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Dropping Umbrella Coverage
Old 05-11-2021, 11:36 AM   #1
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Dropping Umbrella Coverage

I am considering dropping my $1M Umbrella Liability Coverage as I consider my risk factors are substanially reduced recently. Other than the cost savings, wandering what other factors I should consider. Firt took out the policy about 15 years ago as I realized my net worth was growing nicely and I wished to reserve and protect my net worth enabling me to raise my two sons.

My peak risk factors was about five years ago when I had 4 vehicles, a camper, a dog, and two high school teenage drivers.

As of this week, I'm down to two vehicles, and the camper. the younger son just graduated college and is moving away. His vehicle is in his name and his own insurance policy. His older brother still lives at home, has a full time career job, has his own vehicle and insurance policy.

So we are down to wife and I with two vehicles. I'm considering raising the lability coverage to the max they will offer on homeowners and auto policies and dropping the umbrella coverage. Probably a $1M on HO and auto each.

Am I missing anything??

I should add that we are not dependent on our investments for standard living expenses, I have a COLA pension but very low SS due to WEP and my wife has not started SS yet but can start next year.
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Old 05-11-2021, 11:57 AM   #2
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Other risk factors to consider include performing volunteer work, being a member of a Board (paid or nonprofit), and owning rental property.
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Old 05-11-2021, 12:08 PM   #3
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I was under the impression that it was cheaper to go with an umbrella policy than try to duplicate the coverage by increasing HO and auto coverage.
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Old 05-11-2021, 12:57 PM   #4
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Penny wise, dollar foolish. Umbrella policy is like an inexpensive way to keep a lawyer (the insurance company's lawyer) on retainer, should you ever be sued over a liability issue.
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Old 05-11-2021, 12:59 PM   #5
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I've always found it cheaper to do the minimum (but usually high) coverage plus an umbrella than to just jack up the basic coverage.

If your son is living at home, I would still put that under your risk category.

The only time I would not have umbrella insurance is if I had no risk factors. Certainly, anyone in the household still driving would automatically disqualify the no risk factors possibility -- for me, anyway. IMO, most don't realize how often/easy it is to become a defendant in a civil suit.

This is all assuming living in the US.
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Old 05-11-2021, 12:59 PM   #6
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Sounds like you're not pressed for the money, so it may be cheap peace of mind, but only you can answer for yourself. Sounds like you have the facts on each side of the scale right.
As far as I'm concerned, it takes only one car or one dog.
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Old 05-11-2021, 01:03 PM   #7
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Risk factors can be almost anything. You bump into someone out shopping and she trips and falls. A worker on your property has an accident, etc. Umbrella for 1M is almost always less than 1K per year, so IMO it's in the no brainer category.
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Old 05-11-2021, 01:26 PM   #8
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Your son living at home is a risk factor. Does he ever have friends over? Imagine what could happen. Ever hire a handyman and not checked his insurance coverage? Even you and your wife, if you’re in an accident that disables or kills someone, it could be a big lawsuit. What might the legal bills be before a judgment is rendered?
Umbrella coverage is cheap insurance.
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Old 05-11-2021, 03:11 PM   #9
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Relatively cheap insurance. I would keep it.
Might as well due the delta homework between car and umbrella insurance.
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Old 05-11-2021, 04:37 PM   #10
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Interesting question. Just yesterday I added back my umbrella policy. When we sold our house last summer and moved, we changed auto insurance carriers. With only auto insurance, I wasn't sure I could get umbrella coverage. So, I did nothing. When I finally called my agent I was pleased to hear they could find me a policy.
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Old 05-11-2021, 05:10 PM   #11
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I’d keep it. People who have no assets including human capital need no insurance. Those who do have assets need it. But you need not insure for more than can be attached. Consider Googlizing Pascal’s Wager. That’s what you are facing.
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Old 05-13-2021, 07:35 PM   #12
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I would look to increase my Umbrella, not decrease it.
Umbrella coverage is cheap. Not something to skimp on.
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Old 05-13-2021, 07:39 PM   #13
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Cheap is relative. In my area it's $400/year/$M and i don't even have dogs, teenagers or a pool...

Of course, compared to getting sued ...
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Old 05-13-2021, 09:46 PM   #14
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Quote:
Originally Posted by freedomatlast View Post
Penny wise, dollar foolish. Umbrella policy is like an inexpensive way to keep a lawyer (the insurance company's lawyer) on retainer, should you ever be sued over a liability issue.
Yes, and op may consider..... Do you want the $1M team or the $5M team defending your assets in the event of a lawsuit?
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Old 05-13-2021, 11:04 PM   #15
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Quote:
Originally Posted by RE2Boys View Post
I am considering dropping my $1M Umbrella Liability Coverage as I consider my risk factors are substanially reduced recently.
How much is your umbrella policy?
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Old 05-14-2021, 09:43 AM   #16
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Quote:
Originally Posted by BlueberryPie View Post
Cheap is relative. In my area it's $400/year/$M and i don't even have dogs, teenagers or a pool...

Of course, compared to getting sued ...


You might pay $400 for a one hour consult with an attorney about the lawsuit. Just want to put the cost into perspective.
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Old 05-14-2021, 09:48 AM   #17
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I assume your umbrella is an addition to your homeowners which can keep the cost down a bit vs. having an independent umbrella policy. Like others have said, I wouldn’t be without it until I move to a nursing home.
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Old 05-14-2021, 10:04 AM   #18
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On the other hand, in my seventy plus years of living dangerously, I have never been sued. Three kids, a wife, multiple cars, and now a pile of assets, and no lawsuits.
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Old 05-14-2021, 11:15 AM   #19
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Other risk factors to consider include performing volunteer work, being a member of a Board (paid or nonprofit), and owning rental property.
Umbrella policies are typically written to exclude volunteer commitments- when I was on the B of D of my professional society the agent told me that any Board activities would not be covered.

I agree on keeping the coverage, though. I'm widowed, no teenage drivers, no Rottweilers, no swimming pool but I have assets to protect. Another scenario: I loan my car to someone who carries minimum limits and they injure someone in a wreck. Lawyers are always looking for deeper pockets and I could be accused of having negligently entrusted my car to the person who caused the accident.
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Old 05-14-2021, 05:16 PM   #20
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My umbrella did require me to increase some of the liability limits on the car before it takes over, even though it's from the same insurance.

You buy insurance in the hope of never needing it, so good for you guys that skated through the raindrops.
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