Winemaker
Thinks s/he gets paid by the post
DW and I have a $3 million personal policy each, and two $3 million for each of our two rental properties. The rentals pay their own insurance premium as an expense. About $289 each, IIRC.
Question about umbrella insurance
- Thread starter SunnyOne
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Fermion
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Everyone says it is cheap insurance but I just got our renewal letter and for a $1M policy they want to raise the rates from $420 a year to $528 when it renews in April. That is not cheap!
I am thinking about dropping it.
I am thinking about dropping it.
COcheesehead
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I guess the alternative is to get sued and have to pay a million.
Fermion
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Or get sued and not pay a million because all of your money is in a 401K
COcheesehead
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I knew someone who got sued. They even took most of his clothes. You are left with $1500 and a pair of shoes.
Insurance is essentially 'peace of mind'. Most of us won't ever experience a serious car accident, a devastating house fire, flood or earthquake. We likely won't ever be sued for some type of liability concern either.
It all comes down to level of risk and level of protection you feel comfortable with given your individual situation. It's kind of like asset allocation decisions... what makes YOU feel comfortable and how much $$$ does that comfort level cost?
What's expensive to you may be a bargain for me. Personally I have a $2M umbrella policy... but I have multiple rental properties, have had multiple children living with me of driving age, a boat that my (now adult) children sometimes make use of, etc. etc. For a few hundred dollars a year extra, I have some additional 'peace of mind' and I'm okay with the value prop.
In a few years I'll start selling off the rental properties, the boat is older and won't be replaced (by me) and the last of the children has moved to another state on her own auto insurance policy so I'll drop things back to either $1M or drop the coverage altogether.
JoeWras
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Plus lawyer fees. It won't be a million.
JoeWras
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Don't forget that you may be sued by someone you know
The one case of a friend I know that needed the umbrella involved a lawsuit from a mutual friend for $1M and change, the coverage of his policy.
Don't forget when it comes to cars, that passenger that dies or is seriously injured may be a family member or a friend.
You will have a lot of pain over that alone. Add lawsuits on top of it, and the pain goes to 11.
Will the umbrella make the pain go away? No. Might your friendship be permanently damaged? Probably. However, an umbrella puts a 3rd party buffer between you that makes it a whole hell of a lot less personal.
(Details on my friend's issue. Two teenage friends in car accident. Driver at fault. Passenger was killed. Parents sued, parents were friends also. This is not an unusual scenario.)
The one case of a friend I know that needed the umbrella involved a lawsuit from a mutual friend for $1M and change, the coverage of his policy.
Don't forget when it comes to cars, that passenger that dies or is seriously injured may be a family member or a friend.
You will have a lot of pain over that alone. Add lawsuits on top of it, and the pain goes to 11.
Will the umbrella make the pain go away? No. Might your friendship be permanently damaged? Probably. However, an umbrella puts a 3rd party buffer between you that makes it a whole hell of a lot less personal.
(Details on my friend's issue. Two teenage friends in car accident. Driver at fault. Passenger was killed. Parents sued, parents were friends also. This is not an unusual scenario.)
Fermion
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Well first I am going to shop around and try to find a broker to get cheaper rates on all of these policies.
However....I don't think we should feel so held hostage by this stuff. Almost all of my policies already have $250,000 or $500,000 of liability coverage. From what I have been reading, the lawyers really don't want your clothes, they want to get the money from the insurers. They don't want to spend tens of thousands of dollars trying to get a judgement to sell your bicycle and extra boots.
And when is it enough? Say you have $5,000,000 of coverage...what is to stop someone from seeking a $6,000,000 judgement and still taking your clothes?
However....I don't think we should feel so held hostage by this stuff. Almost all of my policies already have $250,000 or $500,000 of liability coverage. From what I have been reading, the lawyers really don't want your clothes, they want to get the money from the insurers. They don't want to spend tens of thousands of dollars trying to get a judgement to sell your bicycle and extra boots.
And when is it enough? Say you have $5,000,000 of coverage...what is to stop someone from seeking a $6,000,000 judgement and still taking your clothes?
JoeWras
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It depends on the circumstances. We can all say "what is enough?" It is impossible to answer.
The $1M judgement I mention above was 20 years ago. The number came about because it was a smart, young person near the top of the class that was involved. Same can go if it is a renown surgeon that lost proper use of hands.
If it is that surgeon, and you clap back with only $250k liability, you can be sure a law office will do a little searching on you. Likewise -- and this is difficult to hear -- if it is a friend or acquaintance that knows you, knows a bit about your lifestyle, job, or previous profession, you may also be in for a bit more further action.
There's never a good answer with umbrella. But I can tell you when kids are coming out of college and making $100k on their first job, that $250k coverage probably isn't enough.
It might be enough for another kid fresh out of college. But for people here when they talk about their multi millions NW? Uh... think carefully.
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Sunset
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I agree shop around.
We pay $490 for 2M coverage, it's been the same rate for 5 yrs. Which means it was expensive 5 yrs ago
Having at least $1M means they might be happy enough to settle for that without working for more, but a low coverage means they won't take it without trying for a lot more.
The legal costs to defend would easily be $20K.
Fermion
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It seems it boils down to a mathematical question, what is the likelihood you will get sued and your coverage not be enough, similar to other questions like should you purchase LTC insurance (which seems like it could bankrupt you just as fast as a lawsuit but many people forgo getting it on here).
If the odds are, say 1 in 10,000 of getting sued for a major event, is it worth it to pay 0.5% of your unprotected net worth each year to protect against it?
If the odds are, say 1 in 10,000 of getting sued for a major event, is it worth it to pay 0.5% of your unprotected net worth each year to protect against it?
Sunset
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Chance of a house burning down is 1 in 3,000 approximately, and frankly less for people who are careful.
My cost for home ins. costs over 2x the umbrella insurance, so on a per dollar basis for event happening it's somewhat closer.
By the same reasoning, I could skip fire insurance, but I won't.
I'm would think, someone like you has more than $100K unprotected, and even protected things will have to be defended in court with large legal fees.
What State are you in?
I agree that seems quite high to me, but there are so many factors that go into it.
Is this with the same company your home and auto insurance is with?
Mine is $295 for $2M but I know that's pretty cheap. Same company for everything.
Callitaday2022
Recycles dryer sheets
Young drivers make umbrella insurance expensive. I know someone whose son got broadsided in an accident, but her son was over legal blood alcohol limit, and got judgement against him paid for by umbrella. Courts said he was at fault since he should not have been on the road. 1 million dollar claim.
Never let anyone know you have an umbrella policy as they'll go for whatever they can.
Never let anyone know you have an umbrella policy as they'll go for whatever they can.
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$458 for $1m here, S Fla. Thru a sub of our main car (geico). Gonna shop around I think when it comes up for renewal...
Question---if my adult child drives his own car (i.e., the car is registered under his name only), and he and I are both on the same policy, if he's involved an accident and is found to be liable for monetary damages, can a party come after me (e.g. my umbrella policy and personal assets)?
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I hate quoting myself...
I spent a few minutes to look it up. Looks like as long as I'm not on the title, I'm not legally liable even though we're on the same policy. Does this sound right?
JoeWras
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I'm no expert and I have no idea. Much depends on the state laws. In the case I mentioned, it involved actually switching drivers and letting the friend drive. The suit was not against the car owner, but the parent of the driver.
There are guidelines to all of this, and then there are actual arguments in court. I wouldn't assume anything.
CincyDave
Thinks s/he gets paid by the post
Just want to mention, probably the obvious, that insurance companies all have different pricing, underwriting rules and policy language, so be careful of advice from SGOTI as it may not apply to you. If you have questions, ask your agent and get the answers in writing in case a coverage question comes up later. That’s what they get paid for.
As far as how much to carry, that’s a tough one. Not sure I totally buy into the argument to get enough to cover your assets as you can certainly get a judgement against you in excess or either your assets or your coverage limits. To me it should also be based on your risk factors as some others have stated.
Another big factor in pricing, which I don’t think I saw mentioned is whether the umbrella covers uninsured and underinsured motorist coverage. I do remember it was pretty expensive to add UM/UIM when I got my quote. This will vary greatly by state as state laws are all over the place regarding UM/UIM coverage.
As far as how much to carry, that’s a tough one. Not sure I totally buy into the argument to get enough to cover your assets as you can certainly get a judgement against you in excess or either your assets or your coverage limits. To me it should also be based on your risk factors as some others have stated.
Another big factor in pricing, which I don’t think I saw mentioned is whether the umbrella covers uninsured and underinsured motorist coverage. I do remember it was pretty expensive to add UM/UIM when I got my quote. This will vary greatly by state as state laws are all over the place regarding UM/UIM coverage.
