Calculating Umbrella Insurance Needs

pb4uski said:
While I concede that someone can sue you for whatever they want to, as a practical matter they will look at your income and assets only because you can't draw blood from a stone (or is it turnip).

That said, $2.5 million is obviously better than $1.5 million, but in both cases the insurer has a strong incentive to provide me with a vigorous defense.
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That seems to be the norm, from what I hear. But how do they look at your assets? Can they get a court order to see my Vanguard account? And if they can see that, can they also see that I have an umbrella policy? If so, why wouldn't they sue for my assets+umbrella+underlying insurance?
 
RunningBum said:
That seems to be the norm, from what I hear. But how do they look at your assets? Can they get a court order to see my Vanguard account? And if they can see that, can they also see that I have an umbrella policy? If so, why wouldn't they sue for my assets+umbrella+underlying insurance?
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I could be wrong, but I think there is a "discovery" process in court proceedings and assets must be disclosed.
 
Sunset said:
But that happens after you have already been sued, after they have declared they "need" a certain amount for injury/medical/insult etc...
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I only know about NY. The insurance is disclosed during discovery. Although obviously, plaintiff's counsel can always do a asset search, assets are (typically) not part of discovery - until after a verdict/ judgment.
 
Surprised this hasn't come up yet, but the umbrella insurance company lawyers are not going to represent YOU. They are going to defend the insurance company to pay as little as possible.
You still need your own lawyer to watch out for your interest. Your lawyer should be able to take a back seat and let the ins co take the lead as long as the ins co's goals align with yours, so your bill meter might spin a little slower, but the meter still going to spin.


I had a case where there were 4 parties (and 4 lawyers involved). It started with the plaintiff suing the other 3. Arbitrator ruled I did not owe anything, but the other 2 defendants had to pay. So... the other 2 defendants start the appeals (all the way to the state supreme court) but I am now on the side of the person who originally sued me because the initial ruling was favorable to me. It cost me 8K in legal fees (1980's $'s) and 4 years of putting my life on hold to "win". Never hand your financial life over to somebody else's lawyer.
 
COcheesehead said:
Can't a jury award more?
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Legal proceedings are always a crap-shoot, even criminal cases where perjury is highly likely to be investigated/prosecuted.
Just look at the high variance in criminal case sentences for the same crime.

So, while suddenly upping the lawsuit request from $100,000 to $5M because the suing party realized you are rich would look bad.
A judge or jury can impose practically any award they want.

The rationale is that is what appeals are for.
 
We have always just carried 1 million and I will not raise it. I am sick of paying insurance premiums on everything.


We just changed our policy over to Progressive, as well as our auto. We already had homeowners with them. Was the best package deal we got when shopping recently.
 
Spock said:
Surprised this hasn't come up yet, but the umbrella insurance company lawyers are not going to represent YOU. They are going to defend the insurance company to pay as little as possible.
You still need your own lawyer to watch out for your interest. Your lawyer should be able to take a back seat and let the ins co take the lead as long as the ins co's goals align with yours, so your bill meter might spin a little slower, but the meter still going to spin. ....
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While I understand that the insurance companies lawyers are not necessarily going to represent me, the plaintiff will only get money if it is determined that I (the insured) caused damages and then the insurance company will pay the first $x under my insurance policies.... so it seems like a distinction without much of a difference since the insurer's economic interests and mine are joined at the hip.

Can you give me an example of how I could be harmed by what the insurer does?
 
pb4uski said:
While I understand that the insurance companies lawyers are not necessarily going to represent me, the plaintiff will only get money if it is determined that I (the insured) caused damages and then the insurance company will pay the first $x under my insurance policies.... so it seems like a distinction without much of a difference since the insurer's economic interests and mine are joined at the hip.

Can you give me an example of how I could be harmed by what the insurer does?
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Simple. In a big enough case they buy themselves out of the case with your policy and leave you to pay the rest of the judgement.
 
meleana said:
We have always just carried 1 million and I will not raise it. I am sick of paying insurance premiums on everything.


We just changed our policy over to Progressive, as well as our auto. We already had homeowners with them. Was the best package deal we got when shopping recently.
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Usually I've heard that if you have all your insurance with 1 company you get a much better deal than spreading it around.
I once moved 1 vehicle insurance to another company as it was $100 cheaper, next renewal my house insurance jumped up $500 :facepalm:

So I shopped and moved everything to a new company. :)

Insurance can be expensive, but as a friend once told me, it's not nearly as expensive as NOT having it when needed. :flowers:
 
Well, they could only "buy themselves out" at my policy limit because if it is any less then they still have to pay my claim for any deficiency so I'm not sure that they have accomplished anything compared to just defending the claim against me.... poor example... try again.
 
pb4uski said:
Well, they could only "buy themselves out" at my policy limit because if it is any less then they still have to pay my claim for any deficiency so I'm not sure that they have accomplished anything compared to just defending the claim against me.... poor example... try again.
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If you're being sued for $5M and have a policy for $1M, and it looks like a strong case against you, they might not put a lot of effort into defending a loser. They pay their $1M and move on, sticking you with the rest. If they're paying their max, they don't care how much over that the judgement is . If you have your own lawyer, maybe they can get the whole verdict reduced to $1.5M, and you're only on the hook for 0.5M.

I guess that was the point. Makes some sense to me.
 
RunningBum said:
If you're being sued for $5M and have a policy for $1M, and it looks like a strong case against you, they might not put a lot of effort into defending a loser. They pay their $1M and move on, sticking you with the rest. If they're paying their max, they don't care how much over that the judgement is . If you have your own lawyer, maybe they can get the whole verdict reduced to $1.5M, and you're only on the hook for 0.5M.

I guess that was the point. Makes some sense to me.
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We would need to look at the policy, but most liability policies have a duty to defend clause. Accordingly, the insurer would still be required to provide a defense separate from their liability limit. ABA Article.

"The Insurer's Duties to Indemnify and to Defend
Most policies, regardless of whether it's a CGL or homeowners policy, include at least two liability-related promises by the insurer. The first promise, which is commonly referred to as the duty to indemnify, is the insurer's agreement to pay for the insured's legal liability up to the stated policy limits. The second promise, which is broader than the first promise, is referred to as the promise to defend, and it means that the insurer agrees to hire legal counsel to defend the insured against covered suit. The duty to defend also includes a promise to cover all legal fees and costs. Therefore, if a policyholder is faced with a covered third-party claim, the insurer has a duty to defend against the claim, in addition to a duty to pay any monetary award entered against the insured for covered claims."
 
Me neither. But we both have umbrella insurance just in case, right? It's helpful to realize that you might not want to rely on their lawyers if you are sued, specifically if the lawsuit amount is for over policy coverage and there's some substance to the lawsuit.
 
RunningBum said:
If you're being sued for $5M and have a policy for $1M, and it looks like a strong case against you, they might not put a lot of effort into defending a loser. They pay their $1M and move on, sticking you with the rest. If they're paying their max, they don't care how much over that the judgement is . If you have your own lawyer, maybe they can get the whole verdict reduced to $1.5M, and you're only on the hook for 0.5M.

I guess that was the point. Makes some sense to me.
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If this happened your insurer would be committing Bad Faith and you'd have a valid claim against them. They know this and want to avoid it.
 
Stormy Kromer said:
If this happened your insurer would be committing Bad Faith and you'd have a valid claim against them. They know this and want to avoid it.
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Thanks Stormy and Flint. Good to know.
 
Markola said:
IRAs are governed more by state laws and not nearly as protected as this statement implies. In my state, lawyers can go after my IRA. 401k-type plans are regulated by federal law and have better, though not absolute, protections. See https://www.irahelp.com/slottreport/your-ira-protected-creditors-you-may-be-surprised
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In my state, they can't go after an IRA. I find this state specific info helpful:

https://www.thetaxadviser.com/content/dam/tta/issues/2014/jan/stateirachart.pdf
 
RunningBum said:
If you're being sued for $5M and have a policy for $1M, and it looks like a strong case against you, they might not put a lot of effort into defending a loser. They pay their $1M and move on, sticking you with the rest. If they're paying their max, they don't care how much over that the judgement is . If you have your own lawyer, maybe they can get the whole verdict reduced to $1.5M, and you're only on the hook for 0.5M.

I guess that was the point. Makes some sense to me.
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So maybe bad faith lawsuits would stop them from doing this, but they could still assign this case to 1 brand new lawyer, maybe the intern (as long as has passed the bar), leaving the seasoned pro team of 3 lawyers to take on the $5M lawsuit.
 
Sunset said:
Usually I've heard that if you have all your insurance with 1 company you get a much better deal than spreading it around.
I once moved 1 vehicle insurance to another company as it was $100 cheaper, next renewal my house insurance jumped up $500 :facepalm:

So I shopped and moved everything to a new company. :)

Insurance can be expensive, but as a friend once told me, it's not nearly as expensive as NOT having it when needed. :flowers:
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Actually, having bundled policies with one insurance company is NOT always cheaper. We learned that long ago- as we shop for insurance every 5 years.


Eventually over time I am sure our bundles Progressive policies will cost more than separating them out OR bundling them elsewhere. But right now I am happy.
 
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