Protecting Your Nest Egg from the Vultures?

[Gumby]

My question is this: If I purchase an Umbrella policy for $1m to protect my assets, what keeps the vultures from suing for $2m to get my insurance co. to pay $1m and me to pay the other $1m from my hard earned retirement money?

Also as an aside,
I have been getting quotes for an umbrella policy and use USAA for my auto coverage. Their quote was exactly the same as my homeowners policy quote for all coverage options.
They both require $500,000 min liability on house and cars and $250,000 on boat. They are both quoting from the same carrier Is this normal?

USAA also has umbrella policies. You should ask them for a quote.

 

[MJ]

I think you still can. They just require some minimums on home and car insurance - if you own them. Talk to your (or an) insurance company.

There is also renters insurance. Perhaps an umbrella policy can tie to that.

Audrey

I just sold my car and I cancelled my auto insurance but unfortunately I could not keep my Geico umbrella because they require that you have an auto policy with them. I sold it because I no longer needed one.

MJ

 

[audreyh1]

Well, that may be a requirement by GEICO, but other insurance companies will have different options.

You might see what AON Recreation has to say (an insurance broker). We have a "fulltimer's insurance" - a version of homeowners/auto insurance for RVers who do not own a house, plus an umbrella, arranged through them - different insurance companies but they handle the "package".

Audrey

 

[MJ]

Thanks Audrey. I realize that this was a Geico requirement. I have to do a bit of research.

 

[Martha]

MJ, a friend of mine got "renters" insurance and an umbrella for his father who was in a nursing home. Dad had cognitive impairments and would periodically take a swipe at people. This insurance covered that liability.

Talk to an agent as to what might work for you.

 

[audreyh1]

Thanks Audrey. I realize that this was a Geico requirement. I have to do a bit of research.

Yes, when we sold our house and went full time in the RV, we had to deal with total changes in our insurance. There are only a few companies/agents who deal with the specialized insurance requirements of an RV fulltimer, but thankfully they are out there!

So, I suspect your case is simpler than ours, and that there are companies or agents willing to provide you the service.

Audrey

 

[bigla]

I have a 1million umbrella and fairly high auto liability and sure glad I did. I had a head on collision. IMO it was not clear who was at fault but I had a safe car with seatbelts and airbags and the young guy in the other car was not wearing seatbelts and car was older and not equiped with safety features. I pretty much walked away from the accident. He was seriously injured. I was out of state, he was local. My insurance co felt they would lose in court so they got 1.3 million from the insurance company as a final settlement.
After the accident I did move ownership of our homes to my wife and we segregated our finances. We knew the change in home deeds would stand up to a court challenge but felt we would not make it easy for them if it came down to it.
I was told IRA type money was protected.
Larry

 

[Patrick]

I was concerned at the time (because I was considering marriage, a risk to one's assets all its own.)

Consult a good lawyer to draw up a pre-nuptial agreement for you.

 

[Patrick]

Lawyers can be your friends also according to the profession: "The truth is, when you are in a bind, a lawyer can be the best friend you have."

Yeah, just ask O.J. Simpson.

 

[Patrick]

My question is this: If I purchase an Umbrella policy for $1m to protect my assets, what keeps the vultures from suing for $2m to get my insurance co. to pay $1m and me to pay the other $1m from my hard earned retirement money?

Nothing. But you will still be $1 million ahead.

 

[haha]

I think you still can. They just require some minimums on home and car insurance - if you own them. Talk to your (or an) insurance company.

There is also renters insurance. Perhaps an umbrella policy can tie to that.

Audrey

I wonder what the thinking of an insurance company would be in refusing a liability policy to someone with no home or car. Most of one's exposure comes from driving, so it would seem that these car free applicants would be the most profitable customers. I suppose that most people in this situation may realize that they have little exposure, and self-insure. So maybe the insurance underwriter smells adverse selection?

Ha

 

[audreyh1]

Who knows, but I'm sure it widely varies between companies. You just have to find which company will sell the kind of insurance you need. I know, for example, that the pool of companies willing to sell specialty insurance to RVers is small, but it's out there. And it's not State Farm, GEICO nor some of the other biggies.

Varies by state as well of course.

Audrey

 

[Independent]

If you file bankruptcy, the rollover IRA is fully protected if the money came from a 401k, or 457b. I am not absolutely sure about the 401a, I haven't looked it up.

If you don't file bankruptcy, then the protection of the rollover IRA is governed by state law. Some states provide full protection, many limit protection to the amount reasonably necessary for your and your dependents support, other states place a dollar limit on the amount protected. There might even be a few states that give no protection.

So, if things get bad and you have a big rollover IRA you might end up filing bankruptcy to protect it from creditors.

Thanks, I was wondering about that, too.