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10-15-2018, 09:17 AM
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#1
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jun 2003
Location: Florida's First Coast
Posts: 7,723
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Umbrella Insurance
It is that time of year in our household where all the insurances come due. Home, Flood, Auto, Umbrella etc. It is an expensive time of year for us here in NE Florida.
I was wondering what the rule of thumb was for the amount of Umbrella coverage. In Florida, Annuities, First Residence, Qualified accounts etc. are protected by state law. Does one add up their non qualified accounts x 2 and that is the number to the closest upper limit?
Or is there another formula?
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10-15-2018, 10:35 AM
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#2
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Full time employment: Posting here.
Join Date: Apr 2011
Location: Castro Valley
Posts: 788
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I think the rule of thumb is Umbrella insurance matching your net worth. Although, I still don't see how that would prevent a judgement against you of 10 times your net worth.
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10-15-2018, 11:00 AM
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#3
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jul 2014
Location: Spending the Kids Inheritance and living in Chicago
Posts: 17,094
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My rule of thumb is to buy enough so that you know the insurance company will work hard not to pay it out.
There really is no absolute protection as the suing party can ask for the moon, so it's just how hard do you want the ins company to work.
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Fortune favors the prepared mind. ... Louis Pasteur
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10-15-2018, 11:23 AM
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#4
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jun 2016
Location: Colorado
Posts: 8,971
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Quote:
Originally Posted by Sunset
My rule of thumb is to buy enough so that you know the insurance company will work hard not to pay it out.
There really is no absolute protection as the suing party can ask for the moon, so it's just how hard do you want the ins company to work.
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^^^this^^^
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10-15-2018, 11:57 AM
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#5
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jun 2003
Location: Florida's First Coast
Posts: 7,723
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So what number would that be? $1m - $10m?
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"Never Argue With a Fool, Onlookers May Not Be Able To Tell the Difference." - Mark Twain
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10-15-2018, 12:16 PM
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#6
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jun 2016
Location: Colorado
Posts: 8,971
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I have $3 million and for some reason for us its cheap. I pay less than $300 a year. Others on here have much higher costs based on their circumstances.
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10-15-2018, 12:19 PM
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#7
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Thinks s/he gets paid by the post
Join Date: Jun 2017
Location: Western NC
Posts: 4,633
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This comes up over on bogleheads all the time.
As many posters over there note, you don't see non-DUI judgments against individual defendants (as opposed to companies) that exceed low 7 figures.
State laws can also help...e.g., here even 1% fault by the plaintiff & they can't collect a single dollar in damages.
And don't DUI.
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10-15-2018, 12:20 PM
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#8
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jan 2018
Location: Tampa
Posts: 11,298
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I am in FLA and have 2mm. FLA is one of the most expensive Umbrella policy states. $625 yearly premium.
I have read that at 2mm and above, they will "fight" for you.
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TGIM
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10-15-2018, 12:54 PM
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#9
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jun 2003
Location: Florida's First Coast
Posts: 7,723
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I have $2m also, but it is only $288.
__________________
"Never Argue With a Fool, Onlookers May Not Be Able To Tell the Difference." - Mark Twain
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10-15-2018, 12:58 PM
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#10
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Thinks s/he gets paid by the post
Join Date: Feb 2016
Location: SoCal
Posts: 1,293
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2 million
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10-15-2018, 01:15 PM
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#11
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Thinks s/he gets paid by the post
Join Date: Jul 2012
Location: Texas
Posts: 3,024
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We pay $325/yr for $1M in Texas. The premium is a bit high in our case because our coverage includes a rental house, plus our main house has a pool and a pond. I think the $1M plus the normal policy liability coverage is sufficient to motivate the insurance company to put some effort into our defense. Are they going to be more motivated with $2M or $3M? Would they put more resources on our case? Would more resources change the outcome? Maybe, maybe not. I think $1M is fine, given the probabilities involved. Plus, in Texas, our main house, pensions, and qualified retirement accounts are protected. So with all that and SS still to come, even in a worst-case scenario, life will carry on just fine.
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Retired at 52 in July 2013. On to better things...
AA: 85/15 WR: 2.7% SI: 2 pensions, SS later
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10-15-2018, 01:43 PM
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#12
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Thinks s/he gets paid by the post
Join Date: Jun 2013
Posts: 2,522
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Umbrella Insurance
Quote:
Originally Posted by COcheesehead
I have $3 million and for some reason for us its cheap. I pay less than $300 a year. Others on here have much higher costs based on their circumstances.
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Your policy probably doesn’t include Uninsured/Underinsured motorists. That adds quite a bit to the premium and for us is worth the additional cost. We carry 4MM -cost is $633.
__________________
"Luck favors the prepared mind"
Pasteur
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10-15-2018, 01:43 PM
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#13
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Recycles dryer sheets
Join Date: May 2014
Posts: 412
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Can you tell me more about how the umbrella policy works? I assume it only kicks in after primary coverage is exceeded, yes? But what if your primary does not cover a certain event, will the umbrella still work?
Here is my situation - we live in a hurricane prone area (Hawaii) and have a separate policy for hurricane coverage because our homeowner's explicitly excludes hurricane damage. But the hurricane policy only covers damage to our structures, not to neighbors who are harmed by any trees from our property that fall on their houses. We have big trees and they worry me so I want to get coverage for that and was thinking an umbrella policy. Any ideas if it would work?
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10-15-2018, 01:44 PM
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#14
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Thinks s/he gets paid by the post
Join Date: Mar 2014
Location: Southern Cal
Posts: 4,032
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Quote:
Originally Posted by Golden sunsets
Your policy probably doesn’t include Uninsured/Underinsured motorists. That adds quite a bit to the premium and for us worth the additional cost. We carry 4MM -cost is $633.
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Possibly why I have $5M for about $900. California has a lot of uninsured people.
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10-15-2018, 01:47 PM
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#15
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Moderator
Join Date: Dec 2007
Location: Eastern WV Panhandle
Posts: 25,340
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This is a timely thread, I just wrote the check today for $217.19 for $1m umbrella policy. I probably should raise it to $2m.
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When I was a kid I wanted to be older. This is not what I expected.
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10-16-2018, 08:05 PM
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#16
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Full time employment: Posting here.
Join Date: Jun 2009
Location: SoCal
Posts: 569
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I keep $2M, and pay $250 per year for it. No uninsured/underinsured - I have sufficient coverage for that on my auto policy. Mine is also renewing in a couple of weeks.
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FIRE'd since January 21st 2022 at age 49
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10-16-2018, 09:06 PM
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#17
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Thinks s/he gets paid by the post
Join Date: Nov 2013
Location: Bay Area
Posts: 2,745
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I'd keep it close to my total asset. That reminds me. I need to increase the limit for my umbrella policy.
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10-16-2018, 09:30 PM
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#18
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Full time employment: Posting here.
Join Date: Jul 2013
Posts: 792
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Quote:
Originally Posted by caninelover
I keep $2M, and pay $250 per year for it. No uninsured/underinsured - I have sufficient coverage for that on my auto policy. Mine is also renewing in a couple of weeks.
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Ditto, though State Farm made me max my auto coverage before setting up the umbrella.
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10-16-2018, 11:07 PM
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#19
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Full time employment: Posting here.
Join Date: Jun 2009
Location: SoCal
Posts: 569
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Quote:
Originally Posted by googily
Ditto, though State Farm made me max my auto coverage before setting up the umbrella.
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Same here, googily, except I have Geico.
__________________
FIRE'd since January 21st 2022 at age 49
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10-17-2018, 04:52 AM
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#20
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Thinks s/he gets paid by the post
Join Date: Mar 2008
Location: Atlanta Suburb
Posts: 1,499
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Does anyone have access to umbrella/excess liability claims distribution data? A data distribution would tell what percent of claims you would be protected against at a given policy limit. As an example, the data may show 98% of claims are below $1M and 99% are below $2M. (In reality, I suspect the difference between $1M and $2M is less than 1% and both cover way over 99% of claims. But, just a guess.)
With one exception*(that I can think of), asset levels do not impact the above. Whether you have $1M or $2M in assets, both have the same risk of being sunk by a >$3M settlement or judgement. In other words, your risk of a large event does not change with a change in net worth. (see the exception below)
*That exception, yes you are more of a target as your wealth increases. Like bank robbers, plaintiffs tend to go where the money is.
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