How Many Here Have Umbrella Liability Coverage?

[COcheesehead]

I'll say it again - an umbrella policy does not "cover your assets" (or income stream).

If you have $2M in assets, and a $2M policy, and get a judgment against you (I think that's the right term) for $4M - you are broke, they take $2M ins plus your $2M.

There's no magic number based on NW. It's similar to the 80% income 'guideline' for retirement. It's easy, but not meaningful.

-ERD50

I think we get that. But the higher amount you have, the more of your assets and income you have covered, no?

 

[RE2Boys]

Yes, have umbrella coverage.....mostly due to involvement in multiple activities over the years such as youth soccer coach, boy scout leader, transporting kids, treasurer of multiple activities son's are/were involved in (though not sure the insurance would cover the last item). Felt that the activities and liability exposure was greater than normal so went with umbrella coverage over 10 years ago. Recently the premium has gotten high (in my mind) due to having two college age driver's with cars.

May drop it completely once the boys are on their own, just go with high liability limits on homeowners and auto policies.

 

[ncbill]

I'll say it again - an umbrella policy does not "cover your assets" (or income stream).

If you have $2M in assets, and a $2M policy, and get a judgment against you (I think that's the right term) for $4M - you are broke, they take $2M ins plus your $2M.

There's no magic number based on NW. It's similar to the 80% income 'guideline' for retirement. It's easy, but not meaningful.

-ERD50

But you can chase that rabbit forever, e.g. "what if you kill a bus full of neurosurgeons?"

IMHO $2 million is plenty to drag out litigation to the point the plaintiff settles for the policy limits.

Most cases you find with judgments in excess of the above are against businesses or defendants who were DUI (so don't drink/drug & drive, kids!)

As for attaching future income streams, a defendant in that situation would either file bankruptcy or move to state like mine where wage income can't be attached.

 

[Chuckanut]

I'll say it again - an umbrella policy does not "cover your assets" (or income stream).

If you have $2M in assets, and a $2M policy, and get a judgment against you (I think that's the right term) for $4M - you are broke, they take $2M ins plus your $2M.

There's no magic number based on NW. It's similar to the 80% income 'guideline' for retirement. It's easy, but not meaningful.

-ERD50

Simple, buy 4 million in umbrella insurance before you get sued. Then hope you don't get sued for 8 million.

Seriously, I have heard, though I cannot provide evidence of this, that most settlements rarely go above the maximum amount that is insured. There are, of course, exceptions. I would think that those who are grossly under insured would be an exception as would those who are fabulously wealthy. Perhaps, the insurance mavens in the group can comment.

The other issue is that if one is sued for a large amount, I assume (always a dangerous word) the the insurance company would have some good lawyers working to defend both of us.

 

[jkern]

I don't have Umbrella insurance, but I have been meaning to get it for several years. A couple of years ago I got quotes for $1M in the range of $350 to $400 per year. I thought that was high so I went into procrastination mode.

 

[JoeWras]

I don't have Umbrella insurance, but I have been meaning to get it for several years. A couple of years ago I got quotes for $1M in the range of $350 to $400 per year. I thought that was high so I went into procrastination mode.

That is high.

 

[Lukeee]

Yup... my insurer has $2 million reasons to provide me with a vigorus defense should I be sued... costs me $341 last year.... cheap peace of mind.

That’s $85 a quarter....
$28 a month
93¢ a day

Definitely worth the peace of mind from a litigious happy society.

 

[DEC-1982]

I expect most people who are in this forum AND who are retired have it.

 

[ERD50]

I think we get that. ...

But I do think a lot of people do not 'get it' (the concept, not the insurance! I do think many here have umbrella coverage).

... But the higher amount you have, the more of your assets and income you have covered, no?

No. A higher amount means you can withstand a higher judgment.

OK, maybe that's just semantics, but I do think it is a clearer, and more helpful way to think about it. Some people assume that their $2M is 'protected' with $2M coverage, but it can still be taken away. It becomes less and less likely, the higher the insurance, but it isn't a direct connection. It's not like having replacement cost insurance on a car or home, it's not 'portfolio insurance'.

edit/add: I cross posted with other replies. I'm certainly not saying there aren't advantages to having more, but just recognize it for what it is.

-ERD50

 

[jkern]

That is high.

Maybe it's my area or that I have three rental properties. IDK.

 

[JoeWras]

Maybe it's my area or that I have three rental properties. IDK.

Oh! Rentals! Yeah, that makes sense then. Some underwriters won't even go there.

 

[Dreamer]

Yes, we have it. $257.00 for 1 million.

 

[RunningBum]

I guess the notion started with the threat of someone being sued for "everything you've got." So you insure yourself for everything you've got. But there's nothing to stop some one from suing you for everything you've got plus your insurance coverage.

In reality, a jury might take sympathy with a person and not the insurance company, and just set the settlement at the insurance coverage and no higher. If they even know that you're covered and by how much?

In any case, I just moved my insurance over to Progressive this morning, and bumped my umbrella to $2M, for $321/yr. I don't know if it's that much better than the $1M policy I had, but I guess I feel better about it.

 

[Tailgate]

2mil

 

[Cobra9777]

We have $1M umbrella for $298/yr, which includes one rental property in addition to our main home (with a pool and pond) and 3 vehicles. Our underlying auto and home policies also have $500K liability.

In Texas, it's my understanding that retirement accounts and the primary home are protected from lawsuits. We sized the policy according to our remaining assets. I might bump it up to $2M at some point, but it's a bit pricey with the rental.

 

[capjak]

Yes, $3MM cost $500 per year

 

[rodi]

We have it for $2m. It's about $600/year (just went up when older son started driving, plus we have a rental.). It's high enough that the insurance company lawyers will be invested enough to litigate hard.

 

[NYEXPAT]

No insurance of any kind, I'd be dead before a lawsuit came to trial in my country!

 

[Janet H]

Yes. Bundling an umbrella policy with auto and home and reducing the liability limits on the auto yields a discount that is almost enough to cover the cost of the umbrella.

 

[Another Reader]

All my policies are bundled and the limits dovetailed to save the most money.

 

[PatrickA5]

$1 million for $499. Used to be much cheaper before DS started driving. I assume it will go back down when I get him off the payroll.

 

[dvalley]

I don't have it. Someone correct me if my understanding is wrong but I read somewhere that in a lawsuit your insurance will use your auto/home insurance limits first, anything beyond that is then covered under the umbrella policy ($1M umbrella would include the auto/home limits so it's only providing $600k of coverage if your auto/home covers $400k, if I recall). Since all my big assets are already protected from lawsuits i.e. primary residence, 401k, IRA the only exposure would be to my savings and investment accounts. These accounts are while sizable now, one, they still fall within the auto/home policy coverage limits and two if I'm sued for a bigger amount than that it still won't make or break me.

Even with the umbrella you could be sued for a higher amount than your policy covers so you can keep doing the what-ifs indefinitely.

 

[Cobra9777]

I don't have it. Someone correct me if my understanding is wrong but I read somewhere that in a lawsuit your insurance will use your auto/home insurance limits first, anything beyond that is then covered under the umbrella policy ($1M umbrella would include the auto/home limits so it's only providing $600k of coverage if your auto/home covers $400k, if I recall). Since all my big assets are already protected from lawsuits i.e. primary residence, 401k, IRA the only exposure would be to my savings and investment accounts. These accounts are while sizable now, one, they still fall within the auto/home policy coverage limits and two if I'm sued for a bigger amount than that it still won't make or break me.

Even with the umbrella you could be sued for a higher amount than your policy covers so you can keep doing the what-ifs indefinitely.

I believe the bolded part is not correct. At least for my policy, the umbrella is additive. So in your example, there is a total of $1.4M liability coverage before you have to start liquidating your own assets to cover a judgment against you.

 

[greydog17]

I believe the bolded part is not correct. At least for my policy, the umbrella is additive. So in your example, there is a total of $1.4M liability coverage before you have to start liquidating your own assets to cover a judgment against you.

Yes, Umbrella coverage is added on top of auto, homeowner ins (or boat or RV if you have them). Auto and home are primary policies for the liability losses they cover, if the underlying auto or homeowner policy lapses for any reason, the Umbrella policy will not drop down below the limit of auto or home coverage that was supposed to be there.

 

[Charlotte]

Yes, $2 million.