Umbrella Liability Policy

[RockyMtn]

had a $10m Umbrella policy through my former megacorp for years. They finally took me off the coverage recently and I need to get a new one.

What levels do people have here? Do you cover 100% of your net worth or just some portion of it?

Thanks in advance for your input!

 

[REWahoo]

A few past threads on the subject:

http://www.early-retirement.org/forums/f27/umbrella-insurance-questions-66167.html
http://www.early-retirement.org/for...y-fact-finding-initial-information-75650.html
http://www.early-retirement.org/forums/f28/umbrella-insurance-recommendations-82307.html

 

[rodi]

I don't cover 100% - but enough that the insurance company lawyers would fight any claims against me. For me, that was $2M.

 

[Big_Hitter]

had a $10m Umbrella policy through my former megacorp for years. They finally took me off the coverage recently and I need to get a new one.

What levels do people have here? Do you cover 100% of your net worth or just some portion of it?

Thanks in advance for your input!

$2M

 

[eta2020]

What levels do people have here? Do you cover 100% of your net worth or just some portion of it?

Thanks in advance for your input!

You cannot cover your net worth. If somebody gets award higher then insurance limit rest comes from your net worth.

But few million dollar coverage will motivate insurance company to make process pretty difficult.

It is also advisable to keep max in 401k, House Homestead, Annuities if living in Florida, maybe trust fund.... so they are out of creditors reach.

 

[CardsFan]

This thread prompted me to investigate if IRA's are protected from creditors. In Missouri, it appears they are. This covers about 2/3 of our assets, but still leaves a significant amount of money exposed. We have never had an umbrella policy, but it sounds like a good idea to have enough to get the attention of the insurance lawyers. We intend to look in to it.

 

[eta2020]

This thread prompted me to investigate if IRA's are protected from creditors. In Missouri, it appears they are. This covers about 2/3 of our assets, but still leaves a significant amount of money exposed. We have never had an umbrella policy, but it sounds like a good idea to have enough to get the attention of the insurance lawyers. We intend to look in to it.

Double check. Inherited IRAs are totally accessible to creditors.

401k has full protection. No questions, no doubts, does not matter where you live and who's 401k it is.

But you will have a spousal protection. Your kids will not have it. (If they inherit it)

 

[CardsFan]

Double check. Inherited IRAs are totally accessible to creditors.

401k has full protection. No questions, no doubts, does not matter where you live and who's 401k it is.

But you will have a spousal protection. Your kids will not have it. (If they inherit it)

At this point, I am worried about myself and DW. If DS inherits, he can worry about an umbrella policy to protect it! He does live out of state, so the MO law would not apply.

 

[eta2020]

At this point, I am worried about myself and DW. If DS inherits, he can worry about an umbrella policy to protect it! He does live out of state, so the MO law would not apply.

That is a Federal Law together with protection limit which in 2016 is $1,245,475.

IRA provides surprisingly weaker protection then 401k.

I am out of this thread . Think carefully when converting 401k to IRA.

 

[45th Birthday]

We have $10 million. Just over 50% of NW. Have been told a larger policy would require getting more than one company to write because most won't do larger individual policies. Haven't visited that issue in a number of years. Cost is about $1,600 a year, just us two on the policy now that the kids have moved out on their own. Small price to pay I think.

 

[FIREchief]

Double check. Inherited IRAs are totally accessible to creditors.

401k has full protection. No questions, no doubts, does not matter where you live and who's 401k it is.

But you will have a spousal protection. Your kids will not have it. (If they inherit it)

If kids inherit an IRA in a properly drafted and administered trust, they will have full asset protection. The best approach is an accumulation trust funded with inherited Roth assets. Whether or not an independent trustee is required will vary from state to state.

 

[RetireAge50]

$1million umbrella here. Once kids are completely gone will probably drop it. We plan to only have 401k, IRA, and pension money with no other assets (except our personal items and maybe a couple bicycles).

 

[Markola]

$2 million here for only $36/month. Our state has lousy IRA protection of just $40,000 or something absurd, so I'm also looking into transferring the IRAs to our 403bs. That transfer would have the added benefit of giving us a bigger nut to tap if we leave our employers after age 55 and want to FIRE. I suppose this is also an argument for keeping the mortgage rather than paying off the house early but I haven't researched that aspect of liability exposure yet for my lawyer-friendly state.

One thing I've wondered about is whether, despite all of those protections, a judge could garnish one's 401k/403b income, even if they can't touch the principle. Does anyone know?

 

[Lucantes]

Don't have an actual full umbrella but do have an additional $1MM Liability policy on our rental house in FL for $700/yr (above what comes with our Homeowner's policy of $300K personal liability).
Will be getting a full umbrella insurance package when we retire to the house in 2017, probably shoot for $2MM.

 

[Dash man]

We have $5M of umbrella coverage and an additional $1M the underlying liability policy. We'd have to go to a secondary insurer to get more than the $6M covered by USAA. We're going through our annual planning process with them, so I'll see if they bring up the need to look into that.


Enjoy life!

 

[Golden sunsets]

We just increased ours from 2MM to 4MM. One thing we noticed is one can reduce auto and home liability coverage to the minimum when obtaining an umbrella policy so the cost of the policy is offset by a reduction in auto and home premium cost.


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[REWahoo]

We just increased ours from 2MM to 4MM. One thing we noticed is one can reduce auto and home liability coverage to the minimum when obtaining an umbrella policy so the cost of the policy is offset by a reduction in auto and home premium cost.

Interesting.

USAA required the opposite when we purchased an umbrella policy - at least for our auto policies. We had to increase our liability limits to 300/500/100.

 

[COcheesehead]

Interesting.

USAA required the opposite when we purchased an umbrella policy - at least for our auto policies. We had to increase our liability limits to 300/500/100.

Same here. We had to increase our auto limits before we could obtain the umbrella.

 

[MichaelB]

Interesting.

USAA required the opposite when we purchased an umbrella policy - at least for our auto policies. We had to increase our liability limits to 300/500/100.

Ditto with our umbrella policies.

 

[athena53]

One thing we noticed is one can reduce auto and home liability coverage to the minimum when obtaining an umbrella policy so the cost of the policy is offset by a reduction in auto and home premium cost.

I guess it depends upon the carrier but, like the other posters, I was required to buy pretty high limits on my Auto and Homeowners policies to get them up to the level where the Umbrella attaches. It may be that some carriers allow you to buy minimal Auto and Homeowners limits but charge a higher Umbrella premium to make up for it. As long as they're all with the same carrier you should be OK.

To answer the OP's question, we have $2 million Umbrella limits. I
m VERY happy to see that our state (MO) protects IRAs from lawsuits. As it is, if I cause someone's serious injury or death, they've hit the friggin' lottery..

 

[LARS]

As it is, if I cause someone's serious injury or death, they've hit the friggin' lottery..

Well maybe the person's lawyer who you seriously maim or kill hits the "friggin' lottery", but I hardly think the victim does. Just saying...


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[athena53]

Well maybe the person's lawyer who you seriously maim or kill hits the "friggin' lottery", but I hardly think the victim does. Just saying...

Well, I certainly agree on the lawyer part. And, while I diligently have tried to avoid killing or maiming anyone (knock wood, I've had only a few fender-benders in my driving history), I'm thinking mostly of the vast majority of drivers who carry the bare minimum or none at all. My parents were hit by a driver with no insurance, a suspended license and open containers of alcohol in the car. They needed to be checked in the hospital and Medicare covered it, but Medicare would not have covered pain and suffering that a jury might have awarded had the accident been worse. If I cause serious injury or worse, there's plenty of $$$ for pain and suffering.

 

[RockyMtn]

OP here. 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.

 

[phil1ben]

We have $10 million. Just over 50% of NW. Have been told a larger policy would require getting more than one company to write because most won't do larger individual policies. Haven't visited that issue in a number of years. Cost is about $1,600 a year, just us two on the policy now that the kids have moved out on their own. Small price to pay I think.

We keep 10MM through Lloyds of London. To keep the cost down we have a $10,000.00 deductible. Would have went higher on the deductible but the cost of the policy was not appreciably lower. Our coverage is less than our NW.

 

[Amethyst]

OTOH, Nationwide required us to increase our homeowner's coverage - I would have to look up by how much. The offset is that the umbrella premium is cheaper, per million of coverage, than the base policy.

We just increased ours from 2MM to 4MM. One thing we noticed is one can reduce auto and home liability coverage to the minimum when obtaining an umbrella policy so the cost of the policy is offset by a reduction in auto and home premium cost.


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