At what point would you drop umbrella policy?

[CincyDave]

That does seem thigh for a $1M policy. I have my auto, home and umbrella all with the same carrier and I'm paying $198 for a $2M umbrella. Wasn't sure from your post if you have everything with one carrier or not. Also rates will vary a lot by location and see you are in Seattle, so that may explain part of the pricing. Like others have said I would keep for defense costs in addition to the extra million in coverage.

 

[euro]

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?

I would think for most people the answer would be:"keep the umbrella". However, if you are confident that the vast majority of your assets are secure from lawsuits in your state, then I think you should go ahead, cancel it and do something fun with the savings. Being overinsured offers no benefit to you (just to the insurance company).

 

[Gumby]

Here's a question, to which I don't know the answer. Suppose that all your assets are in exempt accounts/property, so that a judgment creditor cannot seize them. Now suppose that you die and your assets are liquidated by the executor and transferred to your beneficiaries, by will or by law. The judgment creditor will still be a creditor against the estate, and as I understand the law, creditors get paid out of the estate before beneficiaries. Or, does the money/property retain its exempt character even after it is liquidated and put into the estate?

 

[athena53]

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.

This is good advice, anyway- it means that your underlying and excess coverages are consistent (less risk of something covered by the underlying but excluded by the Excess or vice versa) and the insurer is at stake for the whole claim and will likely throw more legal power at it.

OP, Check the laws in your state- I think 401(k) assets are exempt from lawsuits but IRAs aren't always.

I keep mine- plenty outside of my IRA and no 401(k) assets at all. I figure whatever damage I do, they're likely to be happy to walk away with $3 million plus the underlying (minus the 33% the attorney rakes off) 'cause the plaintiff hit the darn lottery. (I used to work in property-casualty insurance- can you tell?)

 

[street]

Tough question but I think I would keep mine and if price started to increase, I would start looking for new insurer. With the ranch I would feel better about having the umbrella policy no matter what.

Who knows what could go wrong with trespassers etc.

 

[JBTX]

The amount seems high. I have State Farm with 3 million with for than OP amount.

If you have young drivers on your policy that could drive it up.

 

[luckydude]

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?

So I have a dumb question. Let's say you have all your assets protected from judgement by law (401(k), retirement accounts, home, etc.) and thus don't need an umbrella policy. Then something bad happens and you are sued and found liable for a judgement of say $1 million. Because all your assets are protected, the plaintiff can't get their hands on them, but you would still be legally liable to pay $1 million somehow---maybe it's wage garnishment or some other methods.

My point is that it is entirely possible for someone to be sued for a judgement regardless of how much assets a person has and how much of said assets are legally protected. Wouldn't having an umbrella policy helps in dealing with this kind of scenario?

 

[ncbill]

Well, even w/o an umbrella policy, the insurance company still has a duty to defend and do their best to settle within limits of your home/auto policy.

And if you do go to trial, lose, and are subject to a judgment over those policy limits but you have most of your assets in protected accounts the plaintiff will get your unprotected assets but any excess judgment is normally dischargeable in Chapter 7, assuming you were not DUI.

Another reason to file ASAP in the above example is that filing stays wage garnishment, in states where that's allowed.

OP's price does seem high for a $1 million umbrella...better start shopping the whole package.

 

[youbet]

Curiosity got to me. Just sent DW to the file cabinet where she pulled the policy and yelled down the hall "$699 for 3 million." State Farm. Two cars with two drivers. 1 camper. Suburban house very near Chicago. Both retired. No high risk adders.

 

[Happyras]

Curiosity got to me. Just sent DW to the file cabinet where she pulled the policy and yelled down the hall "$699 for 3 million." State Farm. Two cars with two drivers. 1 camper. Suburban house very near Chicago. Both retired. No high risk adders.

classic State Farm....suck you in then raise the rates every 6 months until you notice it.......

 

[youbet]

classic State Farm....suck you in then raise the rates every 6 months until you notice it.......

Not sure what you mean. Does the amount I'm paying seem high for our situation in an urban location? Increases have been small but steady.

 

[ivinsfan]

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.

Usually a settlement is a settlement releases and such are signed.

 

[Happyras]

Not sure what you mean. Does the amount I'm paying seem high for our situation in an urban location? Increases have been small but steady.

Just my experience with State Farm here in WA. Small increases, OK, but we pay a little less with AMFAM, which was the OP's carrier in question. I can still buy an Umbrella from my former employer GE without underlying policies, but we choose to bundle all policies in favor of the service.

MY POINT is, AMFAM did us right recently with our home fire, they lived up to their contract and covered us well for our losses. I would have a hard time switching now to any other carrier, but I did switch to State Farm for a short time a few years back and enjoyed their semi-annual rate increases. I had a loss covered with them in a camper tip over where they did nothing to go after the manufacturer for defect nor the "extended warranty" carrier, but ended up raising our auto/camper rates to compensate for the loss.

 

[ivinsfan]

So I have a dumb question. Let's say you have all your assets protected from judgement by law (401(k), retirement accounts, home, etc.) and thus don't need an umbrella policy. Then something bad happens and you are sued and found liable for a judgement of say $1 million. Because all your assets are protected, the plaintiff can't get their hands on them, but you would still be legally liable to pay $1 million somehow---maybe it's wage garnishment or some other methods.

My point is that it is entirely possible for someone to be sued for a judgement regardless of how much assets a person has and how much of said assets are legally protected. Wouldn't having an umbrella policy helps in dealing with this kind of scenario?

You know lawyers in these cases work on contingency fees...they want an insurance settlement or a cash judgement against someone who has lots of cash. So not many lawsuits actually happen against regular people..

 

[Fermion]

I would imagine a lawyer would look at us, see the protected retirement assets, protected home, one vehicle also protected to $15,000, a couple of 11 year old motorcycles and a sailboat that costs $370 a month to moor and would say "pass", but I may be wrong. I certainly wouldn't put in a lot of time on that case.

I think though the smart thing is to shop around and find a new insurer for everything. We have all of our policies with Amfam, but they really don't care. The agent on the phone today was practically yawning even though we pay around $4,000 a year in various insurances to them. I figure some executive needed a second Tesla and decided to bump the rates.

 

[youbet]

Usually a settlement is a settlement releases and such are signed.

In a case like this, I doubt a settlement would be signed. 10X was awarded and only 1X was delivered (for example). Why would they sign off as "settled." More likely, there would be ongoing collection attempts, liens, etc. If there is something to eventually go after, wouldn't the lawyers or collection agency keep sniffing around for years?

Maybe one of our lawyer members will chime in.

 

[Fermion]

how many people on here have had a umbrella policy "kick in" so to speak?

I imagine the odds are actually quite small, as in 1 in 10,000 chance or something that someone gets a large enough judgement against you that your 500,000 liability on your auto doesn't cover.

So then it comes down to is paying $5,000 over 10 years worth protecting maybe $50,000 in assets on a 1 in 1,000 chance? Seems the money would be better spent on a life insurance policy or long term care insurance.

 

[luckydude]

how many people on here have had a umbrella policy "kick in" so to speak?

I imagine the odds are actually quite small, as in 1 in 10,000 chance or something that someone gets a large enough judgement against you that your 500,000 liability on your auto doesn't cover.

So then it comes down to is paying $5,000 over 10 years worth protecting maybe $50,000 in assets on a 1 in 1,000 chance? Seems the money would be better spent on a life insurance policy or long term care insurance.

There've been more than a few threads on this topic and I can't recall any single forum member saying they've had this happen to them.

Sure the probabilities are low, but isn't that the whole point of insurance? We don't think it's going to happen, and it likely isn't going to happen, but in the very unlikely even that it does happen, we're covered. That's the same reason we get disability insurance, fire insurance, etc. We pay a relatively small amount to insure against a relatively unlikely event, but one that, if it does occur, can potentially devastate one's portfolio. It seems like a very small price to pay, especially when we're talking about a lousy few hundred dollars a year.

 

[MarieIG]

Here's a question, to which I don't know the answer. Suppose that all your assets are in exempt accounts/property, so that a judgment creditor cannot seize them. Now suppose that you die and your assets are liquidated by the executor and transferred to your beneficiaries, by will or by law. The judgment creditor will still be a creditor against the estate, and as I understand the law, creditors get paid out of the estate before beneficiaries. Or, does the money/property retain its exempt character even after it is liquidated and put into the estate?

It occurred to me that if most of someone's assets were in IRAs or 401ks, that someone may want or need to take money out of their IRA or 401k - to live; or maybe want sell their house at some point.

 

[RetiredHappy]

We don't see dropping umbrella policy as an option. We pay $234 for $2M coverage with Travelers. Time to shop for a new insurer.

 

[COcheesehead]

We dropped our dog off for doggy day care. He was left in the sun and died of heatstroke. The local animal control cited the day care for animal neglect. The local paper heard of the death and published the story. The case is in the courts. We are only witnesses in the case. The owners of the daycare are suing us for libel and slander because their business dropped to nothing after the death. We consulted a lawyer who told us our homeowners and umbrella will defend us.

It’s cheap insurance to not lose millions. Life comes at you fast. We dropped our beloved dog at day care - we are sued. Protect yourself.

 

[kgtest]

How many times have you been sued for $1million? How many people do you know who have been sued for $1million. And of those, why did they get sued? A dog bite? A slip and fall? Running with scissors in their hands? A burn from the family campfire? A propane tank exploding right in front of them. I knew one person whose dog bit a neighbors friend. He just paid all the dr bills and called it good.

 

[kgtest]

We dropped our dog off for doggy day care. He was left in the sun and died of heatstroke. The local animal control cited the day care for animal neglect. The local paper heard of the death and published the story. The case is in the courts. We are only witnesses in the case. The owners of the daycare are suing us for libel and slander because their business dropped to nothing after the death. We consulted a lawyer who told us our homeowners and umbrella will defend us.

It’s cheap insurance to not lose millions. Life comes at you fast. We dropped our beloved dog at day care - we are sued. Protect yourself.

Well there we have it. I don't own a dog. I do have 3 children. None of them are at an age where they could really do much of anything.

Now my business on the other hand has LOTS of risk, so I carry a $2mm general liability policy.

 

[COcheesehead]

Well there we have it. I don't own a dog. I do have 3 children. None of them are at an age where they could really do much of anything.

Now my business on the other hand has LOTS of risk, so I carry a $2mm general liability policy.

Post a bad review on a business…or your kids say something online.
Crap happens.

 

[COcheesehead]

How many times have you been sued for $1million? How many people do you know who have been sued for $1million. And of those, why did they get sued? A dog bite? A slip and fall? Running with scissors in their hands? A burn from the family campfire? A propane tank exploding right in front of them. I knew one person whose dog bit a neighbors friend. He just paid all the dr bills and called it good.

I know someone who bumped a pedestrian with their car in a cross walk and was sued. The umbrella covered it.

People … it’s cheap vs what you’d have to pay in court. Don’t be penny wise and pound foolish.