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Umbrella Insurance
Old 06-18-2017, 09:40 AM   #1
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Umbrella Insurance

Had a question about umbrella insurance and wanted to throw it out here to see what everyone thought. If you currently have significant investable assets, how much umbrella insurance do you have? Enough to cover just your portfolio assets? Your entire net worth or some multiple over and above your portfolio?

I was wondering what the general consensus was and the thoughts. I know my agent would be more than willing to sell me more.

Don't want to put myself at risk knowing the courts these days but don't want more than I need. Thanks.
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Old 06-18-2017, 09:49 AM   #2
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Quote:
Originally Posted by stlguy57 View Post
Had a question about umbrella insurance and wanted to throw it out here to see what everyone thought. If you currently have significant investable assets, how much umbrella insurance do you have? Enough to cover just your portfolio assets? Your entire net worth or some multiple over and above your portfolio?

I was wondering what the general consensus was and the thoughts. I know my agent would be more than willing to sell me more.

Don't want to put myself at risk knowing the courts these days but don't want more than I need. Thanks.
Note that you don't need to protect 401ks as they are already protected in bankruptcy. Then check state laws on how much of the homestead is protected. Set the umbrella at about the amount remaining.
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Old 06-18-2017, 09:52 AM   #3
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From a previous thread on this topic not sure if there is consensus as to best approach. Personally I've carried one forever and intend to continue doing so, from memory I think its in the 4m range (there appears to be a threshold which introduces additional complexity above a certain number).

It is cheap and if anything makes me feel better about having insurer lawyers on my side if needed.
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Old 06-18-2017, 09:56 AM   #4
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The umbrella insurance isn't protecting your assets, it is protecting against liability. You need to have enough to cover the likely liability you might face. Whether you have $1 million or $2 million of assets, a $5 million dollar lawsuit could wipe you out. Having $1 million or $2 million of umbrella coverage makes no real difference, they pay the full insurance amount then you are still wiped out by the $5 million claim.

To figure policy size, you should consider the likely size of any liability you might face. $1 million claims used to be rare, but bigger claims are more common now. I don't think there is an easy answer to how much insurance you need.
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Old 06-18-2017, 10:10 AM   #5
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Basically you want enough that the insurance company will fight your claim good and hard. I wish I knew how much that was , but I don't , so I guessed and came up with $3mm.
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Old 06-18-2017, 10:26 AM   #6
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I have an umbrella policy. My company would NOT write a policy for 5 million. Something about not more than 10 times my pay was a factor. But they first had to up all my auto coverage to the max. :;Note: i like insurance. I sleep better at night. I have flood insurance and i live way way above sea level. Im also near the top of the block so a sewer stoppage and water coming into my basement is remote. I have water line , sewer line protection, i have gas leak insurance. I have 10 year extended warranty appliance insurance. I have roadside assistance. I dont want drama at this point in my life. I saved and lived wayyy below my means till i was 50 years old. Im living as peaceful as i can now. So no, my umbrella does not cover my assets. I have over 5m with the house, over 4m invested in the market). Umbrella is for 2 million.
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Old 06-18-2017, 10:37 AM   #7
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FWIW, with my insurer the cost of umbrella insurance goes up very dramatically over 2 million.
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Old 06-18-2017, 10:38 AM   #8
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I have 2 million. If I was at fault in a tragic accident, that 2 million above and beyond my underlying policies should be sufficient to resolve any legal action. One can always envision an accident where 2 million isn't enough, but I'm comfortable with that amount.
In practice, in event of of a calamitous injury claim with liability, the insurance company would offer policy limits. It's an ugly time consuming process for the plaintiff to then seek to attach your personal assets above that amount, so usually the policy limits settles the claim in its entirety.
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Old 06-18-2017, 11:55 AM   #9
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I think my home/auto cover 0-400k and my umbrella covers 400k to 1mill I think? Costs <$200 a year. I agree about having enough that their attorneys will fight for you. Also anyone decent can get an idea of your net worth when looking to sue you - a $1mm policy isn't that worthwhile if you live in a $5mm house (someone would try and sue you for more if it looks like you can pay).

I will say you have to use insurance effectively. How many months does it take to pay out when changing your auto deductible from $250 to $500? Etc.

Also figure that if you don't take risks - there is low probability you would open yourself to major liability.
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Old 06-18-2017, 12:12 PM   #10
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Originally Posted by braumeister View Post
FWIW, with my insurer the cost of umbrella insurance goes up very dramatically over 2 million.
That is interesting. I have 4 million and the 2nd 2 mil were a lot cheaper than first 2. Go figure
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Old 06-18-2017, 12:37 PM   #11
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I ended up going with $5m for $906 per year. For first $5m it is $182/million/year. After that it is $500/million/year topping out at $3406 for $10m liability.

They also lowered my auto rates by $72 per year as a result of some multi policy discount so net to me for $5m in coverage was $834 per year.
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Old 06-18-2017, 12:59 PM   #12
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I chose the $2 million policy. The insurance said something about going over that much is a big hassle. I figure the $2 million should work for us. Pay around $320 per year. The did make me raise my auto insurance amounts to qualify for the umbrella.
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Old 06-18-2017, 01:37 PM   #13
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A large insurance company usually has no problem in writing a large umbrella for a good insured if it is within their normal underwriting capacity. A smaller company doesn't like to go over one or two million and might have to talk to their reinsurance underwriter to go over the normal amounts. Small companies reinsure part of their exposure so they are not on the hook for the total amount, but this costs them part of the premium, so there is no benefit to them to write an amount higher than their in-house limit. All companies reinsure property or liability business to some extent, usually for large weather catastrophes such as tornadoes, hurricanes or large hail storms or for the large property risks that might run into the tens of millions in commercial lines. Reinsurance comes in layers where the writing company takes the first layer, the reinsurer takes the next layer and so on.

Umbrella policies are usually very good business for a company and tend to be a profitable line. Most insurance companies like to write them and don't blink and eye at a couple of million. They only get serious about underwriting when you want to go to five million or more because no underwriter wants to have their name on a file that has a loss of that size.
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Old 06-18-2017, 01:41 PM   #14
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We settled on $2M also. That should be enough that the insurance company lawyers are fully engaged in limiting the judgement if we're sued.

As mentioned - we were also required to raise our homeowners, auto, and (in our case) renter owner policy limits.
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Old 06-18-2017, 02:14 PM   #15
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We carry $4,000,000 in Umbrella Liability and the cost is $633/year. It does include uninsured and underinsured motorists, as do our auto policies. UI motorists is an important component of insurance coverage and worth considering as you review your coverage amounts.


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Old 06-18-2017, 02:40 PM   #16
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$5M for $800. Enough that the lawyers will engage vigorously.
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Old 06-18-2017, 03:02 PM   #17
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We're at $1M for $192/yr and in the next couple will look at increasing.
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Old 06-18-2017, 03:20 PM   #18
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$2 million for $610 per year.
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Old 06-18-2017, 03:36 PM   #19
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We had $1M for many years, but recently upped it to $2M. A million dollars doesn't go as far as it used to, especially in lawsuits...
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Old 06-18-2017, 04:18 PM   #20
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I have 2 million. If I was at fault in a tragic accident, that 2 million above and beyond my underlying policies should be sufficient to resolve any legal action. One can always envision an accident where 2 million isn't enough, but I'm comfortable with that amount.
In practice, in event of of a calamitous injury claim with liability, the insurance company would offer policy limits. It's an ugly time consuming process for the plaintiff to then seek to attach your personal assets above that amount, so usually the policy limits settles the claim in its entirety.
I agree and I also have $2 million. I increased it from $1 million when a few years ago and I no longer have the house with the swimming pool (and diving board) that I considered a major liability exposure, but I think it's a good number even though it's less than my assets.

Given that most people are driving around with minimum auto liability limits ($25K per person, $50K per accident in some states) if I hit someone and it's my fault, they or their heirs have won the friggin' lottery and I think they'll be happy with policy limits.
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