Umbrella liability insurance policy to match portfolio size?

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Sandtrap
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Umbrella liability insurance policy to match portfolio size?

Post by Sandtrap » Mon Dec 04, 2017 4:14 pm

Given there is car insurance and homeowners insurance, would it be feasible to match an Umbrella liability insurance policy to match one's portfolio size?
Has anyone done this?
Thoughts?
Thanks,
j :D

HRPennypacker
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Re: Umbrella liability insurance policy to match portfolio size?

Post by HRPennypacker » Mon Dec 04, 2017 4:17 pm

I have an umbrella policy like this. It isn't especially expensive. You have to get your other insurance (auto, etc) up to certain coverage minimums first, and then they'll let you get an umbrella policy. (At least, that's how it was with State Farm.) AFAIK Bogleheads are quite pro-umbrella policies, in part because all we think about is the day it rains.

JBTX
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Re: Umbrella liability insurance policy to match portfolio size?

Post by JBTX » Mon Dec 04, 2017 4:26 pm

If you take my umbrella policy + homeowners or auto liability (of which I have maximized both). The total amount is approx equal to our net worth.

We live in TX where retirement accounts (which is most of our assets) have a good deal of protection, so in our case I don't know that is necessary to match total portfolio. However given umbrella is fairly cheap we just do it for the peace of mind.

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Sandtrap
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Re: Umbrella liability insurance policy to match portfolio size?

Post by Sandtrap » Mon Dec 04, 2017 4:28 pm

JBTX wrote:
Mon Dec 04, 2017 4:26 pm
If you take my umbrella policy + homeowners or auto liability (of which I have maximized both). The total amount is approx equal to our net worth.

We live in TX where retirement accounts (which is most of our assets) have a good deal of protection, so in our case I don't know that is necessary to match total portfolio. However given umbrella is fairly cheap we just do it for the peace of mind.
Thanks.
So is the umbrella policy a "rider" on the homeowner's policy?
j :D

neilpilot
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Re: Umbrella liability insurance policy to match portfolio size?

Post by neilpilot » Mon Dec 04, 2017 4:37 pm

A few thoughts:

[1] When you adjust the underlying limits of your auto & homeowner to meet the particular umbrella policy requirements, you may need to raise or low your other policy limits. It depends.

[2] The amount of excess liability (i.e. Umbrella) coverage you want or need should match not only the assets you want to protect but possibly future earnings as well. Depending on where you live, certain assets (home, 401k, etc) maybe sheltered from judgement. Note that 401k maybe sheltered, and not IRA or Roth. Depends on state.

[3] It is not a rider on your homeowners.

[4] While many will bundle home, auto & umbrella, you don't need to. Sometimes a multipolicy discount can save you money, but not always. I saved by writing home with one carrier, and auto+umbrella with another.

[5] don't just compare rates with others, since your location and individual circumstance (children, recreational vehicles, waterfront property, pets, etc, etc) will effect your risk.

JBTX
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Re: Umbrella liability insurance policy to match portfolio size?

Post by JBTX » Mon Dec 04, 2017 5:16 pm

Sandtrap wrote:
Mon Dec 04, 2017 4:28 pm
JBTX wrote:
Mon Dec 04, 2017 4:26 pm
If you take my umbrella policy + homeowners or auto liability (of which I have maximized both). The total amount is approx equal to our net worth.

We live in TX where retirement accounts (which is most of our assets) have a good deal of protection, so in our case I don't know that is necessary to match total portfolio. However given umbrella is fairly cheap we just do it for the peace of mind.
Thanks.
So is the umbrella policy a "rider" on the homeowner's policy?
j :D
The umbrella is a separate policy under GEICO with my auto policy (GEICO). They have different terms/dates and are billed separately. Typically a company will only give you umbrella if you have auto insurance with them. I think the thought process is the likelihood of an auto liability claim is far higher than what your home policy claim would be. Having them with the same company is probably good for them so that you don't have coordination of liability issues under two different policies.

You can get a separate umbrella policy with a different company, but it may cost a little more.

I had progressive auto for years, then switched to GEICO. Once I left progressive, when the umbrella policy with progressive came up for renewal, they would not renew it if you don't have an auto policy. I ended up getting a GEICO umbrella.

I may end up going through this process again as GEICO keeps jacking their auto premiums up every six months. I think they have gone up about $150 per 6 months over the past couple of years.

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Re: Umbrella liability insurance policy to match portfolio size?

Post by Sandtrap » Mon Dec 04, 2017 6:30 pm

JBTX wrote:
Mon Dec 04, 2017 5:16 pm
Sandtrap wrote:
Mon Dec 04, 2017 4:28 pm
JBTX wrote:
Mon Dec 04, 2017 4:26 pm
If you take my umbrella policy + homeowners or auto liability (of which I have maximized both). The total amount is approx equal to our net worth.

We live in TX where retirement accounts (which is most of our assets) have a good deal of protection, so in our case I don't know that is necessary to match total portfolio. However given umbrella is fairly cheap we just do it for the peace of mind.
Thanks.
So is the umbrella policy a "rider" on the homeowner's policy?
j :D
The umbrella is a separate policy under GEICO with my auto policy (GEICO). They have different terms/dates and are billed separately. Typically a company will only give you umbrella if you have auto insurance with them. I think the thought process is the likelihood of an auto liability claim is far higher than what your home policy claim would be. Having them with the same company is probably good for them so that you don't have coordination of liability issues under two different policies.

You can get a separate umbrella policy with a different company, but it may cost a little more.

I had progressive auto for years, then switched to GEICO. Once I left progressive, when the umbrella policy with progressive came up for renewal, they would not renew it if you don't have an auto policy. I ended up getting a GEICO umbrella.

I may end up going through this process again as GEICO keeps jacking their auto premiums up every six months. I think they have gone up about $150 per 6 months over the past couple of years.
I have USAA for auto insurance. Allstate for homeowners.
So either may have an umbrella liability insurance policy that will cover all of my assets?
Thanks,
j :D

JBTX
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Re: Umbrella liability insurance policy to match portfolio size?

Post by JBTX » Mon Dec 04, 2017 6:43 pm

Sandtrap wrote:
Mon Dec 04, 2017 6:30 pm
JBTX wrote:
Mon Dec 04, 2017 5:16 pm
Sandtrap wrote:
Mon Dec 04, 2017 4:28 pm
JBTX wrote:
Mon Dec 04, 2017 4:26 pm
If you take my umbrella policy + homeowners or auto liability (of which I have maximized both). The total amount is approx equal to our net worth.

We live in TX where retirement accounts (which is most of our assets) have a good deal of protection, so in our case I don't know that is necessary to match total portfolio. However given umbrella is fairly cheap we just do it for the peace of mind.
Thanks.
So is the umbrella policy a "rider" on the homeowner's policy?
j :D
The umbrella is a separate policy under GEICO with my auto policy (GEICO). They have different terms/dates and are billed separately. Typically a company will only give you umbrella if you have auto insurance with them. I think the thought process is the likelihood of an auto liability claim is far higher than what your home policy claim would be. Having them with the same company is probably good for them so that you don't have coordination of liability issues under two different policies.

You can get a separate umbrella policy with a different company, but it may cost a little more.

I had progressive auto for years, then switched to GEICO. Once I left progressive, when the umbrella policy with progressive came up for renewal, they would not renew it if you don't have an auto policy. I ended up getting a GEICO umbrella.

I may end up going through this process again as GEICO keeps jacking their auto premiums up every six months. I think they have gone up about $150 per 6 months over the past couple of years.
I have USAA for auto insurance. Allstate for homeowners.
So either may have an umbrella liability insurance policy that will cover all of my assets?
Thanks,
j :D

https://www.usaa.com/inet/wc/faq_Umbrel ... irect=true

USAA does have umbrella, but it looks like they require you to have both your home and auto with them.

Allstate also has it. I am not clear whether or not you have to have auto, or both auto/home, or neither. You'll probably have to call and ask. Typically you have to at least have auto with umbrella carrier, but I don't know about Allstate

One time when I didn't qualify for GEICO umbrella (due to a DW ticket) and my progressive umbrella was expiring, I looked into this outfit for getting umbrella separately.

https://www.rlicorp.com/personal-umbrella-policy

As it turned out, my wife's ticket rolled out of the 3 (or 5?) year window in time for me to pick up the GEICO umbrella when my progressive umbrella expired. It seems like these umbrella policies are a little stricter, and if you have tickets/teenage drivers, etc you may not be able to renew. it will be interesting to see what happens when my 16 year old daughter eventually gets her full driver's license.

Also, as with any insurance, Umbrella doesn't cover everything. I don't think it covers any sort of business/self employment liability. Also, I'm not totally clear to what extent umbrella covers a contractor comes to your home and hurts himself.

https://www.galvezinsurance.com/blog/wh ... cover.aspx
Last edited by JBTX on Mon Dec 04, 2017 6:49 pm, edited 1 time in total.

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Sandtrap
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Re: Umbrella liability insurance policy to match portfolio size?

Post by Sandtrap » Mon Dec 04, 2017 6:46 pm

JBTX wrote:
Mon Dec 04, 2017 6:43 pm
Sandtrap wrote:
Mon Dec 04, 2017 6:30 pm
JBTX wrote:
Mon Dec 04, 2017 5:16 pm
Sandtrap wrote:
Mon Dec 04, 2017 4:28 pm
JBTX wrote:
Mon Dec 04, 2017 4:26 pm
If you take my umbrella policy + homeowners or auto liability (of which I have maximized both). The total amount is approx equal to our net worth.

We live in TX where retirement accounts (which is most of our assets) have a good deal of protection, so in our case I don't know that is necessary to match total portfolio. However given umbrella is fairly cheap we just do it for the peace of mind.
Thanks.
So is the umbrella policy a "rider" on the homeowner's policy?
j :D
The umbrella is a separate policy under GEICO with my auto policy (GEICO). They have different terms/dates and are billed separately. Typically a company will only give you umbrella if you have auto insurance with them. I think the thought process is the likelihood of an auto liability claim is far higher than what your home policy claim would be. Having them with the same company is probably good for them so that you don't have coordination of liability issues under two different policies.

You can get a separate umbrella policy with a different company, but it may cost a little more.

I had progressive auto for years, then switched to GEICO. Once I left progressive, when the umbrella policy with progressive came up for renewal, they would not renew it if you don't have an auto policy. I ended up getting a GEICO umbrella.

I may end up going through this process again as GEICO keeps jacking their auto premiums up every six months. I think they have gone up about $150 per 6 months over the past couple of years.
I have USAA for auto insurance. Allstate for homeowners.
So either may have an umbrella liability insurance policy that will cover all of my assets?
Thanks,
j :D

https://www.usaa.com/inet/wc/faq_Umbrel ... irect=true

USAA does have umbrella, but it looks like they require you to have both your home and auto with them.

Allstate also has it. I am not clear whether or not you have to have auto, or both auto/home, or neither. You'll probably have to call and ask. Typically you have to at least have auto with umbrella carrier, but I don't know about Allstate

One time when I didn't qualify for GEICO umbrella (due to a DW ticket) and my progressive umbrella was expiring, I looked into this outfit for getting umbrella separately.

https://www.rlicorp.com/personal-umbrella-policy

As it turned out, my wife's ticket rolled out of the 3 (or 5?) year window in time for me to pick up the GEICO umbrella when my progressive umbrella expired. It seems like these umbrella policies are a little stricter, and if you have tickets/teenage drivers, etc you may not be able to renew. it will be interesting to see what happens when my 16 year old daughter eventually gets her full driver's license.
Huge thanks. I didn't know where to start. Usually DW takes care of home things so I'm out of the insurance loop.
Really appreciate the help.
j :D

ZinCO
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Re: Umbrella liability insurance policy to match portfolio size?

Post by ZinCO » Mon Dec 04, 2017 7:03 pm

JBTX wrote:
Mon Dec 04, 2017 5:16 pm

You can get a separate umbrella policy with a different company, but it may cost a little more.

I had progressive auto for years, then switched to GEICO. Once I left progressive, when the umbrella policy with progressive came up for renewal, they would not renew it if you don't have an auto policy. I ended up getting a GEICO umbrella.
Not generally recommended to have different carriers for umbrella and either home or auto. If you were in a situation where a claim was made against one of your home/auto policies in excess of your coverage amounts, would you really want TWO carriers fighting amongst themselves as to how to split responsibility to pay and how to defend you? Most would rather have one carrier with as much to lose as possible, since the more they have to lose, the more vigorously they will defend you (and themselves) against the other party. That's why you'll often see the carriers refuse to offer umbrella policies unless they are already covering both home and auto, just to avoid that situation of having to work with another carrier.

JBTX
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Re: Umbrella liability insurance policy to match portfolio size?

Post by JBTX » Mon Dec 04, 2017 7:20 pm

ZinCO wrote:
Mon Dec 04, 2017 7:03 pm
JBTX wrote:
Mon Dec 04, 2017 5:16 pm

You can get a separate umbrella policy with a different company, but it may cost a little more.

I had progressive auto for years, then switched to GEICO. Once I left progressive, when the umbrella policy with progressive came up for renewal, they would not renew it if you don't have an auto policy. I ended up getting a GEICO umbrella.
Not generally recommended to have different carriers for umbrella and either home or auto. If you were in a situation where a claim was made against one of your home/auto policies in excess of your coverage amounts, would you really want TWO carriers fighting amongst themselves as to how to split responsibility to pay and how to defend you? Most would rather have one carrier with as much to lose as possible, since the more they have to lose, the more vigorously they will defend you (and themselves) against the other party. That's why you'll often see the carriers refuse to offer umbrella policies unless they are already covering both home and auto, just to avoid that situation of having to work with another carrier.
I think I said the same things in my posts above, but thanks anyway! :D

JBTX
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Re: Umbrella liability insurance policy to match portfolio size?

Post by JBTX » Mon Dec 04, 2017 7:27 pm

Sandtrap wrote:
Mon Dec 04, 2017 6:30 pm

So either may have an umbrella liability insurance policy that will cover all of my assets?
Thanks,
j :D
Just to clarify here, this is liability insurance. You are insuring against a potential lawsuit against you. You aren't insuring your assets per se. You could have $0 of assets and have a large judgement against you, and owe it through future income. However, if you don't have any assets, you may be able to file bankruptcy to avoid it.

Now it would seem logical that the more assets you have, the more likely you are to get sued. So the more assets you have (or income you have) the more it makes sense to have umbrella insurance.

Wricha
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Re: Umbrella liability insurance policy to match portfolio size?

Post by Wricha » Mon Dec 04, 2017 7:37 pm

Sandtrap
I have my umbrella policy through USAA their rates are competitive. As far as matching your portfolio that depends on the size of the portfolio. I don’t remember the exact amount but as I raised my limit, USAA would no longer would cover the whole policy. They began to use another carrier to cover the excess. Then at some point when I went back to raise it another million the cost become very expensive (not just a few hundred). At that point I had to say you could put on quite a defense for $5+ million and just accept that as my limit. I have no idea what $10M+ policy cost my guess it’s pretty high.

ZinCO
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Re: Umbrella liability insurance policy to match portfolio size?

Post by ZinCO » Mon Dec 04, 2017 7:42 pm

JBTX wrote:
Mon Dec 04, 2017 7:20 pm
ZinCO wrote:
Mon Dec 04, 2017 7:03 pm
JBTX wrote:
Mon Dec 04, 2017 5:16 pm

You can get a separate umbrella policy with a different company, but it may cost a little more.

I had progressive auto for years, then switched to GEICO. Once I left progressive, when the umbrella policy with progressive came up for renewal, they would not renew it if you don't have an auto policy. I ended up getting a GEICO umbrella.
Not generally recommended to have different carriers for umbrella and either home or auto. If you were in a situation where a claim was made against one of your home/auto policies in excess of your coverage amounts, would you really want TWO carriers fighting amongst themselves as to how to split responsibility to pay and how to defend you? Most would rather have one carrier with as much to lose as possible, since the more they have to lose, the more vigorously they will defend you (and themselves) against the other party. That's why you'll often see the carriers refuse to offer umbrella policies unless they are already covering both home and auto, just to avoid that situation of having to work with another carrier.
I think I said the same things in my posts above, but thanks anyway! :D
So you did, and I seem to have cut that part out. Sorry. I will say though that for me, it had to be bundled with my homeowner's policy, and I don't recall whether auto was required to be with the same carrier or not. (I kept all 3 policies with one carrier anyway.)

nick2302
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Re: Umbrella liability insurance policy to match portfolio size?

Post by nick2302 » Mon Dec 04, 2017 7:43 pm

I decided last year to get a million dollar umbrella policy. I had my car insurance with GEICO so I added the new policy and it is a separate policy. Not expensive at all, something like 145.00 a year or in that neighborhood. I have also noticed that GEICO is raising the car insurance rates with depressing regularity. I have my homeowners with AARP and they too are raising their rates every renewal. Seems it is a standard action on the part of insurance companies.

I am told with the massive storms we had we can expect a serious increase in home and car insurance. I dread the next round of renewals.

Admiral
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Re: Umbrella liability insurance policy to match portfolio size?

Post by Admiral » Mon Dec 04, 2017 7:51 pm

We have State Farm for home, auto, personal articles, and umbrella. The home policy has declined a bit, auto has stayed the same. The Umb is $199 per year for $1m in coverage.

WildBill
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Re: Umbrella liability insurance policy to match portfolio size?

Post by WildBill » Mon Dec 04, 2017 8:21 pm

Howdy

I have a 5 million umbrella with a somewhat larger amount of assets. It is $800 per year with Nationwide.

It is probably excessive. What you are buying is liability insurance in excess of other coverage, and what you are really buying in practice is legal services from the insurer to negotiate a claim or litigate it in court for you in event of a large claim. Lots of legal services for 5 million, and your interests and the insurance company’s are aligned.

In actuality final judgements in excess of $500,000 are uncommon, and in excess of a 2 million very, very uncommon. They make the papers, but are actually very, very rare. They are almost always nasty malpractice or product liability cases. That is why umbrella insurance is cheap.

Call your homeowners insurance guy and tell him you want an umbrella, and if he balks for some reason - usually because they don’t do them, or you don’t also have car with them, call an insurance broker. The umbrella is usually written by a different company anyway. First million of coverage is $200-500 depending on your individual situation and history, and $100-200 per additional million thereafter.

Good luck

W B
"Through chances various, through all vicissitudes, we make our way." Virgil, The Aeneid

WildBill
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Re: Umbrella liability insurance policy to match portfolio size?

Post by WildBill » Mon Dec 04, 2017 8:40 pm

ZinCO wrote:
Mon Dec 04, 2017 7:03 pm
JBTX wrote:
Mon Dec 04, 2017 5:16 pm

You can get a separate umbrella policy with a different company, but it may cost a little more.

I had progressive auto for years, then switched to GEICO. Once I left progressive, when the umbrella policy with progressive came up for renewal, they would not renew it if you don't have an auto policy. I ended up getting a GEICO umbrella.
Not generally recommended to have different carriers for umbrella and either home or auto. If you were in a situation where a claim was made against one of your home/auto policies in excess of your coverage amounts, would you really want TWO carriers fighting amongst themselves as to how to split responsibility to pay and how to defend you? Most would rather have one carrier with as much to lose as possible, since the more they have to lose, the more vigorously they will defend you (and themselves) against the other party. That's why you'll often see the carriers refuse to offer umbrella policies unless they are already covering both home and auto, just to avoid that situation of having to work with another carrier.
Howdy

This is a valid point, but as practical advice it may be slightly misleading. I would not hesitate to get an umbrella from a third party carrier.

Agree that the best case is to have all of your coverage with one carrier, as it simplifies things and can be cheaper. However, in practice many umbrella policies are offered by third party carriers specializing in umbrellas, and are sold as a pass through by your agent. For instance, Geico’s work this way, as well as my Nationwide’s.

As for the carrier’s not being aligned and fighting with each other, that comes after the judgement. And it is their problem, not yours.

Best of luck

W B
"Through chances various, through all vicissitudes, we make our way." Virgil, The Aeneid

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Sandtrap
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Re: Umbrella liability insurance policy to match portfolio size?

Post by Sandtrap » Mon Dec 04, 2017 8:45 pm

Wricha wrote:
Mon Dec 04, 2017 7:37 pm
Sandtrap
I have my umbrella policy through USAA their rates are competitive. As far as matching your portfolio that depends on the size of the portfolio. I don’t remember the exact amount but as I raised my limit, USAA would no longer would cover the whole policy. They began to use another carrier to cover the excess. Then at some point when I went back to raise it another million the cost become very expensive (not just a few hundred). At that point I had to say you could put on quite a defense for $5+ million and just accept that as my limit. I have no idea what $10M+ policy cost my guess it’s pretty high.
I have R/E holdings but those are covered by their own policies. Then various smaller rentals and also my home, also insured. I was concerned about the portfolio because I haven't addressed that as far as insurance. It is in a trust but to my understanding the type of trust that it is will not isolate me from liability litigation if it should ever happen.

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Sandtrap
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Re: Umbrella liability insurance policy to match portfolio size?

Post by Sandtrap » Mon Dec 04, 2017 8:48 pm

WildBill wrote:
Mon Dec 04, 2017 8:21 pm
Howdy

I have a 5 million umbrella with a somewhat larger amount of assets. It is $800 per year with Nationwide.

It is probably excessive. What you are buying is liability insurance in excess of other coverage, and what you are really buying in practice is legal services from the insurer to negotiate a claim or litigate it in court for you in event of a large claim. Lots of legal services for 5 million, and your interests and the insurance company’s are aligned.

In actuality final judgements in excess of $500,000 are uncommon, and in excess of a 2 million very, very uncommon. They make the papers, but are actually very, very rare. They are almost always nasty malpractice or product liability cases. That is why umbrella insurance is cheap.

Call your homeowners insurance guy and tell him you want an umbrella, and if he balks for some reason - usually because they don’t do them, or you don’t also have car with them, call an insurance broker. The umbrella is usually written by a different company anyway. First million of coverage is $200-500 depending on your individual situation and history, and $100-200 per additional million thereafter.

Good luck

W B
Outstanding info!
I believe I have USAA for auto and Farmers for my local rentals and something else, can't remember, for my out of state R/E holdings.

Super appreciate your help.
j :D

DrGoogle2017
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Re: Umbrella liability insurance policy to match portfolio size?

Post by DrGoogle2017 » Mon Dec 04, 2017 11:00 pm

I only insure up to $5million with AAA for $904. It doesn’t have to match your assets, but I think it’s enough that the lawyers would defend against any lawsuit more vigorously. I have car, home and rentals with AAA. Multiple discount.

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Sandtrap
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Re: Umbrella liability insurance policy to match portfolio size?

Post by Sandtrap » Tue Dec 05, 2017 1:02 am

DrGoogle2017 wrote:
Mon Dec 04, 2017 11:00 pm
I only insure up to $5million with AAA for $904. It doesn’t have to match your assets, but I think it’s enough that the lawyers would defend against any lawsuit more vigorously. I have car, home and rentals with AAA. Multiple discount.
Thanks for the input.
Isn't the point of an umbrella insurance policy to cover all possibilities, vs enough?
OTOH doesn't the umbrella policy only have to cover beyond what the various homeowner's and auto insurance policies cover?
j :D

DrGoogle2017
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Re: Umbrella liability insurance policy to match portfolio size?

Post by DrGoogle2017 » Tue Dec 05, 2017 1:22 am

Sandtrap wrote:
Tue Dec 05, 2017 1:02 am
DrGoogle2017 wrote:
Mon Dec 04, 2017 11:00 pm
I only insure up to $5million with AAA for $904. It doesn’t have to match your assets, but I think it’s enough that the lawyers would defend against any lawsuit more vigorously. I have car, home and rentals with AAA. Multiple discount.
Thanks for the input.
Isn't the point of an umbrella insurance policy to cover all possibilities, vs enough?
OTOH doesn't the umbrella policy only have to cover beyond what the various homeowner's and auto insurance policies cover?
j :D
Yes, they require a minimum on these policies, I believe it’s 100/300/500 for car. I can’t remember what’s the requirement for home insurance.
But I know somebody who hit two jay walkers and were sued $5 million each. They were only awarded $250k each. So $5million is plenty.

Luckywon
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Re: Umbrella liability insurance policy to match portfolio size?

Post by Luckywon » Tue Dec 05, 2017 6:51 pm

JBTX wrote:
Mon Dec 04, 2017 7:27 pm
Sandtrap wrote:
Mon Dec 04, 2017 6:30 pm

So either may have an umbrella liability insurance policy that will cover all of my assets?
Thanks,
j :D
Just to clarify here, this is liability insurance. You are insuring against a potential lawsuit against you. You aren't insuring your assets per se. You could have $0 of assets and have a large judgement against you, and owe it through future income. However, if you don't have any assets, you may be able to file bankruptcy to avoid it.

Now it would seem logical that the more assets you have, the more likely you are to get sued. So the more assets you have (or income you have) the more it makes sense to have umbrella insurance.
Want to echo what JBTX has stated, as it took me a while to understand this point. If you have $3 million in unprotected assets and buy a $3 million dollar umbrella, you are not insured against losing all your assets. In the unlikely event you have to pay $6 million dollar judgment, your assets may be forfeited.

So the umbrella policy limit is basically the amount of buffer you create before your assets or future earnings are potentially forfeited. As already mentioned, the more assets or earning potential you have, the more you have to lose and so a higher umbrella would seem logical.

TxInjun
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Re: Umbrella liability insurance policy to match portfolio size?

Post by TxInjun » Tue Dec 05, 2017 11:24 pm

To use an imperfect analogy: if you were constructing a building at the seashore, would your seawall be the height of the largest wave (plus some margin), or the height of the building? Clearly what matters is the tallest wave you might encounter.

As others have said, ANY size umbrella policy can be defeated with a large enough liability - however, once you get past $2M or so, there is a vanishingly small likelihood in general, and even lower probability among Bogleheads, that you would be liable for that amount. Is it possible you could crash into a car of surgeons and VCs who're carpooling together, while you're drunk and texting? Sure - but very low chance of that happening to this crowd.

TxInjun

hiddensee
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Re: Umbrella liability insurance policy to match portfolio size?

Post by hiddensee » Tue Dec 05, 2017 11:34 pm

TxInjun wrote:
Tue Dec 05, 2017 11:24 pm
To use an imperfect analogy: if you were constructing a building at the seashore, would your seawall be the height of the largest wave (plus some margin), or the height of the building? Clearly what matters is the tallest wave you might encounter.

As others have said, ANY size umbrella policy can be defeated with a large enough liability - however, once you get past $2M or so, there is a vanishingly small likelihood in general, and even lower probability among Bogleheads, that you would be liable for that amount. Is it possible you could crash into a car of surgeons and VCs who're carpooling together, while you're drunk and texting? Sure - but very low chance of that happening to this crowd.

TxInjun

This is all correct.

It would be very useful to know exactly how come this size of judgement is, though. And what sort of circumstances trigger it. I am not sure if anyone has compiled that information. I have not found such a compilation. But I would greatly appreciate it if anyone here who has would share.

boglerdude
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Re: Umbrella liability insurance policy to match portfolio size?

Post by boglerdude » Wed Dec 06, 2017 1:09 am

Everyone should have 1MM underlying and 1MM umbrella (or less underlying depending on the cost compared to more umbrella)

When you ram into a bus of surgeons and disable them all, they'll most likely accept your 2MM insurance instead of spending years in litigation (@$250/hour per lawyer) and risking that the jury will sympathize with you.

If a court does rule against you, you go bankrupt and keep your homestead exemption and, depending on the state, retirement accounts.

Examples: https://www.rlicorp.com/real-life-scenarios

& get dash cams

2015
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Re: Umbrella liability insurance policy to match portfolio size?

Post by 2015 » Wed Dec 06, 2017 8:27 pm

hiddensee wrote:
Tue Dec 05, 2017 11:34 pm
TxInjun wrote:
Tue Dec 05, 2017 11:24 pm
To use an imperfect analogy: if you were constructing a building at the seashore, would your seawall be the height of the largest wave (plus some margin), or the height of the building? Clearly what matters is the tallest wave you might encounter.

As others have said, ANY size umbrella policy can be defeated with a large enough liability - however, once you get past $2M or so, there is a vanishingly small likelihood in general, and even lower probability among Bogleheads, that you would be liable for that amount. Is it possible you could crash into a car of surgeons and VCs who're carpooling together, while you're drunk and texting? Sure - but very low chance of that happening to this crowd.

TxInjun
This is all correct.

It would be very useful to know exactly how come this size of judgement is, though. And what sort of circumstances trigger it. I am not sure if anyone has compiled that information. I have not found such a compilation. But I would greatly appreciate it if anyone here who has would share.
There have actually have been several threads on umbrella insurance, including some with statistics regarding the probability of being sued above and beyond policy limits). On at least one of these threads attorneys weighed in regarding their own experience litigating.

For the time being I've decided to keep my umbrella insurance at just above the size of assets. In my case, my auto is insured independently with a company that only insures good drivers in CA. No one has ever been able to beat their rates, even were I to bundle. I've been with an insurance broker and the same homeowners/umbrella insurance policies carrier for about 15 years, with the carrier annoying me with continually raising rates the last few years (despite never having a single claim). Their follow-up this year was to serve me a notice of cancellation on my umbrella because they wanted higher underlying limits on my auto (that were higher than industry standard!). I'm happy to report my broker shopped the homeowners/umbrella policies saving me $225 on the umbrella and $25 on the homeowners with new carriers! Yes!!! :D :moneybag

Thesaints
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Re: Umbrella liability insurance policy to match portfolio size?

Post by Thesaints » Wed Dec 06, 2017 8:50 pm

Have an Umbrella. In principle it should bring total coverage high enough to cover all assets that can be attacked by creditors. In practice, I've kept myself below that amount.

ncbill
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Re: Umbrella liability insurance policy to match portfolio size?

Post by ncbill » Thu Dec 07, 2017 1:33 pm

hiddensee wrote:
Tue Dec 05, 2017 11:34 pm
TxInjun wrote:
Tue Dec 05, 2017 11:24 pm
To use an imperfect analogy: if you were constructing a building at the seashore, would your seawall be the height of the largest wave (plus some margin), or the height of the building? Clearly what matters is the tallest wave you might encounter.

As others have said, ANY size umbrella policy can be defeated with a large enough liability - however, once you get past $2M or so, there is a vanishingly small likelihood in general, and even lower probability among Bogleheads, that you would be liable for that amount. Is it possible you could crash into a car of surgeons and VCs who're carpooling together, while you're drunk and texting? Sure - but very low chance of that happening to this crowd.

TxInjun
This is all correct.

It would be very useful to know exactly how come this size of judgement is, though. And what sort of circumstances trigger it. I am not sure if anyone has compiled that information. I have not found such a compilation. But I would greatly appreciate it if anyone here who has would share.
From a very old (1991 edition) of More Wealth Without Risk, from searching 15 months of court cases in "sue-happy capital of America" south Florida...

"million-dollar or more settlements were rare and were incurred primarily under two conditions:

The defendant was a company whose employee caused the accident...

The defendant was convicted first of DUI..."

Another reason not to DUI: had a neighbor whose kid's life insurance refused to pay when the kid died while DUI.

Though I assume that was a limitation of the employer-provided group insurance, since I don't see that on my individual policies.

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Sandtrap
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Re: Umbrella liability insurance policy to match portfolio size?

Post by Sandtrap » Fri Dec 08, 2017 11:27 am

UPDATE:

OP here.
Thanks everyone for your wonderful advice.

I spoke with USAA and am having all of my insurance coverage for auto, home, rentals, and also the umbrella policy switched over to USAA as of Jan, 2018. I ended up with far greater coverage at reduced premiums.

j :D

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