At what point would you drop umbrella policy?

[Fermion]

Amfam has raised our renewal rate yet again for our dinky 1 mil umbrella policy from $420 to $530 coming up this April.

I am starting to wonder if it is really financially smart to keep it. After putting a lot of our taxable account into our new home build, we have most of our assets in 401K, IRA and Roth accounts now. Washington state passed a law in 2021 that increases the amount of your home protected from judgements from $125,000 to the greater of that or the median value of homes in your area, which would pretty much cover our house. We only have 1 vehicle, which is protected as well from judgements.

So essentially the blood from this turnip would be a couple of older motorcycles and our sailboat, which honestly, they would save us a ton of money if they took it.

I am having a hard time thinking of paying $530 for *maybe* protecting $50k in at risk assets if our current coverages on our normal policies don't cover what someone seeks. If they are not happy with our $500,000 policy on our home and boat, would they be ok with the $1mil, or would they want $5 million and we would still be in the same situation?

 

[Car-Guy]

I'll be watching this thread since I've been asking myself a similar question. "Is it really worth" what I'm paying for my UP... My 1m policy is only $290 yr now but I'm sure it will go up. Add to that, I could also reduce my auto liabilities too has me thinking. I'd probably be saving ~1k a year on a go forward basis so not that much but still......

 

[MarieIG]

Me? After my estate settles . . .

 

[OldShooter]

Anybody can sue anybody. One benefit of liability insurance is that the insurance company defends. Being right and having assets in liability shelters does not mean that you will not have legal bills defending.

 

[CRLLS]

Do not ignore that the insurance company would foot the bill for any attorney costs if sued. That could be a lot of $$ out the door on your pocket. I have no idea but would think that an attorney would not take your case without $$ up front and such low attachable savings.

Personally, I just have a bit more comfort having the umbrella insurance. Ican afford the annual premium.

 

[Fermion]

Wouldn't they also defend your case if they are on the hook for $250,000 from your normal insurance policy?

 

[Bigdawg]

Wouldn't they also defend your case if they are on the hook for $250,000 from your normal insurance policy?

Depends. Probably not worth their time. If they don't defend you and you lose in court, their portion is only 250k. If the judgement was 1 mil, u would have to pony up the other 750k. Mine is cheap enough that I'm sticking with it for now. How much interaction do you have with people who would potentially sue you? I how a lot. My sports officiating puts me at risk. I can also deduct some of mine because I need it as a sports official.

 

[Fermion]

Depends. Probably not worth their time. If they don't defend you and you lose in court, their portion is only 250k. If the judgement was 1 mil, u would have to pony up the other 750k. Mine is cheap enough that I'm sticking with it for now. How much interaction do you have with people who would potentially sue you? I how a lot. My sports officiating puts me at risk. I can also deduct some of mine because I need it as a sports official.

It would probably be more like the insurance pays $250k and they would try to make me pony up the 750k but I would tell them to take a long walk off a short pier and use the Washington state and federal protection laws to back me up. They could have the sailboat though, would save me a lot of moorage costs.

 

[Happyras]

Wouldn't they also defend your case if they are on the hook for $250,000 from your normal insurance policy?

Yes, but not for very long.

We have AMFAM and live in Redmond, but have not seen the jump in premium you describe. We have a $3M PEL (personal excess liability) or Umbrella. the sole reason is to make it interesting enough for the insurance company to engage the right legal defense, for as long as needed. Its not the assets protected as much. Our rental home is listed, but our commercial property is not, since it is covered under a triple net lease by the company leasing our building.

Litigation due to the commercial property liability would not be covered, but that asset would be subject directly to lawsuit settlement as an unprotected asset, along with other assets held in our trust.

Tough to know if the risk is high for us, as we have one vehicle, and pretty good property coverage for liability. I looked at the AMFAM site, and I see our listed underlying policies do not include our rental, so I need to clear that up, but I see we paid $480 for 3M coverage 12 mo. It could be your sail boat that is driving the high cost of premium.

 

[badatmath]

Your umbrella prices seem quite high to me. . . do you have a lot of drivers? As a single mine is not significant and I am cheap.

 

[Montecfo]

I would shop it. I plan to keep ours in place. Seems cheap insurance relative to risks.

 

[Happyras]

Yes, but not for very long.

.... I looked at the AMFAM site, and I see our listed underlying policies do not include our rental, so I need to clear that up, but I see we paid $480 for 3M coverage 12 mo. It could be your sail boat that is driving the high cost of premium.

I read our policy renewal again and our "rental" is listed as a seasonal additional home, and is covered for excess liability as such. Our policy renewed in late Feb, the increase was similar, but it is for a 3M policy, same carrier. One vehicle and 2 drivers, but no sports or leisure vehicles. I suspect that sail boat and motor cycles are driving most of your costs. Again, its the liability not the asset value that is covered.

 

[Lakedog]

You might be able to increase your auto/home liability coverages for way less cost than the umbrella. My autos have a million $ liability and home is $500k. Those policies were just a few $ more than lower liability limits.

 

[RunningBum]

Washington state seems pretty protective, with Roths and tIRA protected. If I had few assets at risk from a lawsuit and losing them wouldn't be a hardship, I'd probably drop my umbrella insurance.

 

[VFK57]

Get a quote what combines home, auto and umbrella. The rate will be lower if you have all 3 with one company. It will require high auto coverage (250,000/500,000) but the rate for umbrella will drop.

 

[ivinsfan]

Do not ignore that the insurance company would foot the bill for any attorney costs if sued. That could be a lot of $$ out the door on your pocket. I have no idea but would think that an attorney would not take your case without $$ up front and such low attachable savings.

Personally, I just have a bit more comfort having the umbrella insurance. Ican afford the annual premium.

In theory, but with less well heeled (as in not billionaires) people the insurance company will settle and make it go away rather then pay lawyers...most attorneys are just trying for the insurance settlement anyway. It's quicker, less hassle, less work.



In the Alex Murdoch case the boat accident lawyer was nosing around for an umbrella insurance settlement and thought that would be the end of it. But it turned out the umbrella policy had been cancelled by the insurer after a different lawsuit and settlement....As the lawyer guilelessly said, that makes it way more complicated.


To the original question it depends on much you want to avoid hassle!

 

[CRLLS]

So what happens if you have a judgment against you and you can't or won't pay because of "protected retirement accounts". At least for now. But in a year or two or three, RMD's are there. Then there is a flow of unprotected cash flow. Would you be required to pay unpaid judgement? With interest? I honestly don't know.

 

[bloom2708]

Not for $110. That is a meal for 2 right now.

Or .6 of 1 tire for your car. Keep the Umbrella. Ella. Ella.

 

[braumeister]

If you have your policies bundled with one insurer, that seems like a stiff increase. I pay $317 for a $2M umbrella. Maybe time to start shopping around?

 

[Piper20]

Our policy just renewed $323 for 2 million. Same cost as last year in PA.

 

[ivinsfan]

soupcxan haven't seen your name pop up in a long time...Hi!

 

[Gumby]

Not for $110. That is a meal for 2 right now.

Or .6 of 1 tire for your car. Keep the Umbrella. Ella. Ella.

Who could disagree with Rihanna?

 

[ivinsfan]

Who could disagree with Rihanna?

Not me and I don't know how much effort I would put into reshopping all my insurance for a 110 bucks... not much...

 

[youbet]

It would probably be more like the insurance pays $250k and they would try to make me pony up the 750k but I would tell them to take a long walk off a short pier and use the Washington state and federal protection laws to back me up. They could have the sailboat though, would save me a lot of moorage costs.

What they get at the time of the initial award is one thing. What they continue to hound you for over the years might be another thing.

 

[socca]

GEICO doubled, doubled, and then doubled again my umbrella premium in successive years. I cancelled the policy and told them I was going to self-insure for awhile so their pricing algorithm wouldn't identify me as a sucker. It worked. The quoted premium "collapsed" when I restarted the umbrella early this year. GEICO may try the successive doubling strategy again, and around the block we'll go.

P.S. GEICO has converted to billing the umbrella every six months rather than annually, a well-known technique among scammers ("buy this certified U.S. Mint Dollar for only four payments of $24.99 each ..." )