneys will go for the policy limits and call it a day if they get there. Sure it's possible but even a huge insurance policy is not foolproof.

I am surprised that the OP's employer provides umbrella coverage...I get some free life insurance through my employer but I am not really sure what a company gains by giving its employees umbrella coverage, given that the vast majority of people don't have enough wealth to make it worthwhile. Guessing OP is some kind of executive.
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Old 12-29-2011, 08:25 PM   #16
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I have no idea why they offer umbrella either - I had never heard of this as being part of a benefit package until I joined that employer - but I don't look a gift horse in the mouth.
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