How much liability insurance do you carry?

[Gazingus]

I searched and didn't find an old thread on this topic. I've always been as self-insured as possible (risk tolerant) but last year we increased our auto liabilities to $300k per person, $500k per accident, and $100k property damage. We have the same amounts in uninsured/underinsured motorists. Previously, we had the minimum policies allowed, which were around the $50k-$100k range.

We also opted for $500k liability coverage for any accident/injury on our property. Of course, they want to sell us an "umbrella" liability policy for $1MM or more.

I hate to spend money on insurance, so I'm considering rolling these amounts back. It won't save big money, but every dollar counts, right?

Are 300/500/100 amounts common for an auto policy? Is it high/low? What do you carry? Do you have umbrella liability coverage?

 

[REWahoo]

I searched and didn't find an old thread on this topic.

Search 'umbrella' and you'll find a dozen or more threads discussing the subject.

 

[Big_Hitter]

umbrella is pretty cheap - I have $2M coverage

 

[Helen]

umbrella is pretty cheap - I have $2M coverage

+1

I woke up thinking about this and wondering if I should up they amount to $3 million.

 

[rodi]

Because of our umbrella policy we had to up our liability limits on everything else.
We need an umbrella policy because we have a rental unit on our property, we have middle school age kids who are, sometimes, idiots. And because much of our nest egg is not in a 401k - and therefore exposed to lawsuits.

We have the minimum liability on auto/home/rental unit that is allowed by our umbrella.

 

[Dash man]

I have $4 million umbrella coverage. It's cheap compared to losing what we've worked for all our lives because of one mistake.


Sent from my iPhone using Early Retirement Forum

 

[2017ish]

500K Combined Single Limit liability on house/cars. 3 million umbrella.

BUT, it is all going to depend upon a particular individual/couple's earnings, assets, location of assets (house, protected retirement $$, or other), and state of residence.

OTOH, as noted by several already, umbrella coverage is pretty inexpensive.

 

[greydog17]

$250/$500 on Auto Liab with same for Uninsured & Underinsured, $800k on Home Liab and $1M Umbrella

 

[RE2Boys]

I searched and didn't find an old thread on this topic. I've always been as self-insured as possible (risk tolerant) but last year we increased our auto liabilities to $300k per person, $500k per accident, and $100k property damage. We have the same amounts in uninsured/underinsured motorists. Previously, we had the minimum policies allowed, which were around the $50k-$100k range.

We also opted for $500k liability coverage for any accident/injury on our property. Of course, they want to sell us an "umbrella" liability policy for $1MM or more.

I hate to spend money on insurance, so I'm considering rolling these amounts back. It won't save big money, but every dollar counts, right?

Are 300/500/100 amounts common for an auto policy? Is it high/low? What do you carry? Do you have umbrella liability coverage?

Wow, you must not have much in the way of assets to protect until recently. I think I went to 300/500/100 about ten years ago. Recently increased coverage to 500/1000/100. Cost very few dollars for additional liability and resulted in a decrease in my umbrella coverage. A liability lawsuit can quickly destroy my retirement plans! I save a fair amount by cutting out collision coverage once the vehicles worth drops below $10K. The worst that can happen is the vehicle is totaled, but in a lawsuit, liability could get into the 100K range very quickly.

 

[TimSF]

umbrella is pretty cheap - I have $2M coverage

+1. me too. I bought it shortly after I ER'd.

 

[photoguy]

2M umbrella as well

 

[mpeirce]

Even if you have coverage, it's worth shopping around every now and then.

We had our homeowners/umbrella/auto with Grange and the price had started to creep up. Then in December the bill came for 2015 and it was around almost 20% than last year.

I called our agent and she shopped around for similar coverage.

Turned out Westfield offered slightly better coverage for a lot less. We switched after checking with DB who's in the business and likes Westfield.

 

[Cobra9777]

Our auto coverage is 250/500/100, and we have 300 liability on the house. IIRC, these were the minimums required for our umbrella coverage. We have $1M umbrella. I'd like to go to $2M, but it's not cheap due to two rental houses and two 20-something kids still carried on my auto insurance. The kids pay their share of the auto policy, but not the umbrella. I need to kick them off soon.

 

[Aeowyn]

In general I don't like insurance because it is something you buy and hope to never use.

However as far as insurance goes, liability is one of the best deals out there.

When thinking of insurance, I ask my self what are the things that could bankrupt me financially.

One of those things is a major medical issue like cancer. We can cover the small stuff, but cancer could knock us out financially. So I make sure we have medical insurance in place that covers the big stuff.

The other thing that could knock us out is a lawsuit. Not that I think it is likely, but what if we are found at fault in a major auto accident - it doesn't take long to get above $100K and if injuries are involved - could be over $1M.

Or what my livestock get out of the fence and cause an accident - or my dog gets out and destroys a neighbors property? or what if?

Yes - liability insurance, especially umbrella insurance if your net worth is high enough to need protecting is a bargain.

 

[Aeowyn]

One more thing - I like to carry high deductibles for insurance. In addition to lowering the cost of the insurance, it also makes sure I don't try to mess around filing claims for the small stuff that we can cover. Saves time/hassle and then I don't have a small claim that might count against future premium hikes. Even when people have a low deductible, if they have a small claim they often will cover themselves to avoid premium increase (or potentially being dropped).

So my philosophy is don't insure the things you can reasonably cover - but do insure the things that can take you out.

 

[Katiek]

I just increased my liability coverage to $1m for auto and took out a $2m umbrella policy. I really hadn't thought about it much previously, but as I started to do more planning for FIRE, I realized I wanted more protection from events that could undo years of saving.

 

[Hyper]

Interesting. We are currently going through this right now as our current ins provider has had a brilliant brain fart and started some kind of IQ rating that has rated us below 500 on a scale up to 900 and significantly raised our premiums. We have not had a claim for 25 yrs against any kind of ins. We have 0 debt and an ok sized NW so how the heck can we rate below 500 It's because we aren't in debt up to our eyeballs!!! Really torqued about it and we are switching. While going through this we checked on the umbrella thinking it might ins out of the ordinary accidents. It won't. All it does is extend house and auto $$ so we don't see the benefit. Seems kind of like life ins, a waste. My wife has been in the legal field for quite a while now and for those that think they can't be hit even with high umbrella. Better guess again. Steaming as I type

 

[jebmke]

$5M umbrella. Was the most I could get without going to underwriting.

 

[scrabbler1]

Back in 2010 I increased my auto insurance BI and PD limits from 100/200/25 to 250/500/50. Because I live in a large co-op apartment complex, I didn't feel I needed to buy umbrella because the co-op's large insurance policy acts like umbrella, covering potential claims against injuries or damages in the common areas of the co-op.

 

[imoldernu]

Next question is: do you know what the umbrella policy actually covers? Therein may be the reason that the coverage rate is so low. Just sayin'

 

[T-Minus]

My general rule-of-thumb for determining total liability insurance coverage is Net Worth minus 401k balance - rounded up to next even number.

 

[jon-nyc]

Your net worth is irrelevant. Or at least not directly relevant. You aren't insuring the balance. If you have x million of insurance and are sued for x+1, you have a million of your own money at risk.

If there's any rule of thumb about how much liability insurance to have, it would be 'what might i be sued for?' Obviously a hard question to answer.

 

[T-Minus]

Your net worth is irrelevant. Or at least not directly relevant. You aren't insuring the balance. If you have x million of insurance and are sued for x+1, you have a million of your own money at risk...

I formed my opinion from some basic research - but I tended to avoid insurance sales-people's opinion. I found this in a Money Magazine article:

Base your umbrella policy on the value of your assets. In a lawsuit, lawyers will aim for your available assets but probably settle for a comparable insurance amount.

...and this from Jack Hungelmann, Author of Insurance for Dummies:

..A good start for a coverage amount is to add up the value of non-retirement-plan assets. And then add $1million for peace of mind...

Can you please point to research that enforces the point you are making?

Thanks!

 

[jon-nyc]

Just read your umbrella policy. It isn't net worth insurance. It's liability insurance.

Note the money magazine article, fwiw, frames the question the same way I did. It just assumes the answer is going to be tied to the value of your umbrella policy. I don't really understand the rationale behind that.

 

[Del Q]

I asked an attorney who does a lot of defense work for an insurance company "how much liability insurance should I carry" He didn't bat an eye and said "how much do you have to lose?".


He told me that most cases settle for policy limits as long as the defendant carried liability limits up to his assets. He did say that excess verdicts over policy limits are rare, but do happen if someone is blatantly underinsured.


I carry a $2m umbrella over the basic underlying policies. I spent a lot of time with my agent finding other ways to trim some coverage from my underlying policies to cover most of the premium. I increased deductibles to $1,000 and removed some smaller "feel good" options such as towing, full glass, jewelry riders and other options that I can live without.


I've got a friend who had a motorcycle accident last year and he's worried sick he's going to lose his business. He has a $1m umbrella and a net worth over $5m. I asked why he had such low limits and he said he didn't want an umbrella at all but his agent kept hounding him that he took out just to shut him up.