Liability Insurance Question

[frayne]

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.

 

[pb4uski]

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.

 

[HI Bill]

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!

 

[SecondCor521]

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.

 

[COcheesehead]

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.

 

[bigreader]

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

 

[DogGone]

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 it’s only a few hundred $ more per year

 

[Sunset]

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.

 

[brewer12345]

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.

 

[pb4uski]

+1 my insurer has 2 million reasons to give me a vigorus defense.

 

[The Onceler]

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.

 

[donheff]

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?

 

[braumeister]

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?

 

[WestUniversity]

Wouldn't golf lessons be cheaper?

LOL!

 

[COcheesehead]

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.

 

[pb4uski]

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-umbrella-policy/libel-slander-liability.aspx

 

[JPatrick]

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.

 

[pb4uski]

^^^ 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.

 

[CaliKid]

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.

 

[kimcdougc]

+1 I have a $2 million umbrella. It is the cheapest insurance you can have to have peace of mind.

 

[CoolRich59]

+1 I have a $2 million umbrella. It is the cheapest insurance you can have to have peace of mind.

Yep.

I have a $2M umbrella. The annual premium is about half of what I spend for 6 months of auto coverage on our two vehicles.

I first got an umbrella when I had 3 teenage boys at home. But, I've kept it because it is extremely cheap peace of mind.

 

[Sunset]

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.

Nope.
My agent actually reduced my auto policy coverage, as the umbrella would cover it and it was cheaper per million.

 

[Cayman]

Coverage in the amount of your NW doesn't necessarily protect your NW. You're on the hook for any judgement $ that your umbrella doesn't pay for - if your umbrella doesn't cover it, you will. In previous threads, members discussed amounts from $2M to $5M+. Consider your comfort level with risk and cost for each additional $1M of coverage.

 

[gstillson]

But I mean really? How much damage could an umbrella do? Maybe put an eye out if one of the wire things pokes through the fabric....

 

[MarieIG]

^^^ 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.

+ 1

Also, recommend to discuss with broker and review your specific policy to verify underlying minimums and exactly what is covered.