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Umbrella Insurance with Low Net Worth?
Old 12-05-2012, 10:47 PM   #1
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Umbrella Insurance with Low Net Worth?

I read this great thread on umbrella insurance

Curious about umbrella liability policy experience

and am considering getting it, but don't know if it makes sense for me. If my retirement account is actually shielded as was mentioned in that thread, then the rest of my net worth is not that much. But I am in a profession that is frequently sued. Let's say NW is $50,000 (excluding retirement) and I get sued for $3 million. If my occupational insurance covers $1 million then I'd be responsible for $2 million so it would seem to make the most sense to just declare bankruptcy for the $50,000. On the other hand maybe it's worth the peace of mind to just get an umbrella for $1-$2 million depending on how much it costs.

Does it make sense to get umbrella insurance with low net worth? It seems that people decide umbrella insurance amount based on net worth.

Also it was mentioned in the other thread that ppl with umbrella seemed less likely to get sued. But wouldn't it be the opposite, because if someone had $2 million umbrella, isn't this money that becomes accessible to someone in a lawsuit, versus someone who didn't have umbrella insurance and low assets? Is it possible for anyone to find out how much umbrella insurance one has?

Is the price of the policy based on net worth?
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Old 12-05-2012, 11:12 PM   #2
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Also it was mentioned in the other thread that ppl with umbrella seemed less likely to get sued.
This may be because with an umbrella insurance policy you have a partner in the lawsuit, the insurance company. The insurance company isn't going to just sit back and let someone run off with their money without a fight. They will be in the courtroom with you.
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Old 12-05-2012, 11:32 PM   #3
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Quote:
Originally Posted by inquisitive View Post
I read this great thread on umbrella insurance

Curious about umbrella liability policy experience

and am considering getting it, but don't know if it makes sense for me.
Is the price of the policy based on net worth?
No, it is based on coverage limits and your underwriting.

I'd say get it, and be sure that it will cover your business and professional exposures. Not all policies will.

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Old 12-06-2012, 01:46 AM   #4
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This may be because with an umbrella insurance policy you have a partner in the lawsuit, the insurance company. The insurance company isn't going to just sit back and let someone run off with their money without a fight. They will be in the courtroom with you.
Yes an umbrella policy will tend to lead the insurance company to send a better level of legal rep than if just a homeowners policy, but I suspect that in the case of the poster since it their business is a source of liability since you have an occupational policy they may well need a occupational umbrella policy. Of course the first question is why is the business not an LLC subchapter S corp, so that the only risk is to the balances of the corp, plus any co-signed loans?
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