Protecting assets Umbrella ++++

[wallygator69]

Hi,

What do you folks do in reference to determing how big of an Umbrella policy you carry in FIRE. Equal to net worth, including real estate?

A rather well off Brother In law told me he took out an 80% HELOC on his $1 M house in addition to Umbrella. If he gets in a legal situation he'll write a check against it and if there is a judgement against him the HELOC shelter $800k? I am guessing it is because it is a mortgage on the primary residence but not sure.

Anyone doing anything like this or have comments on the merits.

Thanks as always,

Wally

[riskadverse]

I'm not a fan of insurance, but I do carry an umbrella policy. It is nowhere near the net worth, but hopefully it is significant enough to keep the insurance company active in defending me.

[Nords]

Quote:

Originally Posted by wallygator69 What do you folks do in reference to determing how big of an Umbrella policy you carry in FIRE.* Equal to net worth, including real estate?

I would expect a lawyer to sue for gross worth, not net. They're not going to care how mortgaged the assets are.

[cute fuzzy bunny]

Find out what the average judgements run in your area, then carry 2x that much, with a million as a minimum. In my area, average judgements are ~300k...in the SF bay area they're about 700k.

Methinks if you get a judgement over $2M, you royally ****ed up and probably deserve a little poke in the wallet...

[MasterBlaster]

Can you ever have enough insurance ?

What if you pull out in front of that busload full of millionaire lawyers ?

[Martha]

Quote:

Originally Posted by MasterBlaster Can you ever have enough insurance ? What if you pull out in front of that busload full of millionaire lawyers ?

You better hope you kill all of them because pain and suffering claims don't survive death.

You should know what assets are exempt from creditors in your state of residence. This will help you evaluate what you have to lose.

The guy who said he would draw on the HELOC: What are you going to do with the money? Hide it under the mattress? A big HELOC withdraw will certainly draw the attention of a creditor.

CFB's suggestion about average judgments makes sense.
I think that a million or two dollars are common amounts for an Unbrella policy. Increase it if you have a special situation, like own rental property, own a business, etc.

[cute fuzzy bunny]

Quote:

Originally Posted by Martha CFB's suggestion about average judgments makes sense. I think that a million or two dollars are common amounts for an Unbrella policy. Increase it if you have a special situation, like own rental property, own a business, etc.

I figured anyone that needed a $3M+ umbrella wouldnt be asking about it on an internet message board

[cute fuzzy bunny]

I guess the good news is you can sue the property managers...

[mathjak107]

you have to make sure your policy covers the things you want it to cover...i just read about a claim being denied where a homeowner shot a burgler ..the burgler is suing the homeowner.....(only in america right?) the umbrella policy denied the claim as it covers liabilities do to accidents.since pulling the trigger wasnt an accident but intentional if the homeowner looses in a civil suit hes not covered

[Martha]

Yes, insurance does not cover intentional acts. Against public policy.

[donheff]

Quote:

Originally Posted by DanTien Umbrella doesn't help if you have no underlying insurance - home, auto, or business My wife is being sued as trustee involving a rental property - our property managers neglected to renew the liability on the property and didn't tell us so we are not covered by our $2M umbrella policy - that was a shock to the system - Check you insurance

Amen. When I was totaling up expenses recently to verify my anticipated RE expenses prior to pulling the plug, I noticed that State Farm had not sent me a bill for one of my two cars for the last couple of years. I get separate bills for seven insurance policies and simply hadn't noticed that the bill for the car policy never came. It got lost in the mail and State Farm expired the policy. My 17 year old daughter drove that car throughout the uncovered period. If she crippled a lawyer while DUI I would have been up a creek -- and the umbrella would have been useless. Maybe I could have sued State Farm for not following up more carefully on a customer who has had all of his policies with them for years.

[2B]

Quote:

Originally Posted by donheff Maybe I could have sued State Farm for not following up more carefully on a customer who has had all of his policies with them for years.

You must have a different agent than I do. If I'm even close to late, I get a call. When we recently moved, I had to call a timeout with all the flying insurance notices and sit down with one of the staff.