To "umbrella" or not to "umbrella"...

[aza455]

What is the common wisdom as to the need for umbrella insurance for someone who is retired with a few millions in assets?

Would be great to get an actual YES (I have one) or NO (I don't have one) in the answer and the rationale behind that answer...

 

[Big_Hitter]

YES (I have one $2M) cause it's cheap

 

[dirt_dobber]

Yes $1m - cheap and offers a good bit of protection.
Got to protect those hard earned assets.

 

[razztazz]

The Common Wisdom here is very common, probably universal, and very, very wise. Get it.

 

[Richard4444]

YES for me as well

Rich

 

[pihwoah]

Yes I have one. For $200/year on $1M policy, it's worth it.

 

[ERD50]

YES (I have one)

Relatively cheap (I need to call now that only one child still in the nest, and she is gainfully employed - rates may be lower?).

Also, I don't buy the 'get enough insurance to match your net worth' guideline. You need enough insurance to protect how much you might get sued for. Example:

You have $1M NW, you buy $1M coverage. You get sued for $2M. They take your $1M insurance, and your $1M nest egg. You needed $2M coverage.

Of course, that's hard to predict, so they use the fairly worthless guideline. It doesn't have to be right, it's easy (like the guideline of needing 80% of pre-retirement salary as post-retirement income!)!

-ERD50

 

[FUEGO]

Yes I have it.

It's cheap. $162 per year plus a small amount to bring other policies' liability limits up to the required levels.

So I have $1,000,000 on home policy plus $1M umbrella. On auto it's $500,000 plus $1,000,000 umbrella.

Should cover almost all liability for me.

 

[BrianB]

+1 from me, too, but for a different reason:

Standard home & auto insurance policies have a clause giving the insurance company "right of subrogation". This means that the insurance company decides whether to fight a claim or accept and pay. If I'm hit with a $1 million claim and have just $300 thousand limits, the insurance company can just accept the judgement, pay their $300 k and walk away - leaving me with no recourse other than to pay the large balance.

I want the insurance company on the hook for a BIG potential payout, just to keep their lawyers working in my interest!

 

[Whisper66]

Yes, we have it. But honestly we have it because parents required us to get it before we became part of a family business. Now many years later, I suppose we would keep it if we were given an option to help protect the assets we've collected over the years. As others have said, it's pretty inexpensive.

 

[Jack_Pine]

We have it, 2 mil worth. It costs us around $800 which is not so cheap but still worth it to us.

 

[gayl]

Yes - equal to total assets (2m) for around 185 yr bundled with homeowners, auto, specific items ($2 month) = 178 month total

 

[athena53]

Yes- we have $2 million.

 

[karen1972]

in a society where people are sue happy and everyone wants to sock it to the rich, you bet I have it.

 

[marko]

in a society where people are sue happy and everyone wants to sock it to the rich, you bet I have it.

As my attorney says: "Anyone with $10 and no good reason can sue you".

 

[Katiek]

Yes for me as well.

 

[RobbieB]

I have one also and it is cheap. But you need to max out the liability on all your other policies (vehicle & homeowners) first and that costs more than the umbrella.

 

[tmm99]

Yes, $2 million.

 

[Dash man]

Yes, we have it. $6M worth to cover net worth and potential troubles with tenants.


Sent from my iPhone using Early Retirement Forum

 

[rodi]

Yes I have it. $2M.
Why? Because we have an onsite rental unit (detached granny flat in our back yard). I also have 2 teenagers under roof. I also want the insurance company lawyers involved in fighting any claims and/or settling for the lowest amount.

 

[Jack_Pine]

Maybe I should do a poll... ... kidding.

BUT ours is $819 for 2 mil. Does that seem expensive to everyone else?

 

[RetireAge50]

Yes. We had teenage drivers, motorcycles, and many young people visiting our home. Is a bit expensive $600/yr but maybe it will go down once the kids are gone.

 

[rodi]

Maybe I should do a poll... ... kidding.

BUT ours is $819 for 2 mil. Does that seem expensive to everyone else?

Ours is a little under that. But like everything related to insurance - I think geography matters. (States have different regulations.)

 

[W2R]

I haven't checked for 8-9 years, but at that time it was not an option (even for me, with no claims and a perfect payment history) to start a new umbrella policy at any price with any insurer in New Orleans. My understanding was that this was due to the combination of hurricane losses and the general litigious atmosphere in New Orleans.

At this point I'm not inclined to check again; if they don't want my money then they can take their policy and shove it where... well, you get the idea.

In answer to the original question, I think an umbrella policy is a good idea for those who live in normal US locations instead of third world banana republics like New Orleans. Living here I think you either have to adopt the "laissez les bons temps rouler" philosophy, or move away because some things like this are so messed up.

 

[2017ish]

We have it now and will keep it post-retirement; although likely will drop the limits to 1 or 2 million given that most of our assets are in protected accounts.