Poll: Umbrella Insurance

[Chan_va]

Folks,

I currently have no umbrella coverage currently and am trying to determine if this is something that most people have.

From Wikipedia "Umbrella insurance refers to a liability insurance policy that protects the assets and future income of the name insured in addition to his or her primary policies...Typically, an umbrella policy is pure liability coverage over and above the coverage afforded by the regular policy, and is sold in increments of one million dollars"

[mhc]

I do not have umbrella insurance. I had never heard of it before coming to this forum. Yesterday, I scheduled an appointment with my insurance agent so that I can get a quote on umbrella insurance. A previous thread showing how inexpensive it is convinced me that I should get it.

[gkaplan]

Does "home coverage" include rental insurance?

[Rob5TCP]

For a couple of hundred dollars a year, I have 2+ million dollars insurance. I doubt I will ever need it. It's like health insurance. Hope I don't need it,
but it's there if I do.
If you have less than 5 figure net worth, it's probably not worth the expense.
But, if you have any assets, you need it.

[rixer]

I use my umbrella very carefully. I've never damaged anything with it so far..

[sesq]

I pay $200 and change for $2M in umbrella. Most of my assets are judgement proof (homestead, retirement accounts), but I wanted to protect against wage garnishment during my prime earning years.

[Dulocracy]

If you have less than 5 figure net worth, it's probably not worth the expense.

I disagree. I think it is worth having even if you do not have assets yet (for the same reason people starting a business should form a corporate entity even if they have no worth/income).

Person A has no assets. Person A gets sued by Person B for reason X.

Scenario 1: Person A has an umbrella policy: coverage.

Scenario 2: Person A had no coverage, but had assets. No coverage- assets taken.

Scenario 3: Person A had no coverage and no assets. Person B has a judgment against Person A and simply waits until Person A gets income and garnishes it. Person B also waits and takes inheritance, settlements, and other things Person A wanted to keep.

The alternative is (potentially) bankruptcy. Bankruptcy could help Person A start over. However: Some debts are not dischargeable in bankruptcy. Also, would bankruptcy harm the career of Person A (in the event that licencing issues arise out of Person A's bankruptcy). Some professions will pull a license if an individual goes through bankruptcy. Even without that, some jobs run a credit check on new employees for various reasons. Person A's future is now limited.

My opinion: If available to you, get an umbrella policy (even if you do not have assets yet).

[NateW]

Now who would want to insure their umbrella?

But seriously, I knew what this insurance was, but never gave it any thought until I read about its merits on the Forum last year and now have a 1 million umbrella insurance policy, which is over my net worth. My main concern is some pedestrian running out in front of my car while driving and me hitting them and maiming them for life. Even if it is their fault, it can be a real hassle. I live near Route 1 and the particular stretch I live near has the most pedestrian fatalites of all roads in Northern Virginia. Built-up area with many apartments with people who do not have cars with stores on the other side of Route 1, and few crosswalks. I've almost hit two so far in the last 10 years. Wearing black at night, they don't look, and walk right out in front of you mid block. Speed limit is 45 mph too. Both times if I did not swerve I would have nailed them.

--Nate

[LeyEily]

I have Umbrella Insurance and I'm really comfortable with this decision. My husband and I figured we couldn't be overinsured for the possibility of future lawsuits. A lot of useful information for those who might be new to this can be found in these articles:
http://www.smartmoney.com/plan/insuranc ... 907848431/
http://www.bankrate.com/finance/insuran ... rance.aspx

[SpaceCommander]

I pay $200 and change for $2M in umbrella. Most of my assets are judgement proof (homestead, retirement accounts), but I wanted to protect against wage garnishment during my prime earning years.

I think that's a good price. I pay $208 for $1M. Another million in coverage boosts the premium to $312. I thought I was paying a cheap rate, but now I'm not so sure. I use USAA for auto, home & umbrella. Who's your carrier?

[DaleMaley]

From two previous 2011 Bogleheads polls ...........

[exoilman]

I pay $200 and change for $2M in umbrella. Most of my assets are judgement proof (homestead, retirement accounts), but I wanted to protect against wage garnishment during my prime earning years.

Are retirement accounts judgement proof? We live in NJ and 2/3 of our assets are in retirement accounts.

Sam

[dickenjb]

Are retirement accounts judgement proof? We live in NJ and 2/3 of our assets are in retirement accounts.

Sam

Depends on the state and type of retirement account and what type of judgment, I think.

But OJ was able to keep his, the Goldman family won their suit but could not get to his retirement account(s).

401(k) is covered by ERISA so safer than IRA which varies by state.

[HopeRetNow]

I have looked into umbrella insurance recently. Alot of folks on this forum state that it's a very minimal addition to their current insurance. I live in North Carolina. I have a home, 1990 Taurus station wagon, 1992 Chevy Silverado, 1998 Mazda, 2000 Ford F-150, 2005 Grand Prix, 1996 Harley, and a 23-year old son. My insurance company (NationWide) quoted an additional $700 for $2mil coverage -- Allstate quoted the same. Do different states have different rates? The fact that I own so many vehicles and a 23 year old, is that why my quote is so high? Ya'lls opinion is very much appreciated.

[THY4373]

I pay $200 and change for $2M in umbrella. Most of my assets are judgement proof (homestead, retirement accounts), but I wanted to protect against wage garnishment during my prime earning years.

I think that's a good price. I pay $208 for $1M. Another million in coverage boosts the premium to $312. I thought I was paying a cheap rate, but now I'm not so sure. I use USAA for auto, home & umbrella. Who's your carrier?

From my research (online and with a couple of local insurance folks) and experience (I too use USAA), they are not very competitive in the umbrella policy space. Your figure is similar to what I was paying with USAA for the same coverage. I now have a separate carrier for umbrella but still have USAA for home and auto (there are a few providers who will do this without underwriting the underlying home and/or auto policies). I now pay about about what you pay for $2M. This approach however presents its own set of complications since if you need umbrella you are going to be dealing with two insurance companies, two sets of lawyers, etc. In my case the decision to move from USAA umbrella was made for me (though I was thinking about it prior) but USAA dropped me after a family member had a fender bender (nothing crazy like DUI, speeding, or injury, just a plain old fender bender and no claim made against the umbrella) yet my USAA auto policy was retained and didn't even go up a penny (go figure).

[Steelersfan]

One car, no kids, and I got quotes from two different companies to add a $1mm umbrella to my home and auto as I was combining them to a single insurance company.

Both quotes were $115 a year.

[Quasimodo]

I have looked into umbrella insurance recently. Alot of folks on this forum state that it's a very minimal addition to their current insurance. I live in North Carolina. I have a home, 1990 Taurus station wagon, 1992 Chevy Silverado, 1998 Mazda, 2000 Ford F-150, 2005 Grand Prix, 1996 Harley, and a 23-year old son. My insurance company (NationWide) quoted an additional $700 for $2mil coverage -- Allstate quoted the same. Do different states have different rates? The fact that I own so many vehicles and a 23 year old, is that why my quote is so high? Ya'lls opinion is very much appreciated.

Yes, the number of cars and a young driver would be reasons enough for a high umbrella premium. Some other reasons could be claim history, owning a dog and or a swimming pool, driving records of family members. It might be worth the time to try to get quotes from other companies, just so you have the peace of mind that there isn't a much better deal out there.

Personally I'd say trusting your agent/insurer is more important than getting the cheapest price.

Good luck!

John

[nodenuff2]

Auto liability Home liability General liability and an Umbrella. Gl for the farm.

[orlandoman]

Points to consider:

a. If you get sued, through disclosure, the party suing you will be given your insurance limits. The party suing you will possibly/probably raise the suit amount to your policy limits.

b. Many people feel that their risk for suit is greatest due to an auto accident. Many times raising your auto liability limit is cheaper that an umbrella policy.

c. How high a limit do you need? For example, you are at fault in an auto accident & kill a 84 year old person or you hit a school bus and 23 children are killed/severly injured .... how much is enough?

[dewey]

I pay $200 and change for $2M in umbrella. Most of my assets are judgement proof (homestead, retirement accounts), but I wanted to protect against wage garnishment during my prime earning years.

Are these assets judgement proof for everyone--or is it something you did to arrange it that way?

Thanks.

[kitteh]

I have looked into umbrella insurance recently. Alot of folks on this forum state that it's a very minimal addition to their current insurance. I live in North Carolina. I have a home, 1990 Taurus station wagon, 1992 Chevy Silverado, 1998 Mazda, 2000 Ford F-150, 2005 Grand Prix, 1996 Harley, and a 23-year old son.

Is it rude for me to ask if you need six vehicles? They do not seem to be collectibles, and you must be paying a mint for upkeep and insurance.

[wwross]

A heads up. If you are thinking of getting umbrella insurance and you have kids, buy it before they begin driving. I have a $2 million umbrella policy with GEICO and as our net worth continued to climb, applied to get another $1 million in coverage. But I was turned down for the increase because I have a couple of teenage boys on our GEICO auto policy (which links up to Umbrella). I was told that because of this and the fact that one of them had had a fender bender and a ticket, I couldn't get the increase.

[HopeRetNow]

Great Question!!! That wasn't rude. Of course, the 23 year old drives the Grand Prix. The other vehicles we bought new. Just hold on to them. All in great working order. Just keep them because they work. Wouldn't get anything if we sold them. But you're right, it's costing me to hold onto them.

[sesq]

Are these assets judgement proof for everyone--or is it something you did to arrange it that way?

The bulk of my net worth is in 401(k), IRA's and 529 plans. The rest is home equity and personal vehicles. I filed a homestead for the house, but that protection varies by state (TX and FL unlimited, ask OJ Simpson), and isn't much in PA. I recently learned that only my in-state 529 plan has creditor protection, and my Utah accounts do not under PA law. I also hold my house in a revocable trust, but that probably hurts my creditor protection status since PA has a tenancy by entirety exemption, but not a homestead exemption for credit protection purposes (does help a tiny bit on local property tax).

I think that's a good price. I pay $208 for $1M. Another million in coverage boosts the premium to $312. I thought I was paying a cheap rate, but now I'm not so sure. I use USAA for auto, home & umbrella. Who's your carrier?

I am with USAA. My premium last year was $229 for $2M. Two cars, one house, oldest child is seven (not driving), no pets, PA suburban location.

Are retirement accounts judgement proof? We live in NJ and 2/3 of our assets are in retirement accounts.

Sam

Yes. It used to be 401(k)'s had slightly better protection (depending on state law) than IRA's, but I get the impression that the federal law changed and equalized that. Do your own research, etc..

[bsteiner]

I lost my umbrella but my umbrella insurance didn't cover it.

... I also hold my house in a revocable trust, but that probably hurts my creditor protection status since PA has a tenancy by entirety exemption, but not a homestead exemption for credit protection purposes (does help a tiny bit on local property tax).

... It used to be 401(k)'s had slightly better protection (depending on state law) than IRA's, but I get the impression that the federal law changed and equalized that. Do your own research, etc..

Why would you create a revocable trust in Pennsylvania? Whenever we've needed local counsel to probate a Will in Pennsylvania, the cost was very low, far less than the cost of creating a revocable trust.

Rollover IRAs, and non-rollover IRAs to a large extent, are protected under Federal bankruptcy law. The extent to which they are protected against creditors under state law varies from state to state. It shouldn't be hard to check the extent to which they're protected in any given state.

[RadAudit]

A kid learning to drive was reason enough to get an umbrella policy. An added benefit was having to resign from the community pool board in order to qualify for the insurance.

[gerntz]

It's comforting to know that when it storms I get a free umbrella replacement.

[grabiner]

A heads up. If you are thinking of getting umbrella insurance and you have kids, buy it before they begin driving. I have a $2 million umbrella policy with GEICO and as our net worth continued to climb, applied to get another $1 million in coverage. But I was turned down for the increase because I have a couple of teenage boys on our GEICO auto policy (which links up to Umbrella). I was told that because of this and the fact that one of them had had a fender bender and a ticket, I couldn't get the increase.

Similarly, you should buy it before you need it for other reasons. When I first contacted my insurer about an umbrella, I was told that I did not qualify because I had one at-fault accident in the previous three years. The next year, when the accident no longer counted for insurance, I was able to get an umbrella.

[Steelersfan]

An added benefit was having to resign from the community pool board in order to qualify for the insurance.

I'm on two boards, my HOA and a senior volunteer group and being on them didn't affect my rate.

Maybe pools are considered riskier.

[Ketawa]

I'm 25 years old and my net worth is only around $100k, but I thought it would be wise to add an umbrella insurance policy. I had to raise my auto insurance limits to add umbrella insurance. I have a 2008 Nissan Frontier pickup truck, no home, and my policy was $96 annually for $1 million in coverage through USAA.

[Archie Sinclair]

If one doesn't own a home or a car, is it still possible to get umbrella insurance?

[Rammer]

I just called up my insurance company. By adding umbrella coverage, I get additional discounts on home and auto, so adding $1M of umbrella coverage only increases my annual bill by $23..... I signed right up. My net worth is much closer to $0 than $1M.

[RadAudit]

An added benefit was having to resign from the community pool board in order to qualify for the insurance.

I'm on two boards, my HOA and a senior volunteer group and being on them didn't affect my rate.

Maybe pools are considered riskier.

Probably, it's the diving boards.

[Quasimodo]

If one doesn't own a home or a car, is it still possible to get umbrella insurance?

It should be, as long as you have personal liability and non-owned auto liability for the limits required by the umbrella underwriter.

John

[johne808]

I originally got umbrella insurance when I was as landlord, but it's cheap (I pay $137/year) for $1M, and given today's society, I thought it was cheap.