what do others pay for umbrella insurance, and is it needed?

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Old Sage(brush)
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what do others pay for umbrella insurance, and is it needed?

Post by Old Sage(brush) »

Curious what others pay for umbrella insurance. I've not looked at it in quite a while, and just got a bill of $941 for a $2 million umbrella policy. Seems high to me, I will get other quotes, but if anyone else has a reaction, I'd be interested. Also, my assumption is that if you are someone with significant assets, although likely you'll never use this (like lots of insurance products), it is still advisable to have it. And, any reaction on what amount should be? I've now realized I probably should look at and get quotes on all insurance coverages, home, auto, umbrella. Seems like it all is just costing too much and I've been with one company for over 20 years. Many thanks for any inputs!
GmanJeff
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Re: what do others pay for umbrella insurance, and is it needed?

Post by GmanJeff »

Cost will vary with your individual risk profile and the insurer you use, so what other people pay may not be very useful as a benchmark. Shop around. Some insurers provide coverage only up to $5M and then refer to a second provider for additional coverage beyond that.

I have umbrella coverage roughly equal to my net worth.
inverter
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Re: what do others pay for umbrella insurance, and is it needed?

Post by inverter »

Do you have teenage drivers??
ychuck46
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Re: what do others pay for umbrella insurance, and is it needed?

Post by ychuck46 »

I also have a $2M umbrella policy that costs $414/year. It depends upon a lot of factors. Where you live, crime rates, animals you own, propensity of people to sue, property you own, etc. Bottom line is one size does not fit all.
stan1
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Re: what do others pay for umbrella insurance, and is it needed?

Post by stan1 »

I'd generally get all of it from the same company so they have skin in the game if there's a claim and no questions about who is accountable.

My view on insurance is that we have more than enough to pay the premiums each year but not enough to cover a very large loss. Our auto, home, umbrella, and earthquake coverage is about $3200/year which seems reasonable given there are several scenarios where we could suffer a million dollar loss (or more). Our cost is not relevant to your situation, just cited to support my perspective that the annual cost provides some benefit and peace of mind that we are willing to pay for.
JD2775
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Re: what do others pay for umbrella insurance, and is it needed?

Post by JD2775 »

1 million. $134/year. Geico.

Not sure I really need it or not, but it's cheap insurance to have for me
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Stinky
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Re: what do others pay for umbrella insurance, and is it needed?

Post by Stinky »

$595 per year for $5 million. Through State Farm.
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Topic Author
Old Sage(brush)
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Re: what do others pay for umbrella insurance, and is it needed?

Post by Old Sage(brush) »

No teenage drivers, no unusual risk factors. Thanks all, my impression from this is that my cost is high. I'll shop it.
terran
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Re: what do others pay for umbrella insurance, and is it needed?

Post by terran »

JD2775 wrote: Sun Sep 13, 2020 11:17 am 1 million. $134/year. Geico.

Not sure I really need it or not, but it's cheap insurance to have for me
+1 (approximately, off the top of my head).

It's probably not needed, but if it is then you'll wish you had it, so I guess it kind of depends on what that's worth to you.
Westwing
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Re: what do others pay for umbrella insurance, and is it needed?

Post by Westwing »

$350 a year for 1M, bundled with auto and home. Live in rural LCOL America. Forgot to mention State Farm.
oldfort
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Re: what do others pay for umbrella insurance, and is it needed?

Post by oldfort »

Knowing what others pay for umbrella insurance is useless, unless they live in the same geographic area you do. Umbrella prices can vary a lot by state and within a state. In general, if you live in a HCOL area, expect to pay more for umbrella insurance.
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beyou
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Re: what do others pay for umbrella insurance, and is it needed?

Post by beyou »

If you shop, show auto and homeowners with it.

I agreed with the above comment, if you have a claim ever, having same underlying and umbrella makes the insurer fully accountable for their legal decisions.
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FrugalInvestor
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Re: what do others pay for umbrella insurance, and is it needed?

Post by FrugalInvestor »

You don't need it until you need it and you can't know when that might be. You probably will never need it, but if you don't have it and you do need it that could result in severe financial harm. So do you need it? I have it.
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lessismore22
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Re: what do others pay for umbrella insurance, and is it needed?

Post by lessismore22 »

Old Sage(brush) wrote: Sun Sep 13, 2020 2:36 pm No teenage drivers, no unusual risk factors. Thanks all, my impression from this is that my cost is high. I'll shop it.
Yeah, what you're paying now is way too much unless you have some dirt on your driving record.
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jabberwockOG
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Re: what do others pay for umbrella insurance, and is it needed?

Post by jabberwockOG »

Only thing you can do is shop locally for quotes. We pay approx $350 for a 2M umbrella with one of the majors. We are in a LCOL area, retired, no previous claims.
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peetsperk
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Re: what do others pay for umbrella insurance, and is it needed?

Post by peetsperk »

$300/$2 Million
boglerdude
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Re: what do others pay for umbrella insurance, and is it needed?

Post by boglerdude »

You can just raise auto to 1M.

A recent discussion about "how much is too much" is here viewtopic.php?f=2&t=323663
Grt2bOutdoors
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Re: what do others pay for umbrella insurance, and is it needed?

Post by Grt2bOutdoors »

boglerdude wrote: Mon Sep 14, 2020 2:21 am You can just raise auto to 1M.

A recent discussion about "how much is too much" is here viewtopic.php?f=2&t=323663
But does auto liability cover you for slip and fall accidents at your house? Does it cover for slander? Does it cover for someone who gets hurt in your house?

Yes, by all means shop around but even if the price was $942 a year - when was the last time you retained a defense attorney for less than $1000 total for an entire year of litigation? I don’t believe it’s anytime in the last 50 years, maybe longer than that.
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Re: what do others pay for umbrella insurance, and is it needed?

Post by boglerdude »

~90% of $500k+ settlements result from auto. But you can increase homeowners/renters to 1M and it might be less than umbrella.
Slander is covered by homeowners under personal injury. Most umbrellas are only extended liability, so it's great if you can find one that covers incidents excluded by the underlying.
All liability policies provide defense.
Luke Duke
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Re: what do others pay for umbrella insurance, and is it needed?

Post by Luke Duke »

Old Sage(brush) wrote: Sun Sep 13, 2020 10:29 am Curious what others pay for umbrella insurance. I've not looked at it in quite a while, and just got a bill of $941 for a $2 million umbrella policy. Seems high to me
That is high. Do you have extra vehicles? A pool? A second property? A boat? Etc.
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Lemonaid56
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Re: what do others pay for umbrella insurance, and is it needed?

Post by Lemonaid56 »

Seems high.
We have ours through same as the homeowners so I think theres a bit of a discount there. We had to make sure everything liable for accidents was insured... boats, atvs, snowmobiles, vehicles, camp, trailers for all the same.
Seems like we have $3 umbrella for less than $200.
We are in a Northest LCOL state that doesn't seem as litigious as other states sound? But that might be my circle of acquaintances and local word of mouth heresay.
musicagogo
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Re: what do others pay for umbrella insurance, and is it needed?

Post by musicagogo »

Your costs are similar to mine for same umbrella coverage. We have everything bundled together-car, house, etc. We are in a high cost state, but relatively low cost of living city. We have Farmer's Insurance, and I plan to shop around soon, as we haven't done so in 15+ years. I think Farmer's may be pricey. Sadly, a friend recently shopped various companies and found that they would charge more for one thing or another, such that her total costs didn't seem to budge.
oldfort
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Re: what do others pay for umbrella insurance, and is it needed?

Post by oldfort »

Grt2bOutdoors wrote: Mon Sep 14, 2020 3:35 am
boglerdude wrote: Mon Sep 14, 2020 2:21 am You can just raise auto to 1M.

A recent discussion about "how much is too much" is here viewtopic.php?f=2&t=323663
But does auto liability cover you for slip and fall accidents at your house? Does it cover for slander? Does it cover for someone who gets hurt in your house?

Yes, by all means shop around but even if the price was $942 a year - when was the last time you retained a defense attorney for less than $1000 total for an entire year of litigation? I don’t believe it’s anytime in the last 50 years, maybe longer than that.
Your homeowner's will cover a slip and fall. Usually, but not always, your homeowners will cover slander. If you have homeowner's insurance, the homeowner's insurance company has a duty to defend. Umbrella policies almost never drop down to provide first dollar coverage.
Last edited by oldfort on Mon Sep 14, 2020 2:48 pm, edited 1 time in total.
LiterallyIronic
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Re: what do others pay for umbrella insurance, and is it needed?

Post by LiterallyIronic »

JD2775 wrote: Sun Sep 13, 2020 11:17 am 1 million. $134/year. Geico.

Not sure I really need it or not, but it's cheap insurance to have for me
But doesn't it require you to have maximum limits on your home and auto insurance? If so, and you wouldn't otherwise have the limits that high, then the difference should be included in the cost.
oldfort
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Re: what do others pay for umbrella insurance, and is it needed?

Post by oldfort »

Old Sage(brush) wrote: Sun Sep 13, 2020 10:29 am Curious what others pay for umbrella insurance. I've not looked at it in quite a while, and just got a bill of $941 for a $2 million umbrella policy. Seems high to me, I will get other quotes, but if anyone else has a reaction, I'd be interested. Also, my assumption is that if you are someone with significant assets, although likely you'll never use this (like lots of insurance products), it is still advisable to have it. And, any reaction on what amount should be? I've now realized I probably should look at and get quotes on all insurance coverages, home, auto, umbrella. Seems like it all is just costing too much and I've been with one company for over 20 years. Many thanks for any inputs!
What's your auto limit? Umbrella is usually cheaper if you have $500k in auto.
JD2775
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Re: what do others pay for umbrella insurance, and is it needed?

Post by JD2775 »

LiterallyIronic wrote: Mon Sep 14, 2020 2:46 pm
JD2775 wrote: Sun Sep 13, 2020 11:17 am 1 million. $134/year. Geico.

Not sure I really need it or not, but it's cheap insurance to have for me
But doesn't it require you to have maximum limits on your home and auto insurance? If so, and you wouldn't otherwise have the limits that high, then the difference should be included in the cost.
That's true. In my case, upping the limits needed for auto raised my premium by about $50 I think. That was it. I don't own a home so that didn't factor into the equation.

So, $184/year, given that change.
wfrobinette
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Re: what do others pay for umbrella insurance, and is it needed?

Post by wfrobinette »

$275 for 1 million 360 for 2 million

I have a pool and this is with NC Farm Bureau.
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Re: what do others pay for umbrella insurance, and is it needed?

Post by wfrobinette »

oldfort wrote: Mon Sep 14, 2020 2:47 pm
Old Sage(brush) wrote: Sun Sep 13, 2020 10:29 am Curious what others pay for umbrella insurance. I've not looked at it in quite a while, and just got a bill of $941 for a $2 million umbrella policy. Seems high to me, I will get other quotes, but if anyone else has a reaction, I'd be interested. Also, my assumption is that if you are someone with significant assets, although likely you'll never use this (like lots of insurance products), it is still advisable to have it. And, any reaction on what amount should be? I've now realized I probably should look at and get quotes on all insurance coverages, home, auto, umbrella. Seems like it all is just costing too much and I've been with one company for over 20 years. Many thanks for any inputs!
What's your auto limit? Umbrella is usually cheaper if you have $500k in auto.
Most companies won't even insure unless you have that 500k level. Probably depends on state.
oldfort
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Re: what do others pay for umbrella insurance, and is it needed?

Post by oldfort »

wfrobinette wrote: Mon Sep 14, 2020 3:36 pm
oldfort wrote: Mon Sep 14, 2020 2:47 pm
Old Sage(brush) wrote: Sun Sep 13, 2020 10:29 am Curious what others pay for umbrella insurance. I've not looked at it in quite a while, and just got a bill of $941 for a $2 million umbrella policy. Seems high to me, I will get other quotes, but if anyone else has a reaction, I'd be interested. Also, my assumption is that if you are someone with significant assets, although likely you'll never use this (like lots of insurance products), it is still advisable to have it. And, any reaction on what amount should be? I've now realized I probably should look at and get quotes on all insurance coverages, home, auto, umbrella. Seems like it all is just costing too much and I've been with one company for over 20 years. Many thanks for any inputs!
What's your auto limit? Umbrella is usually cheaper if you have $500k in auto.
Most companies won't even insure unless you have that 500k level. Probably depends on state.
Some companies will insure you with lower levels but charge higher premiums.
Lee_WSP
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Re: what do others pay for umbrella insurance, and is it needed?

Post by Lee_WSP »

With the bundling discounts, it comes out to an extra $120 or so a year for an extra 500k liability.

Why do I have one? Because I want a million liability. Is a million necessary? No. 500k would be perfectly fine in 99.999% of cases where limits are an issue. But you never know what freak of fate will strike.
vshun
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Re: what do others pay for umbrella insurance, and is it needed?

Post by vshun »

Most of the responses here will be from people who have umbrella so obviously it will be biased towards you have to have the policy answer. Reality is not black and white but rather grey. When you research it, there are a couple of considerations against having it:
1. Sadly we all have a friend/neighbor/relative who died from something before reaching golden old age. Or several folks. Very few of us really know or heard people who were litigated by others to a point they went broke. Internet search finds a few cases but they appear to be vary rare, less rare than lightning/hurricane/shark attack/whatever event. So when lets say I was asked by my company to pay $300 for 1 mln of umbrella and I am paying $320 yearly for life insurance I see umbrella market is not competitive, rates are random and do not appear to reflect real risk.
2. Most of your assets are protected, depending on your state of course. Your retirement accounts should be protected. Your house is likely protected. So, in the extreme unlikely event of that policy being used, they can go against your taxable account but it is probably not a catastrophic event for most of the folks, as their primary assets are likely protected against litigation.
3. This topic has been raised so many times on this forum, and prior to it on Morningstar bogleheads forum for those of us who remember, and rarely anyone came up and said I have this insurance, had to use it and it was a life saver. So goes back to point #1, extremely unlikely event.
4. The argument often raised is based on fear like Your teenage kid driver causes driveway pileup full of lawyers in BMW so they will all sue you out of existence is somewhat based on excessive fear. I feel we should not give in to fear for every possible negative event in our life.
UALflyer
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Re: what do others pay for umbrella insurance, and is it needed?

Post by UALflyer »

vshun wrote: Mon Sep 14, 2020 5:47 pm Most of the responses here will be from people who have umbrella so obviously it will be biased towards you have to have the policy answer. Reality is not black and white but rather grey. When you research it, there are a couple of considerations against having it:
1. Sadly we all have a friend/neighbor/relative who died from something before reaching golden old age. Or several folks. Very few of us really know or heard people who were litigated by others to a point they went broke. Internet search finds a few cases but they appear to be vary rare, less rare than lightning/hurricane/shark attack/whatever event. So when lets say I was asked by my company to pay $300 for 1 mln of umbrella and I am paying $320 yearly for life insurance I see umbrella market is not competitive, rates are random and do not appear to reflect real risk.
Your assumptions are incorrect. On the personal liability front, the loss severity has been rising for years. Hence, the reason that the umbrella loss ratios have been under pressure:
https://www.genre.com/knowledge/blog/in ... es-en.html
https://www.iamagazine.com/markets/3-co ... loss-costs

What do life insurance rates have to do with umbrella premiums? Life insurance premiums are tied to your specific health, and a payout only happens when the insured dies during the policy term. With a liability policy, you have no way of knowing the other person's health and some of the largest payouts can happen when the person survives but is permanently disabled by your actions.
2. Most of your assets are protected, depending on your state of course. Your retirement accounts should be protected. Your house is likely protected. So, in the extreme unlikely event of that policy being used, they can go against your taxable account but it is probably not a catastrophic event for most of the folks, as their primary assets are likely protected against litigation.
In most states, your primary residence is actually not protected.

Further, to the extent that your assets are protected, in a lot of cases the protection is through bankruptcy. Contrary to a lot of posts that I keep seeing, if you have unprotected assets and/or an income stream, you don't just get to discharge your obligations while keeping your unprotected assets and an income stream. Also, a bankruptcy filing on your record can be a very big deal: in quite a few industries, a bankruptcy filing can cause people to lose their license, cause them to be fired and prevent them from being considered for a number of lucrative jobs. Likewise, a bankruptcy filing on your record also means much higher auto and homeowners insurance rates (at least in those states that allow your credit to be used in underwriting decisions), can cause you to lose the most valuable credit cards with the best cashback, etc...
I feel we should not give in to fear for every possible negative event in our life.
Of course not, but depending on your financial situation, there are frequently very good reasons to purchase umbrella policies, as you are getting some really good and inexpensive protection against truly catastrophic events. Having said that, if you are essentially judgment proof, then the decision matrix would obviously be very different.
Last edited by UALflyer on Tue Sep 15, 2020 3:05 pm, edited 3 times in total.
FoolMeOnce
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Re: what do others pay for umbrella insurance, and is it needed?

Post by FoolMeOnce »

$500 for $3 million. No teenage drivers. We only drive about 5k miles/year. Have auto and homeowners.
ColoradoRick
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Re: what do others pay for umbrella insurance, and is it needed?

Post by ColoradoRick »

Old Sage(brush) wrote: Sun Sep 13, 2020 10:29 am Curious what others pay for umbrella insurance. I've not looked at it in quite a while, and just got a bill of $941 for a $2 million umbrella policy. Seems high to me, I will get other quotes, but if anyone else has a reaction, I'd be interested. Also, my assumption is that if you are someone with significant assets, although likely you'll never use this (like lots of insurance products), it is still advisable to have it. And, any reaction on what amount should be? I've now realized I probably should look at and get quotes on all insurance coverages, home, auto, umbrella. Seems like it all is just costing too much and I've been with one company for over 20 years. Many thanks for any inputs!
$669/$2 million....2 autos, homeowners, retired, no life insurance. Can't shop because few insurance companies will insure our home due to wildfires so kind of stuck. Having said that, they were good with claims.
oldfort
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Re: what do others pay for umbrella insurance, and is it needed?

Post by oldfort »

UALflyer wrote: Tue Sep 15, 2020 7:54 am
vshun wrote: Mon Sep 14, 2020 5:47 pm Most of the responses here will be from people who have umbrella so obviously it will be biased towards you have to have the policy answer. Reality is not black and white but rather grey. When you research it, there are a couple of considerations against having it:
1. Sadly we all have a friend/neighbor/relative who died from something before reaching golden old age. Or several folks. Very few of us really know or heard people who were litigated by others to a point they went broke. Internet search finds a few cases but they appear to be vary rare, less rare than lightning/hurricane/shark attack/whatever event. So when lets say I was asked by my company to pay $300 for 1 mln of umbrella and I am paying $320 yearly for life insurance I see umbrella market is not competitive, rates are random and do not appear to reflect real risk.
Your assumptions are incorrect. On the personal liability front, the loss severity has been rising for years. Hence, the reason that the umbrella loss ratios have been under pressure:
https://www.genre.com/knowledge/blog/in ... es-en.html
https://www.iamagazine.com/markets/3-co ... loss-costs

What do life insurance rates have to do with umbrella premiums? Life insurance premiums are tied to your specific health, and a payout only happens when the insured dies during the policy term. With a liability policy, you have no way of knowing the other person's health and some of the largest payouts can happen when the person survives but is permanently disabled by your actions.

What percentage of personal umbrella premiums get paid out in a judgement or settlement? That's the bottom line number I'm interested in. The rest is noise.
2. Most of your assets are protected, depending on your state of course. Your retirement accounts should be protected. Your house is likely protected. So, in the extreme unlikely event of that policy being used, they can go against your taxable account but it is probably not a catastrophic event for most of the folks, as their primary assets are likely protected against litigation.
In most states, your primary residence is actually not protected.

Further, to the extent that your assets are protected, in a lot of cases the protection is through bankruptcy. Contrary to a lot of posts that I keep seeing, if you have unprotected assets and/or an income stream, you don't just get to discharge your obligations while keeping your unprotected assets and an income stream. Also, a bankruptcy filing on your record can be a very big deal: in quite a few industries, a bankruptcy filing can cause people to lose their license, cause them to be fired and prevent them from being considered for a number of lucrative jobs.

Lots of fear mongering. Bankruptcy does not mean you're going to get fired or lose your license. There are practicing lawyers, doctors, and CPAs who have filed for bankruptcy. There might be some minute number of jobs where a bankruptcy filing automatically causes you to get fired, but there's no reason to assume this would be the case with the OP.


Likewise, a bankruptcy filing on your record also means much higher auto and homeowners insurance rates (at least in those states that allow your credit to be used in underwriting decisions), can cause you to lose the most valuable credit cards with the best cashback, etc...

Now, this is getting nonsensical. Is anyone buying umbrella insurance, so they have the opportunity to get the best cash-back reward credit cards? If you ever have an accident serious enough where the umbrella matters, ex. you caused a fatality, your insurance rates are going to skyrocket no matter what.
Last edited by oldfort on Tue Sep 15, 2020 5:43 pm, edited 1 time in total.
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Makaveli
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Re: what do others pay for umbrella insurance, and is it needed?

Post by Makaveli »

$1MM $215/yr SafeCo
J295
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Re: what do others pay for umbrella insurance, and is it needed?

Post by J295 »

$235 for $2 million coverage. Retired.

Have always carried for two reasons ....
1. Personal asset protection (doing it for us)
2. If we accidentally cause a catastrophic type economic injury to someone we want them to receive adequate insurance proceeds (doing it for them not us).
Osterix
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Re: what do others pay for umbrella insurance, and is it needed?

Post by Osterix »

Stinky wrote: Sun Sep 13, 2020 11:20 am $595 per year for $5 million. Through State Farm.
I also have State Farm and pay twice that for the same amount.

I’m 33, spouse 32, one toddler, rent a home, don’t own a boat or pool, live in Florida, both cars insured with State Farm and increased bodily injury to $250,000/$500,000 to get the umbrella...

Why do you think your rate is half mine?
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Stinky
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Re: what do others pay for umbrella insurance, and is it needed?

Post by Stinky »

Osterix wrote: Tue Sep 15, 2020 6:44 pm
Stinky wrote: Sun Sep 13, 2020 11:20 am $595 per year for $5 million. Through State Farm.
I also have State Farm and pay twice that for the same amount.

I’m 33, spouse 32, one toddler, rent a home, don’t own a boat or pool, live in Florida, both cars insured with State Farm and increased bodily injury to $250,000/$500,000 to get the umbrella...

Why do you think your rate is half mine?
Maybe because I’m double your age?

Also own my house.
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Lee_WSP
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Re: what do others pay for umbrella insurance, and is it needed?

Post by Lee_WSP »

UALflyer wrote: Tue Sep 15, 2020 7:54 am Of course not, but depending on your financial situation, there are frequently very good reasons to purchase umbrella policies, as you are getting some really good and inexpensive protection against truly catastrophic events. Having said that, if you are essentially judgment proof, then the decision matrix would obviously be very different.
It has nothing to do with judgment proof or not. It's whether the plaintiffs will settle for the policy limits or decide that the odds of winning are near 100% and the odds of collecting additional funds are pretty darn good too. Which would be an odd occurrence since for that to make financial sense for the plaintiff's attorney, your insurance company would have to do a full limit payout and walk refusing to defend you. Next, a judge would have to allow the suit to proceed even though a full policy payout has been offered. Then, the same judge or jury would have to decide that taking your life's savings away is justified. And then they'd have to collect, at which point you can again settle.

If you have a 25k liability policy, tens of millions in highly liquid assets, and a permanently disable a family of 5, yeah, okay, that might happen. Barring that, I can't see it.
UALflyer
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Re: what do others pay for umbrella insurance, and is it needed?

Post by UALflyer »

oldfort wrote: Tue Sep 15, 2020 5:34 pmWhat percentage of personal umbrella premiums get paid out in a judgement or settlement? That's the bottom line number I'm interested in. The rest is noise.
On average, the loss ratios associated with personal umbrella policies tend to hover around 50%. On average, the combined ratios associated with personal umbrella policies, which factor in the loss adjustment expense, are around 85%, which means that the profit margin is somewhere around 15%.

I agree that the above numbers are somewhat helpful, but when the annual cost of the policy is somewhere between $150 and $600, does it really matter whether the profit margin is 15% or 30%, or are you asking because you thought that the profit margin was in the 90% range (it is not)?
Lots of fear mongering. Bankruptcy does not mean you're going to get fired or lose your license. There are practicing lawyers, doctors, and CPAs who have filed for bankruptcy. There might be some minute number of jobs where a bankruptcy filing automatically causes you to get fired, but there's no reason to assume this would be the case with the OP.
We know nothing about the OP, but what you've posted is misleading. Yes, there are practicing professionals in these fields with bankruptcy on their records, but a lot of employers won't hire and/or retain them with such a record. Many sophisticated employers have implemented annual certification requirements as well that cover these types of issues (this has to do with liability, as employees in financial distress or a history of financial irresponsibility are considered to be more likely to engage in various acts that expose the employer to reputational and legal risks), so being already employed by an employer does not mean that it won't find out about it. Likewise, there is a number of industries, such as parts of the financial industry, where a bankruptcy on your record can cause you to lose your license.

Each person obviously knows what industry he or she is in and should know whether something like this is an issue.
Now, this is getting nonsensical. Is anyone buying umbrella insurance, so they have the opportunity to get the best cash-back reward credit cards?
You are intentionally twisting my posts. I listed a number of factors the combination of which make this a serious and expensive issue. You've picked out a single fact out of that bunch and are attempting to attack it, as if that single fact was somehow used as the sole reason for purchasing umbrella insurance.
If you ever have an accident serious enough where the umbrella matters, ex. you caused a fatality, your insurance rates are going to skyrocket no matter what.
This is also misleading. With most carriers, your claims frequency (and sometimes the facts) impact your premiums more than the size of the claim. Further, depending on the state and the carrier, an at fault claim impacts your rates for 3-5 years. Bankruptcy, depending on the chapter used, remains on your credit report for 7-10 years, so it stays around a lot longer. It's also a double whammy, as we would be talking about a bankruptcy plus an at fault claim.
Umbrella is usually cheaper if you have $500k in auto.
What do you mean by "$500K in auto?" Umbrella policies typically require $250K per person/$500K in the aggregate in bodily injury coverage (some policies allow $100K/$300K), or $300K in single limit liability coverage. They also tend to require either $50K or $100K in auto property damage coverage and $300K in HO liability coverage. If you have watercrafts, they also tend to require $300K in underlying liability, etc...
Last edited by UALflyer on Fri Sep 18, 2020 10:19 am, edited 2 times in total.
UALflyer
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Re: what do others pay for umbrella insurance, and is it needed?

Post by UALflyer »

Lee_WSP wrote: Tue Sep 15, 2020 11:38 pm
UALflyer wrote: Tue Sep 15, 2020 7:54 am Of course not, but depending on your financial situation, there are frequently very good reasons to purchase umbrella policies, as you are getting some really good and inexpensive protection against truly catastrophic events. Having said that, if you are essentially judgment proof, then the decision matrix would obviously be very different.
It has nothing to do with judgment proof or not. It's whether the plaintiffs will settle for the policy limits or decide that the odds of winning are near 100% and the odds of collecting additional funds are pretty darn good too.
Every settlement decision always factors in the uncertainty of litigation (on both sides, as it can go high or low) as well as the recovery prospects. So, if you are judgment proof (and the plaintiff wouldn't have a viable bad faith claim against the insurance company), there is no sense in pursuing a judgment in excess of the insurance coverage limits, as the plaintiff wouldn't be able to recover those additional amounts.
Which would be an odd occurrence since for that to make financial sense for the plaintiff's attorney, your insurance company would have to do a full limit payout and walk refusing to defend you.
Insurance companies have a separate duty to defend. So, although there are some limited exceptions, insurance companies are generally not allowed to just tender the insurance limits and then refuse to defend.

Having said that, the quality of the defense effort varies. An insurance company facing a substantial payout is more likely to authorize a greater defense effort in the sense of using more experienced lawyers (a lot of insurance companies have insurance defense panels organized by the exposure amounts), a greater investigative effort, experts, etc...
Next, a judge would have to allow the suit to proceed even though a full policy payout has been offered.
It simply doesn't work this way. The plaintiff's ability to move forward with its claim is never limited by the availability of the insurance proceeds.
Then, the same judge or jury would have to decide that taking your life's savings away is justified.
This is also incorrect. With a few exceptions, jurors do not actually know anything about the availability or unavailability of insurance, as it has nothing to do with liability. In fact, a lot of states have statutory prohibitions on disclosing this information to the jurors.
And then they'd have to collect, at which point you can again settle.
Once again, settlement decisions always factor in the uncertainty of litigation (on both sides, as it can go high or low) as well as the recovery prospects. If you have exposed assets, the recovery prospects are high, which can drive up the value of any eventual settlement, particularly in cases where liability cannot be seriously disputed and the litigation is primarily focused on the plaintiff's damages.
Lee_WSP
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Re: what do others pay for umbrella insurance, and is it needed?

Post by Lee_WSP »

UALflyer wrote: Wed Sep 16, 2020 8:57 am
Lee_WSP wrote: Tue Sep 15, 2020 11:38 pm
UALflyer wrote: Tue Sep 15, 2020 7:54 am Of course not, but depending on your financial situation, there are frequently very good reasons to purchase umbrella policies, as you are getting some really good and inexpensive protection against truly catastrophic events. Having said that, if you are essentially judgment proof, then the decision matrix would obviously be very different.
It has nothing to do with judgment proof or not. It's whether the plaintiffs will settle for the policy limits or decide that the odds of winning are near 100% and the odds of collecting additional funds are pretty darn good too.
Every settlement decision always factors in the uncertainty of litigation (on both sides, as it can go high or low) as well as the recovery prospects. So, if you are judgment proof (and the plaintiff wouldn't have a viable bad faith claim against the insurance company), there is no sense in pursuing a judgment in excess of the insurance coverage limits, as the plaintiff wouldn't be able to recover those additional amounts.
Which would be an odd occurrence since for that to make financial sense for the plaintiff's attorney, your insurance company would have to do a full limit payout and walk refusing to defend you.
Insurance companies have a separate duty to defend. So, although there are some limited exceptions, insurance companies are generally not allowed to just tender the insurance limits and then refuse to defend.

Having said that, the quality of the defense effort varies. An insurance company facing a substantial payout is more likely to authorize a greater defense effort in the sense of using more experienced lawyers (a lot of insurance companies have insurance defense panels organized by the exposure amounts), a greater investigative effort, experts, etc...
Next, a judge would have to allow the suit to proceed even though a full policy payout has been offered.
It simply doesn't work this way. The plaintiff's ability to move forward with its claim is never limited by the availability of the insurance proceeds.
Then, the same judge or jury would have to decide that taking your life's savings away is justified.
This is also incorrect. With a few exceptions, jurors do not actually know anything about the availability or unavailability of insurance, as it has nothing to do with liability. In fact, a lot of states have statutory prohibitions on disclosing this information to the jurors.
And then they'd have to collect, at which point you can again settle.
Once again, settlement decisions always factor in the uncertainty of litigation (on both sides, as it can go high or low) as well as the recovery prospects. If you have exposed assets, the recovery prospects are high, which can drive up the value of any eventual settlement, particularly in cases where liability cannot be seriously disputed and the litigation is primarily focused on the plaintiff's damages.
Cite me one case where the policy limits were one million, the plaintiff was offered the limits and refused, fault was undisputed and then the defendant was pursued for the outstanding judgment in a non commercial case.
talzara
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Re: what do others pay for umbrella insurance, and is it needed?

Post by talzara »

Osterix wrote: Tue Sep 15, 2020 6:44 pm I also have State Farm and pay twice that for the same amount.
Stinky wrote: Tue Sep 15, 2020 7:14 pm Maybe because I’m double your age?

Also own my house.
State Farm does not surcharge older drivers on its umbrella policy. It only surcharges younger drivers below the age of 25.

State Farm also does not charge for home ownership. The umbrella rate is a bundle.

Florida is expensive because the risk pool is older. Retirees are a larger percentage of the population in Florida than in any other state. Retirees also have more assets to protect, so they are more likely to purchase umbrella insurance. Since older drivers are not surcharged, the higher crash risk is subsidized by younger drivers.

Umbrella policies may also include excess underinsured motorist coverage. Florida has the highest percentage of uninsured drivers of all 50 states, and it has the lowest required liability limits. Most of this will be seen in the UIM premium on your auto insurance policy, but some of the increased risk will make it to the umbrella.
talzara
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Re: what do others pay for umbrella insurance, and is it needed?

Post by talzara »

UALflyer wrote: Wed Sep 16, 2020 8:23 am Bankruptcy, depending on the chapter used, remains on your credit report for 7-10 years, so it stays around a lot longer. It's also a double whammy, as we would be talking about a bankruptcy plus an at fault claim.
Credit-based insurance models typically increase your premium by about 60% for a bankruptcy filing.
UALflyer wrote: Wed Sep 16, 2020 8:23 am
oldfort wrote: Tue Sep 15, 2020 5:34 pm Umbrella is usually cheaper if you have $500k in auto.
What do you mean by "$500K in auto?" Umbrella policies typically require $250K per person/$500K in the aggregate in bodily injury coverage (some policies allow $100K/$300K), or $300K in single limit liability coverage.
Many umbrella insurers give a discount for an attachment point of $500k/500k instead of $250k/500k. Since the underlying auto policy covers more of the risk between $250k and $500k, the umbrella insurer is exposed to less risk.

For example, GEICO offers a 20% discount for a $500k/500k attachment point. GEICO even tried to make $500k/500k the minimum attachment point, as described in the article you posted:
UALflyer wrote: Tue Sep 15, 2020 7:54 am On the personal liability front, the loss severity has been rising for years. Hence, the reason that the umbrella loss ratios have been under pressure:
https://www.genre.com/knowledge/blog/in ... es-en.html
The article uses "National Writer A" as a thin disguise for USLI, a Berkshire Hathaway company. GEICO filed the same change as USLI in the states where it writes umbrella. Berkshire Hathaway had to roll back the change after less than six months, but we may be seeing more of this in the future.

Umbrella insurance has been using the same attachment points since the product was introduced. Since it hasn't kept up with inflation, it's not surprising that loss frequencies have gone up. Many auto insurers offer $1 million of liability coverage, which would make sense as a new attachment point. $1 million is just $500k adjusted for inflation.
UALflyer
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Re: what do others pay for umbrella insurance, and is it needed?

Post by UALflyer »

Lee_WSP wrote: Wed Sep 16, 2020 11:06 am Cite me one case where the policy limits were one million, the plaintiff was offered the limits and refused, fault was undisputed and then the defendant was pursued for the outstanding judgment in a non commercial case.
This is a completely different issue from the ones that you were talking about above.

How much liability insurance is "enough" has always been a difficult question, but for reasons very different from the ones that mentioned above. The answer depends in part on the implications that an excess judgment would have on you and the likelihood that such an excess judgment would be pursued against you, which requires an examination of your assets that would be exposed to such excess judgments.

An average family has about $8,863 in savings (https://www.cnbc.com/2019/03/11/how-muc ... y-age.html), and the median 401(k) balance is $22,217 (https://www.businessinsider.com/persona ... retirement) (and 401(k) balances enjoy substantial asset protection benefits). So, there aren't a lot of people out there with substantial exposed assets, and most of those people have sufficient liability limits. This is the reason that most people out there don't want or need much liability protection, as they simply don't have all that much to protect.

So, while it is highly uncommon to have a civil verdict where an individual defendant has $1MM in insurance, the insurance company offers its policy limits, the plaintiff rejects the offer (without a way to pursue a bad faith claim against the carrier), obtains a larger verdict and then pursues the defendant's personal assets, it is for reasons other than those that you've mentioned. Namely, most people out there just aren't the proverbial "deep pocket" and, if they are, they typically have sufficient insurance.

[OT comments removed by admin LadyGeek]

In other words, the way that you would go about deciding the amount of liability coverage that you need depends in large part on how attractive of a litigation target you represent. I don't think that people are suggesting that those earning $50K/year, for instance, need an umbrella policy at all. If, however, you have a person, like many on this board, earning hundreds of thousands a year and/or have 7 figure balances in their individual taxable accounts, then larger umbrella policies start to make a lot more sense.
oldfort
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Re: what do others pay for umbrella insurance, and is it needed?

Post by oldfort »

UALflyer wrote: Wed Sep 16, 2020 11:49 am
Lee_WSP wrote: Wed Sep 16, 2020 11:06 am Cite me one case where the policy limits were one million, the plaintiff was offered the limits and refused, fault was undisputed and then the defendant was pursued for the outstanding judgment in a non commercial case.
For starters, this is a completely different question from the statements that you were making above.

How much liability insurance is "enough" has always been a difficult question, but for reasons very different from the ones that you mentioned above. The answer depends in part on the implications that an excess judgment would have on you and the likelihood that such an excess judgment would be pursued against you, which requires an examination of your assets that would be exposed to such excess judgments.

An average family has about $8,863 in savings (https://www.cnbc.com/2019/03/11/how-muc ... y-age.html), and the median 401(k) balance is $22,217 (https://www.businessinsider.com/persona ... retirement) (and 401(k) balances enjoy substantial asset protection benefits). So, there aren't a lot of people out there with substantial exposed assets, and most of those people have sufficient liability limits. This is the reason that most people out there don't want or need much liability protection, as they simply don't have all that much to protect.

So, while it is highly uncommon to have a civil verdict where an individual defendant has $1MM in insurance, the insurance company offers its policy limits, the plaintiff rejects the offer (without a way to pursue a bad faith claim against the carrier), obtains a larger verdict and then pursues the defendant's personal assets, it is for reasons other than those that you've mentioned. Namely, most people out there just aren't the proverbial "deep pocket" and, if they are, they typically have sufficient insurance.

In other words, the way that you would go about deciding the amount of liability coverage that you need depends in large part on how attractive of a litigation target you represent. I don't think that people are suggesting that those earning $50K/year, for instance, need an umbrella policy at all. If, however, you have a person, like many on this board, earning hundreds of thousands a year and/or have 7 figure balances in their individual taxable accounts, then larger umbrella policies start to make a lot more sense.
Multi-million dollar verdicts in non-DUI, non-commercial auto accidents happen with about the same frequency as lightning strikes, less than one per every million licensed drivers each year. Two years ago, the OP had about $1 million in taxable investments. Those aren't particularly deep pockets.
UALflyer
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Re: what do others pay for umbrella insurance, and is it needed?

Post by UALflyer »

oldfort wrote: Wed Sep 16, 2020 12:25 pm Two years ago, the OP had about $1 million in taxable investments. Those aren't particularly deep pockets.
I agree, but my responses weren't specific to the OP and his situation. I was addressing general questions about various factors that go into these types of decisions.
Multi-million dollar verdicts in non-DUI, non-commercial auto accidents happen with about the same frequency as lightning strikes, less than one per every million licensed drivers each year.
For the reasons that I've mentioned above, this doesn't have anything to do with the decision, which depends on each person's specific exposure.
daheld
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Re: what do others pay for umbrella insurance, and is it needed?

Post by daheld »

Two adults, married, one nearly two year old child. Bundled with home and auto, $1M umbrella: ~$200/year.
Lee_WSP
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Re: what do others pay for umbrella insurance, and is it needed?

Post by Lee_WSP »

UALflyer wrote: Wed Sep 16, 2020 11:49 am
A well known story of a person with substantial exposed assets and clearly insufficient insurance involves Hulk Hogan. Here's an article that talks about his son's crash: https://www.insurancejournal.com/magazi ... 201239.htm According to the article, there was $500K in insurance coverage available at the time. The settlement was apparently in the $5MM range, which would mean that $4.5MM came from his personal assets: https://www.wrestlinginc.com/news/2011/ ... ed-545728/

In other words, the way that you would go about deciding the amount of liability coverage that you need depends in large part on how attractive of a litigation target you represent. I don't think that people are suggesting that those earning $50K/year, for instance, need an umbrella policy at all. If, however, you have a person, like many on this board, earning hundreds of thousands a year and/or have 7 figure balances in their individual taxable accounts, then larger umbrella policies start to make a lot more sense.
If the plaintiff can Google "[your name] net worth" and come up with a result, you need a lot of umbrella insurance. For everyone else, it's not necessarily worth it.
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