Umbrella Insurance Worry

[Fermion]

Using the insurance company's lawyers the entire amount of coverage remains available for settlement.

You've paid for their lawyers via the premiums on your umbrella and underlying coverage.

Hmm, no I meant if you had a Umbrella policy but the plaintiff wanted more than the Umbrella would pay. I would think the defendant would not just say "sure, here is a check for the additional" but rather they would fight in court. Until a verdict is reached, the defendant would use up all of the "touchable" money paying for legal fees and other expenses, leaving nothing to gain for the other side. Realizing this, the plaintiff lawyer is going to heavily press to settle for whatever the Umbrella policy is, be it $1M, $2M or whatever.

Thus really all you need to have is *some* umbrella policy, unless you are just plain rich, in which case why stress over $1000 a year vs $500 a year and get the biggest policy they will write.

 

[OldShooter]

Talk to your independent insurance agent to get his/her general experience and specific experience with this company. If you are working with a tied agent (State Farm, Allstate, etc.) shop independent agents, including asking your questions, and move the business to the agent and company who you think will be your best ally.

 

[camfused]

I just looked it up. Federal law apparently protects all 401k funds from judgements and IRAs are protected to the tune of 1.5ish $M, again federal law. Another reason, beyond the guaranteed income fund access, to keep the 401k open.

$1.5M for each IRA or total for all? If each, then it behoves you to keep each IRA below the $1.5M level.

 

[ncbill]

$1.5M for each IRA or total for all? If each, then it behoves you to keep each IRA below the $1.5M level.

unlimited for a IRA created by a rollover from a 401k or other ERISA-protected account.

currently ~$1.7 million for an IRA outside of the above...limit adjusted for inflation every 3 years.

 

[Dtail]

$1.5M for each IRA or total for all? If each, then it behoves you to keep each IRA below the $1.5M level.

1.71m for the total of IRA's. Unlimited for 401k accounts and 401k rollovers to an IRA. Inherited IRA's are not protected except spousal inherited IRA's.
However each state has its own rules, which can supersede the federal rules. Florida appears to protect all IRA's and 401k's for unlimited amounts.
This is my understanding. Could have missed something.
I should add that these rules are under Federal law if one is filing for bankruptcy. If one is not filing for bankruptcy (and for assumption purposes for umbrella considerations), then the state laws take effect.

 

[Stormy Kromer]

An umbrella insurer has a duty to defend til the end. Even if the case goes beyond policy limits. They aren't just going to toss out policy limits and say goodbye. That would be bad faith.

 

[Out of Steam]

The price of our $1 million umbrella policy just more than doubled. I had to go against my wife's wishes to renew it.

 

[MichaelB]

Clearly folks who need something to wring hands over are no longer concerned about an equity market crash or bird flu.

Yup. Like ring around the collar, it wasn’t an issue until it was.

 

[sengsational]

I should add that these rules are under Federal law if one is filing for bankruptcy. If one is not filing for bankruptcy (and for assumption purposes for umbrella considerations), then the state laws take effect.

Worth highlighting this. Sorry for mentioning the Federal protection limits for bankruptcy, as it has nothing to do with managing a civil judgement.

Florida and Texas are apparently high protection states, but if you're worried about an umbrella policy, you should know your state's laws.

 

[JoeWras]

Fresh bogleheads thread on this topic. As usual, everyone has a different idea of whether $1M is enough or $10M is enough. https://www.bogleheads.org/forum/viewtopic.php?p=8683594#p8683594

I think the one thing almost everyone here and on bogleheads agree on is for retirees on these forums, the standard liability on home and auto is insufficient.

 

[athena53]

[/QUOTE]

The price of our $1 million umbrella policy just more than doubled. I had to go against my wife's wishes to renew it.

So did mine. This is partly due to the leveraged effects of inflation. Hard to explain in clear English but inflation pushes more claim $$ into the higher layers. If you're pricing by layers, a claim that cost $50,000 last year will cost the same next year if you're pricing liability for $50,000 limits. The increase due to inflation when you're pricing for next year goes into the layer for limits above $50,000. It gets even crazier when you're pricing Umbrella layers in the millions. There's also a "risk premium" built into the pricing- essentially a charge for the volatility of a low-frequency, very high severity line of business. There's a reason most of us don't want to self-insure that risk!

I happily renewed mine.

 

[Onda]

If someone thinks you’re a “deep pocket,” they’re more likely to sue aggressively, demand higher settlements, and keep pushing past insurance limits because there’s obvious money to collect.

Keeping a low profile reduces the incentive to target you personally and often makes disputes resolve faster and cheaper. If you have 10M or 20M try not to look like it

 

[COcheesehead]

I think in a lawsuit you have to disclose assets.

 

[Onda]

I think in a lawsuit you have to disclose assets.

It is best to avoid them . Looking rich attracts them.

 

[JoeWras]

I think in a lawsuit you have to disclose assets.

IANAL.

Somewhere I read that happens when things get a little farther down the road. You can't just open up a frivolous suit and ask for "what you can get."

What legal teams can do right away is check everything public. Your tax records, what car you drive and all that. Facebook. Instagram. LinkedIn. Etc. So the advice to keep a low profile is good. Also, don't volunteer information. You don't have to tell the person you crashed into "Don't worry, I have umbrella insurance." You don't have to answer their questions about this either. Just give the cop your insurance card.

 

[Dash man]

unlimited for a IRA created by a rollover from a 401k or other ERISA-protected

I believe that depends on state law. Pennsylvania protects all funds in retirement accounts except inherited accounts.

 

[COcheesehead]

IANAL.

Somewhere I read that happens when things get a little farther down the road. You can't just open up a frivolous suit and ask for "what you can get."

What legal teams can do right away is check everything public. Your tax records, what car you drive and all that. Facebook. Instagram. LinkedIn. Etc. So the advice to keep a low profile is good. Also, don't volunteer information. You don't have to tell the person you crashed into "Don't worry, I have umbrella insurance." You don't have to answer their questions about this either. Just give the cop your insurance card.

Tax records are not public. Auto registration is not public. You can have privacy settings on social media.

 

[JoeWras]

Tax records are not public. Auto registration is not public. You can have privacy settings on social media.

Real estate taxes and auto registration are public in my state. Many people put their property in an LLC to shield it. The auto registration is public probably because of the personal property tax element required in my state.

You can do a lot of things, but most people don't. Just sayin' where they start.

 

[COcheesehead]

Real estate taxes and auto registration are public in my state. Many people put their property in an LLC to shield it. The auto registration is public probably because of the personal property tax element required in my state.

You can do a lot of things, but most people don't. Just sayin' where they start.

Putting a personal residence into an LLC is a very unwise tax move. You lose the capital gains exemption and could make your mortgage, if you have one, accelerate into being due. A court could also rule the LLC was just a shell to avoid liability. An LLC for a rental usually makes sense, but not for your personal home.

 

[JoeWras]

Putting a personal residence into an LLC is a very unwise tax move. You lose the capital gains exemption and could make your mortgage, if you have one, accelerate into being due. A court could also rule the LLC was just a shell to avoid liability. An LLC for a rental usually makes sense, but not for your personal home.

I'm not recommending anything. I just know that a large property next to the non-profit I volunteer with was put in an LLC. The guy actually came by to introduce himself as a neighbor. It was nice to get a name and a face because we all thought it was a developer. Nah, he said it was for his home, but he values privacy. Although I suppose a P.I. could come by and ask the neighbors who lives there since we now know.

 

[USGrant1962]

In most (all?) states you can look up owners of any registered business entity. Not sure how an LLC helps privacy.

 

[COcheesehead]

I'm not recommending anything. I just know that a large property next to the non-profit I volunteer with was put in an LLC. The guy actually came by to introduce himself as a neighbor. It was nice to get a name and a face because we all thought it was a developer. Nah, he said it was for his home, but he values privacy. Although I suppose a P.I. could come by and ask the neighbors who lives there since we now know.

I am not he made a smart move, but each to their own.

 

[JoeWras]

He was a different kind of dude. That's about all I can say. Artful thinking?

Admittedly, it did provide friction from someone like myself from easily finding the owner.

 

[ut2sua]

Realizing this, the plaintiff lawyer is going to heavily press to settle for whatever the Umbrella policy is, be it $1M, $2M or whatever.

This ^^^ sounds most likely to me (unless the damage they seek is way beyond the Umbrella policy limit)

 

[Sunset]

Yes, you have to increase other liability policies to the limit before they will write an umbrella.

Yep, and this means a person really has more than just the umbrella, as the auto liability might be $500,000 itself, and the umbrella is on top of that.