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Liability Insurance Question
Old 05-17-2019, 12:24 PM   #1
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Liability Insurance Question

Do you have it and is there a rule of thumb how much is enough ?

For example, 68 year old retiree, no debt, net worth in the one-two million arena, plays golf, no DUIs or anything remarkable in the background.

Reason I ask, was playing golf yesterday and a person in the foursome pulled a tee shot onto a busy freeway, fortunately no broken glass or accidents but it got me wondering. Would this be a good time for a person to have liability insurance and if so, how much would cover any damages or lawsuits ?

Thanks in advance for any and all responses.
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Old 05-17-2019, 12:45 PM   #2
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You likely have liability insurance if you own a home or a car. Are you thinking of umbrella insurance? Umprella sits over your home and auto insurance and covers a wide variety of potential perils above and beyond home and auto coverage.
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Old 05-17-2019, 12:56 PM   #3
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You can always be sued for more than you're worth. But some assets are typically excluded from being attached, such as 401(k)s. I'd look that up for your state, to determine how much you might need. Likely, you wouldn't need to cover the entire $2M.

I'm sure the golf course's insurance company would be involved, had the errant ball caused an injury!
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Old 05-17-2019, 01:08 PM   #4
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The rule of thumb I have seen is to have liability insurance equal to net worth. I think that rule of thumb is dumb. As HNL Bill points out, the size of the lawsuit is not constrained by your net worth.

I think a better rule of thumb is to find out what the typical or largest award in your state is for a standard negligence lawsuit and then insure for that amount via an umbrella policy. In my state that is $1M. If you were a high profile person or did particularly risky-for-others things, I would consider more.
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Old 05-17-2019, 01:27 PM   #5
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The rule of thumb I have seen is to have liability insurance equal to net worth. I think that rule of thumb is dumb. As HNL Bill points out, the size of the lawsuit is not constrained by your net worth.

I think a better rule of thumb is to find out what the typical or largest award in your state is for a standard negligence lawsuit and then insure for that amount via an umbrella policy. In my state that is $1M. If you were a high profile person or did particularly risky-for-others things, I would consider more.
But punitive awards in some states can go to a cap of 3X the original award, so be sure to check those limits as well.
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Old 05-17-2019, 02:00 PM   #6
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But punitive awards in some states can go to a cap of 3X the original award, so be sure to check those limits as well.

It might be a good idea to check if your insurance even covers statutory and/or punitive damages. Your state might not permit it.

BR
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Old 05-17-2019, 04:40 PM   #7
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Perfect timing... I just changed home insurance and added an umbrella policy today... with two male teens I chose about 2/3 of net worth so I could survive anything... was wondering if that was too much, but itís only a few hundred $ more per year
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Old 05-17-2019, 06:00 PM   #8
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Originally Posted by SecondCor521 View Post
The rule of thumb I have seen is to have liability insurance equal to net worth. I think that rule of thumb is dumb. As HNL Bill points out, the size of the lawsuit is not constrained by your net worth.

I think a better rule of thumb is to find out what the typical or largest award in your state is for a standard negligence lawsuit and then insure for that amount via an umbrella policy. In my state that is $1M. If you were a high profile person or did particularly risky-for-others things, I would consider more.
+1
I get $2M as it's only a little more than $1M and will ensure the insurance company fights harder.
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Old 05-17-2019, 07:03 PM   #9
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Lots. What you are really buying is the enthused defense your insurer will afford you. I picked 2mm because I figured that amount would have them bring in a lawyer that was really a pit bull in people clothing.
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Old 05-17-2019, 07:04 PM   #10
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+1 my insurer has 2 million reasons to give me a vigorus defense.
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Old 05-17-2019, 07:22 PM   #11
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If you have assets you want to keep then liability and property insurance + a healthy amount of umbrella insurance is one of the best hedges you can execute. But it is worth reading the fine print. As others note higher limits are not that expensive and are there for not only fortuitous but also unlikely events.
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Old 05-18-2019, 06:06 AM   #12
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All this talk of liability and umbrella makes me wonder what I am actually insured against. I have home, auto, and umbrella policies. I am guessing that the umbrella supplements only claims that are already covered under the auto and home policies. So, for example, if I went back to work and was sued by an employee (personal tort) I would have no coverage. I am guessing if I was sued for a personal injury by someone I ran into while riding my bike I would have no coverage.

Is there such a thing as a general liability policy that covers oddball situations that don't fall under other policies?
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Old 05-18-2019, 06:13 AM   #13
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Originally Posted by frayne View Post
a person in the foursome pulled a tee shot onto a busy freeway, fortunately no broken glass or accidents but it got me wondering. Would this be a good time for a person to have liability insurance and if so, how much would cover any damages or lawsuits ?
Wouldn't golf lessons be cheaper?
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Old 05-18-2019, 06:16 AM   #14
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Wouldn't golf lessons be cheaper?

LOL!
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Old 05-18-2019, 06:51 AM   #15
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Originally Posted by donheff View Post
All this talk of liability and umbrella makes me wonder what I am actually insured against. I have home, auto, and umbrella policies. I am guessing that the umbrella supplements only claims that are already covered under the auto and home policies. So, for example, if I went back to work and was sued by an employee (personal tort) I would have no coverage. I am guessing if I was sued for a personal injury by someone I ran into while riding my bike I would have no coverage.

Is there such a thing as a general liability policy that covers oddball situations that don't fall under other policies?
The only time that I am personally aware of a claim against an umbrella happened to of all people my insurance agent. She struck a pedestrian crossing the street and the person’s lawyer won a settlement against the umbrella after initially having challenges against the auto policy.

The interesting part is my agent can no longer obtain umbrella coverage for some length of time in the future. I can’t recall the time limit.
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Old 05-18-2019, 07:44 AM   #16
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Quote:
Originally Posted by donheff View Post
All this talk of liability and umbrella makes me wonder what I am actually insured against. I have home, auto, and umbrella policies. I am guessing that the umbrella supplements only claims that are already covered under the auto and home policies. So, for example, if I went back to work and was sued by an employee (personal tort) I would have no coverage. I am guessing if I was sued for a personal injury by someone I ran into while riding my bike I would have no coverage.

Is there such a thing as a general liability policy that covers oddball situations that don't fall under other policies?
Yes, an umbrella policy.

I'm pretty sure that your umbrella would cover your defense if you were sued by an employee... I know it covers libel, slander, etc. Same with your bike... because not only does the umbrella extend coverage under your base policies, it also covers a variety of other perils that your base policies don't cover.

https://www.allstate.com/tr/personal...liability.aspx
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Old 05-18-2019, 03:45 PM   #17
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Remember also, if your current auto/house policies are not maxed out on the liability coverage, you will probably need to do that before you can talk umbrella.
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Old 05-18-2019, 04:08 PM   #18
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^^^ No, IME you don't need to max out your base coverages to have an umbrella... there are required minimums though.

I recall the first time I was buying an umbrella I was debating between $1 million and $2 million and I found it was cheaper to increase my base policy coverages and buy a $1 million umbrella than to leave my base policy coverages where they were and buy a $2 million umbrella.
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Old 05-18-2019, 07:52 PM   #19
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Has nothing to do with net worth. Minimum should be $2m umbrella because that will cover most reasonable lawsuits. I have $3m because I worry. EVERYBODY should have an umbrella. It's too cheap not to. Even your college age kids with no money should have this so they don't have a lawsuit trail them for life.
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Old 05-18-2019, 08:06 PM   #20
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+1 I have a $2 million umbrella. It is the cheapest insurance you can have to have peace of mind.
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