Protecting Assets?

[dogduo]

I am curious to know if you must get an Umbrella policy from your current insurance provider (home, car, etc.) or can you go to any broker and tell them you want an Umbrella policy? I own a home which I finally have lots of equity in which I would like to protect. I live in California where everyone sues for any imaginary reason!

[farmerEd]

I am curious to know if you must get an Umbrella policy from your current insurance provider (home, car, etc.) or can you go to any broker and tell them you want an Umbrella policy?(

Don't know if its a "rule" that all companies follow, but for my umbrella policy the company that provides it also required that they have my homeowners and car insurance policies, and that those policies had high enough limitations on them already. They don't want to be the umbrella policy for someone that bought the very cheapest car insurance they could, since the umbrella doesn't kick in until after the other policy limits are hit.

I have a $1,000,000 policy, ontop of the homeowners and 2 car insurance. According to my agent the most likely way the umbrella is going to get used is as a result of a car accident. It only costs about $300 per year. I may be doubling the coverage to $2 million next year, for an additional $250 fee.

Short money imo. If you got enough dough..someone is going try and take it someday.

Don't know if its a "rule" that all companies follow, but for my umbrella policy the company that provides it also required that they have my homeowners and car insurance policies, and that those policies had high enough limitations on them already. They don't want to be the umbrella policy for someone that bought the very cheapest car insurance they could, since the umbrella doesn't kick in until after the other policy limits are hit.

I have a $1,000,000 policy, ontop of the homeowners and 2 car insurance. According to my agent the most likely way the umbrella is going to get used is as a result of a car accident. It only costs about $300 per year.

Yes, my insurance company also required home and all vehicles to be insured with them. Premium for the three cars did not go up much. It is still way under $1000/year (TX). My umbrella cost is half of yours. Our rental property also falls under it.

Vicky

[Janie]

Vicky and others,

One reason umbrella policies are so much less expensive in TX than in other states is that TX has pretty extensive asset-protection laws that make it harder for someone to take away everything you own with a lawsuit. Items which are exempt include the full value of your home, all retirement accounts (IRAs, 401Ks), $30,000 per person in cash, and personal effects like one vehicle, jewelry, clothes, etc.

This is much more generous than other states.

[Janie]

For the lawyers on the board (Martha M and others),

I wondered if Congress is moving to enact national legislation to protect retirement accounts like IRAs and 401Ks from lawsuits, especially now that few employers outside of the gov't offer traditional pensions, and most people are dependent on those savings to retire.

I know that some states consider IRAs to be savings accounts and do not protect them from creditors in the event you are sued. 401Ks are also not protected in some states -only the employer's contribution is exempt. This is hard to swalllow.

Hello Janie. What you say is true, but this savings
is offset by the cost of other insurance in Texas.
I recall when I had "dual" residency in the 90s, I was
frequently shocked by the cost of car and home insurance in Texas. Right now I am shopping for
insurance on our Texas condo. Yesterday I had a message on my machine from a Texas agent. It was
40% higher than what I am paying and I think I am being robbed now. Of course, I am only comparing
with Illinois, so maybe Illinois is just lower in general.
I would be surprised if that were true. OTOH, I recall
car insurance was way high in New Mexico also. When I asked the agent why that was she said "Drunken
Indians!" Pretty non-PC, but she swore that was the
answer. Texas................... I don't have a theory.

JG

[charlie]

Hey JG,

Maybe the higher car insurance is because of all
of us redneck cowboys with gun racks in our pickups.


Cheers,

Charlie (aka Chuck-Lyn)

[Martha]

For the lawyers on the board (Martha M and others),

I wondered if Congress is moving to enact national legislation to protect retirement accounts like IRAs and 401Ks from lawsuits, especially now that few employers outside of the gov't offer traditional pensions, and most people are dependent on those savings to retire.

I know that some states consider IRAs to be savings accounts and do not protect them from creditors in the event you are sued. 401Ks are also not protected in some states -only the employer's contribution is exempt. This is hard to swalllow.

Janie, I missed your post until cruising through messages today. 401(k) plans are protected by federal law--ERISA--from the claims of creditors so it really doesn't matter what state law provides. The supremacy clause in the constitution means that federal law trumps state law in this case. Unfortunately, you are right about IRAs. ERISA doesn't provide for protection from creditors so you have a lot of state law differences, some with total protection and some with none. The is a US Supreme Court case up for decision in the next few months which will provide some guidance as to the extent IRAs are exempt under the federal bankruptcy code exemptions.

There has been some moves in Congress to provide more protection for retirement plans such as IRAs. But there has been lots of talk in Congress about many of the exemptions, including limiting homestead exemptions. Who knows what is going to happen. The bankruptcy so callled reform bill has been up for discussion lately and I anticipate that some kind of bill will pass that bankrutpcy lawyers and judges won't like, but wll make the credit card companies happy.

Martha