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-   -   Umbrella Liability Policy (http://www.early-retirement.org/forums/f28/umbrella-liability-policy-83738.html)

RockyMtn 10-10-2016 01:25 PM

Umbrella Liability Policy
 
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!:coolsmiley:

REWahoo 10-10-2016 01:28 PM

A few past threads on the subject:

http://www.early-retirement.org/foru...ons-66167.html
http://www.early-retirement.org/foru...ion-75650.html
http://www.early-retirement.org/foru...ons-82307.html

rodi 10-10-2016 02:14 PM

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 10-10-2016 02:55 PM

Quote:

Originally Posted by RockyMtn (Post 1789633)
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!:coolsmiley:

$2M

eta2020 10-10-2016 03:26 PM

Quote:

Originally Posted by RockyMtn (Post 1789633)

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!:coolsmiley:

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 10-10-2016 03:57 PM

This thread prompted me to investigate if IRA's are protected from creditors. In Missouri, it appears they are:dance:. 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 10-10-2016 04:09 PM

Quote:

Originally Posted by CardsFan (Post 1789669)
This thread prompted me to investigate if IRA's are protected from creditors. In Missouri, it appears they are:dance:. 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 10-10-2016 04:23 PM

Quote:

Originally Posted by eta2020 (Post 1789672)
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 10-10-2016 04:29 PM

Quote:

Originally Posted by CardsFan (Post 1789677)
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. :laugh:

45th Birthday 10-10-2016 05:31 PM

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 10-10-2016 06:09 PM

Quote:

Originally Posted by eta2020 (Post 1789672)
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 10-10-2016 06:43 PM

$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 10-10-2016 07:53 PM

Umbrella Liability Policy
 
$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 10-10-2016 10:40 PM

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 10-11-2016 02:00 AM

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 10-11-2016 07:04 AM

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.


Sent from my iPad using Early Retirement Forum

REWahoo 10-11-2016 07:15 AM

Quote:

Originally Posted by Golden sunsets (Post 1789773)
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 10-11-2016 08:00 AM

Quote:

Originally Posted by REWahoo (Post 1789775)
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 10-11-2016 08:40 AM

Quote:

Originally Posted by REWahoo (Post 1789775)
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 10-11-2016 08:43 AM

Quote:

Originally Posted by Golden sunsets (Post 1789773)
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..


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