Adding umbrella insurance cost me $6,720 of play money

[corn18]

I got umbrella insurance today. I have it through work now for free, but I am retiring in Mar, so figured I would get a new policy from USAA. $1M for $16/mo. That seemed ok. Until I plugged that into my retirement spreadsheet. Over 35 years, that's $6,720 (16x12x35). That has to come out of our $200,000 play budget unless we cut $16 / month from something else. Never really thought about it that way. So I took a look and increasing or overspending $100 / mo costs me $42,000 in play money. Maybe Mr. Market will get that back for me.

 

[RetireeRobert]

Well, over on the long term care insurance thread, lots of the posters say they opted for self-insure for that risk. They view LTCi as wasting premium moneys for something they may never use.

Could look at umbrella insurance the same way. Don't buy it, instead self-insure.

Also occurred to me, why not view Homeowners insurance that way. In fifty years of paying premiums I have never had an HO loss to claim for. So, I was just thinking, why not self insure my home? I am mortgage free and could recover from a fire loss, why not save some insurance money each year?

 

[SecondCor521]

Also occurred to me, why not view Homeowners insurance that way. In fifty years of paying premiums I have never had an HO loss to claim for. So, I was just thinking, why not self insure my home? I am mortgage free and could recover from a fire loss, why not save some insurance money each year?

I decided I didn't want to pay my HO carrier for small risks, but I also didn't want to pay a bunch if my house burned down completely.

So even though I'm mortgage free, I still have a homeowner's policy. But I have a really large deductible ($10K or something).

I think an umbrella policy sorta requires a homeowner's policy underneath it, but not 100% sure on that.

I want (and have) an umbrella policy because I want protection against a large downside event.

 

[MarieIG]

Well, over on the long term care insurance thread, lots of the posters say they opted for self-insure for that risk. They view LTCi as wasting premium moneys for something they may never use.

Could look at umbrella insurance the same way. Don't buy it, instead self-insure.

Also occurred to me, why not view Homeowners insurance that way. In fifty years of paying premiums I have never had an HO loss to claim for. So, I was just thinking, why not self insure my home? I am mortgage free and could recover from a fire loss, why not save some insurance money each year?

Someone trips and falls on your property and decides to fund their ER on you. Oh, and your umbrella requires underlying insurance to drop down.

It's not necessarily just insuring against damage to your home.

At least with LTC - you are paying for - well you.

 

[RunningBum]

$6720 or whatever it is for me spread out over the next 35 years would not derail my retirement in any way. Losing a 7-figure lawsuit certainly would. Odds of losing one are small but not unimaginable. Just dealing with a nonsense lawsuit would be very stressful. I'd feel better letting my insurance company's lawyers deal with disposing of trivial lawsuits, and defending me in others and covering my first $2M in case of loss.

If you want to choose otherwise, that's your business.

 

[kimcdougc]

We have a $2,000,000 policy. It picks up where all your other insurance ends. It is a cheap peace of mind for me.

 

[RobbieB]

Two hundred bucks a year is cheap for better sleep.

 

[DenverGuy42]

I got umbrella insurance today. I have it through work now for free, but I am retiring in Mar, so figured I would get a new policy from USAA. $1M for $16/mo. That seemed ok. Until I plugged that into my retirement spreadsheet. Over 35 years, that's $6,720 (16x12x35). That has to come out of our $200,000 play budget unless we cut $16 / month from something else. Never really thought about it that way. So I took a look and increasing or overspending $100 / mo costs me $42,000 in play money. Maybe Mr. Market will get that back for me.

I look at it this way...

Many people in finance would tell me to not pay off my mortgage - "rates are so low, you can make more in the market". But I did (on three properties - two my wife and I enjoy and one my son rents from me). Why? Peace. Of. Mind. I feel better having done it.

I have umbrella insurance. Why? Peace. Of. Mind. No other reason. I know if something catastrophic happens (someone decides to sue me big time - it happens https://www.homevestors.com/blog/crazy-stories-homeowners-sued/), I'm covered and don't have to worry about losing everything.

I have long term care insurance (it is a lot more than your umbrella $$$). Why? Peace of mind - I hope I never ever have to use it, but if I do, I know it is there and my care won't wipe my wife out financially.

I find that 'peace of mind' > 'every last penny' in most cases. And when it comes to money - penney wise, pound foolish can be really bad for you.

 

[RetireeRobert]

Actually, I have HO with $5k deductible, and an umbrella liability as well. And the Umbrella is cheap enough it doesn't feel like a waste of premium.

But I may get a requote at next renewal for $10k deducible on HO.

Now as to car insurance, maybe I should slice that back to just the liability coverage and do away with collision and comprehensive on both cars, as I could easily self insure for those risks. Might save me several hundred a year in premiums.

 

[corn18]

Don't get me wrong, I want the umbrella insurance.

 

[AbbA]

I have umbrella insurance. Why? Peace. Of. Mind. No other reason. I know if something catastrophic happens (someone decides to sue me big time - it happens https://www.homevestors.com/blog/crazy-stories-homeowners-sued/), I'm covered and don't have to worry about losing everything.

I checked your provided link. Well, how crazy is that? First insurance helps the insured and then turns around a few years later and sues the insured back for the help it provided earlier. How can you trust the insurance company then? Or which to trust and which not? I wish I haven't gone on that link because it made me feel nervous

 

[street]

Well, over on the long term care insurance thread, lots of the posters say they opted for self-insure for that risk. They view LTCi as wasting premium moneys for something they may never use.

Could look at umbrella insurance the same way. Don't buy it, instead self-insure.

Also occurred to me, why not view Homeowners insurance that way. In fifty years of paying premiums I have never had an HO loss to claim for. So, I was just thinking, why not self insure my home? I am mortgage free and could recover from a fire loss, why not save some insurance money each year?

Lol!!
That has always been interesting when this topic comes up. I can't agree with you any more on your comments. It all is a gamble, so if you don't have it you should of had it and if you had it you won't need to have it.

I have seen the worse and the best case scenarios with LTC and Umbrella Insurances. Some it paid big time to have and then there are others that never had to use it.

Just my two ¢.

 

[winger]

We have our truck, RV and umbrella policy with the same company. For 2021, the truck and RV went up 1.56% from 2020 rates. We have homeowners insurance with another company, and a barely used motorcycle with a third company that I feel some loyalty toward.
But the umbrella policy went up 34.11%. We have the correct underlying insurance limits, and no claims.

We can afford it, just burns my burrito.

 

[mrfeh]

Two hundred bucks a year is cheap for better sleep.

+1

If we're gonna pinch pennies, or look at expenses over decades, I suggest people take a close look at what they're spending on mobile phones every month.

 

[Dtail]

We have a $2,000,000 policy. It picks up where all your other insurance ends. It is a cheap peace of mind for me.

Same here. If one kills someone accidently in an auto accident, one is finished without coverage.

 

[H2ODude]

$6720 or whatever it is for me spread out over the next 35 years would not derail my retirement in any way. Losing a 7-figure lawsuit certainly would. Odds of losing one are small but not unimaginable. Just dealing with a nonsense lawsuit would be very stressful. I'd feel better letting my insurance company's lawyers deal with disposing of trivial lawsuits, and defending me in others and covering my first $2M in case of loss.

If you want to choose otherwise, that's your business.

Agree fully. If I had the choice and my HO insurance kept climbing the way it was, I would actually self insure for HO. But, you can't have an umbrella without HO. In the remote occurrence of a fire, could afford to rebuild. In the remote occurrence of an accident in which a child or high earning adult was injured (despite my careful driving it is possible) I'd be toast. Having an insurance co attorney/staff to cover up to the umbrella would be quite comforting for the minimal cost. As it is, our HO is only about $1000 a year for $600k coverage, the umbrella is something between 100 and 200. That's fairly de minimus out of the $3200 insurance bill for HO, two fairly high end cars, and umbrella.

 

[H2ODude]

Two things I remember from my father. No license? OK to drive, but if you don't have insurance it's not. That, and when you need insurance, the best is not good enough.

 

[RunningBum]

Don't get me wrong, I want the umbrella insurance.

So this was just a budget error. Deal with it.

 

[FANOFJESUS]

I got umbrella insurance today. I have it through work now for free, but I am retiring in Mar, so figured I would get a new policy from USAA. $1M for $16/mo. That seemed ok. Until I plugged that into my retirement spreadsheet. Over 35 years, that's $6,720 (16x12x35). That has to come out of our $200,000 play budget unless we cut $16 / month from something else. Never really thought about it that way. So I took a look and increasing or overspending $100 / mo costs me $42,000 in play money. Maybe Mr. Market will get that back for me.

Corn from what I know about you. You need it and it's cheap. LOL

 

[Aerides]

Over 35 years, that's $6,720 (16x12x35).

Despite the forest, that's a remarkably good tree.

That $6720 could well end up saving you millions, and will end up saving you a lot of peace of mind.

Every time someone steps on your property, you run the risk of a claim that exceeds your regular home owners insurance. Our policy is $2m.

 

[retire48in2018]

Well, over on the long term care insurance thread, lots of the posters say they opted for self-insure for that risk. They view LTCi as wasting premium moneys for something they may never use.

Could look at umbrella insurance the same way. Don't buy it, instead self-insure.

Also occurred to me, why not view Homeowners insurance that way. In fifty years of paying premiums I have never had an HO loss to claim for. So, I was just thinking, why not self insure my home? I am mortgage free and could recover from a fire loss, why not save some insurance money each year?

I view umbrella insurance as catastrophic coverage. If LTCi had that, and priced it accordingly, I'd be interested.

I will buy insurance when it transfers the risk. I don't buy insurance to try to make money.

With umbrella insurance, have the $MM policy gets their lawyers involved, and covers some portion of the costs - to me - that's transferring the risk.

 

[ivinsfan]

On an OT note this is like the 11th thread in last month you started about money. Are you usually this worked up about stuff or is something else going on?

This one about umbrella insurance is a good example.It will make no difference in your life if you spend this dough for insurance. I think it might be a good time for you to find a new hobby and put away the spreadsheets for awhile.

 

[sergio]

The bigger cost increase for us was going from $300k liability to $500k liability on both home and auto, which was required to be eligible for umbrella coverage. The extra $2M umbrella was peanuts for each dollar of coverage compared to that.

According to our agent, the average wrongful death settlement/judgment in our state is $850k, so even having $500k of liability means you'd be on the hook for a substantial amount.

Of course, umbrella claims are also incredibly rare, hence the relatively cheap cost.

Years ago one of my former coworker's kids hit another driver while distracted and severely injured him. My coworker wasn't able to share the settlement details but hinted it was well north of a million, and this was a case where the other injured driver eventually (thankfully) made a full recovery. Umbrella coverage saved my bosses' retirement and also fairly compensated the victim for all medical, pain and suffering, and lost income.

We pay $230/year for umbrella which is an absolute no-brainer for peace of mind alone.

 

[corn18]

So this was just a budget error. Deal with it.

True dat. It isn't bugging me. Just demonstrates the impact of a $16/mo omission..

 

[corn18]

On an OT note this is like the 11th thread in last month you started about money. Are you usually this worked up about stuff or is something else going on?

This one about umbrella insurance is a good example.It will make no difference in your life if you spend this dough for insurance. I think it might be a good time for you to find a new hobby and put away the spreadsheets for awhile.

48 days and a wakeup from retirement, so I am hyper focused on money. Drives my wife nuts.