Umbrella Insurance

[stevenr]

I am curious how many folks on here have umbrella insurance, and how much you carry in relation to net worth.

Do you up the coverage over the years as your NW grows?

 

[Montecfo]

I have had a policy for years.

It covers about half of our network outside of retirement plans.

Probably should be more.

 

[COcheesehead]

We have one as well. I took the max that my insurance company would allow. It doesn’t cover our net worth, but it doesn’t have to.

 

[Vincenzo Corleone]

We have one as well. I took the max that my insurance company would allow. It doesn’t cover our net worth, but it doesn’t have to.

Curious - why doesn't it have to cover your net worth?

To answer the OP's question: Our umbrella insurance covers our entire NW. It's the max our insurance company will cover. I'm not sure what we'll do if/as our NW goes up.

 

[erkevin]

Have had a policy for three years. Covers 75% of NW. Will likely increase the policy soon.

 

[CRLLS]

From many searches, when it comes to a lawsuit, the plaintiff's side will virtually always accept the insured amount, whatever that may be, regardless of the amount they sue for. You want to have enough coverage that your insurance company will provide very good defense lawyership (if that's even a word). Keep in mind, there is a maximum that any given insurance company will write a policy for.

 

[Sunset]

Curious - why doesn't it have to cover your net worth?

To answer the OP's question: Our umbrella insurance covers our entire NW. It's the max our insurance company will cover. I'm not sure what we'll do if/as our NW goes up.

Trying to cover net worth is a fool's errand. Anybody can be sued for 2x their net worth or 100x their net worth..

There is no way via umbrella insurance to protect your savings in the end.
The my Pillow guy is being sued for $1.3 Billion.

 

[COcheesehead]

Curious - why doesn't it have to cover your net worth?

To answer the OP's question: Our umbrella insurance covers our entire NW. It's the max our insurance company will cover. I'm not sure what we'll do if/as our NW goes up.

Some assets are unattachable.

 

[Fermion]

I actually drop the coverage lower even though our net worth has increased, because more of the net worth is protected by 401K/IRA/household exemption.

I am down to just a bare bones million dollar policy, and I would drop that also at the point that we sell the big sailboat.

Actually, if someone sued me, they would be doing me a favor if they took the boat, saving me $5,000 a year on moorage.

 

[COcheesehead]

Actually, if someone sued me, they would be doing me a favor if they took the boat, saving me $5,000 a year on moorage.

Take my boat, please.

 

[NoiseBoy]

I added a $1M umbrella policy with the same company that I insure my home and two cars through last year. I'm paying about $10 a month for the added insurance and it more than covers my non-retirement portfolio balances. It's mostly a CYA kind of thing that I can easily afford.

FWIW since retiring I buy travel health insurance now too. It's pretty cheap to buy $100k worth and contributes to my peace of mind.

 

[punkinhead]

We got an umbrella when our kids started driving. Now that they're grown and out of the house and most of our assets are in 401K/IRA which are protected we've been thinking of dropping the policy. But a bit of research showed me that my state does not have a homestead exemption, meaning that we could lose our house in a civil suit.

 

[Dtail]

2m policy for $500 a year. Many assets are in a protected category.

 

[Sunset]

We got an umbrella when our kids started driving. Now that they're grown and out of the house and most of our assets are in 401K/IRA which are protected we've been thinking of dropping the policy. But a bit of research showed me that my state does not have a homestead exemption, meaning that we could lose our house in a civil suit.

Even if your State has a homestead exemption, having Umbrella insurance means you won't be paying $20K->$40K for a lawyer (plus expert witnesses, etc) for defense.

 

[Fermion]

Even if your State has a homestead exemption, having Umbrella insurance means you won't be paying $20K->$40K for a lawyer (plus expert witnesses, etc) for defense.

Isn't that more of a scare tactic? From what I hear, most lawyers won't take cases against someone with little touchable assets if they don't have a umbrella policy, so you would never get to the point where you needed the 40k lawyer.

I could say similar that if you don't have gold and silver, what are you going to do if the currency collapses?

 

[COcheesehead]

Isn't that more of a scare tactic? From what I hear

Hear, know or have proof? Meaningless.

 

[LateToFIRE]

I carry $1M umbrella liability insurance for each property I own (multiple). Additionally, I carry a $5M umbrella for general liability above and beyond those policies. So, would say that a high % of NW is covered. Reasons for so much insurance: (1) I'm a landlord, (2) I sit on several boards which have their own D&O policies (Director & Officer) but I like to know I'm individually covered as well, (3) I'm a boat owner which makes for all kinds of potential injuries/damages to passengers & others boats, (4) I reside in a highly litigious region, and (5) I'm paranoid (see #'s 1, 2, 3 & 4).

 

[youbet]

Hear, know or have proof? Meaningless.

Any numbers or references to back that up?

 

[COcheesehead]

Any numbers or references to back that up?

Exactly my question. Waiting….

 

[CincyDave]

I carry 2 mill. It's cheap. $184 a year. Gives me peace of mind and doesn't cost much. Same carrier as my auto and homeowners. There have been numerous threads on this. If you do and advanced search for the word umbrella and search titles only you will find more than you probably care to read.

 

[Fermion]

Exactly my question. Waiting….

I don't have numbers, but there was some discussion in the auto accident thread on here that agreed with some other hearsay.

https://www.early-retirement.org/forums/f28/auto-accident-lawsuit-119973-2.html


My thinking is if you carrying reasonable limits on auto and home, something around 250k person 100k property, this is going to cover most situations. If you have very little exposed assets such as you have a couple million in 401K, a 200k house in a state with a homestead protection, and one older car, there is just not a lot of meat there for a attorney to take on the case for more than your 250k auto policy. If you have a million dollar umbrella policy, then that may change things.

I keep our million dollar umbrella policy for now, but they keep raising the rates, it is getting near $600/yr although we have had no claims ever. Eventually I am just going to drop it and rely on the government protection of our assets.

 

[Sunset]

Isn't that more of a scare tactic? From what I hear, most lawyers won't take cases against someone with little touchable assets if they don't have a umbrella policy, so you would never get to the point where you needed the 40k lawyer.

...

I've never had an agent even try to sell me umbrella insurance, so never had one try to scare me into getting it.

If something is in an "untouchable" category, this will not stop a determined person from suing for it, and coming up with some reason why it is now touchable.
Along with future income, bank accounts, etc.

I'm willing to pay the $500/yr to be covered and not take the risk that I miscalculated on the "untouchable" status of something.

 

[SecondAttempt]

There is another recent thread about this. I carry a $1 million umbrella policy for $104 per year through State Farm. But the true cost is higher because they require you have higher liability limits on you other policies. It would take quite a bit of work to quantify that but I think it would be a total cost of about $350 per year.

The general idea is you need to think about your risks not just your assets.

If your assets are $100 million but your likely liability is $500,000 you probably do not need umbrella insurance. If you worth is $1M you could be wiped out by a serious car accident that is your fault.

The point is, your net worth may have nothing to do with it. Talk to someone knowledgable, preferably a lawyer rather than an insurance agent!

 

[FLSUnFIRE]

Do you up the coverage over the years as your NW grows?

Coincidentally, my liability coverage is close to my NW but I don't plan to increase it if my NW ever goes up. I'm FIREd so recovering from a loss (or even just paying for my defense and winning) could be catastrophic for my FIRE. I'd get by as ~80% of assets are protected but that protection comes with rules and losing all my taxable assets would cause withdrawal strategy/tax challenges in addition to the capital loss.

 

[Rjhasti]

if you have any wealth at all you needed...........it is cheap