Umbrella insurance with negative net worth

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balderdash1
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Joined: Sun Sep 16, 2012 10:44 am

Umbrella insurance with negative net worth

Post by balderdash1 » Wed Apr 03, 2013 1:28 pm

Question that I can't seem to get a good handle on and any input would be greatly appreciated. A disability insurance salesman told me that I need to get umbrella insurance. He doesn't sell it and he didn't recommend any specific person so I don't think there is any conflict of interest. I am currently a medical resident with 45k in assets (mainly Roth and 403b) and 150k in debt. I have car insurance with 50k in liability. Should I go out and get a million dollar policy? They are relatively cheap but could someone go after me despite a negative net worth? Would they garnish future earnings? Thanks for any help.

Grt2bOutdoors
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Location: New York

Re: Umbrella insurance with negative net worth

Post by Grt2bOutdoors » Wed Apr 03, 2013 1:38 pm

That was excellent advice from the insurance fellow. It's not just assets they can go after, they can garnish your future wages. Being that you are a medical doctor, that means :moneybag :dollar :moneybag to the plaintiffs. Buying an umbrella policy would be cheap insurance in the event you are sued. Try Geico, they seem to have good rates.
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions

DrPeppaPig
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Joined: Sun Mar 10, 2013 1:38 pm

Re: Umbrella insurance with negative net worth

Post by DrPeppaPig » Wed Apr 03, 2013 3:10 pm

I bought a policy when I was in a similar position as you and recommend it. You'll likely have to increase your auto liability though.

lwfitzge
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Joined: Sun Jun 12, 2011 8:01 am

Re: Umbrella insurance with negative net worth

Post by lwfitzge » Wed Apr 03, 2013 3:15 pm

DrPeppaPig wrote:I'd definitely do it. A $1MM umbrella shouldn't cost more than $150-$250. You'll likely have to increase your auto liability though.
+1, will have raise auto liability to perhaps $200-300k and if you had a home that insurance might have been raised as well.

northstar22
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Re: Umbrella insurance with negative net worth

Post by northstar22 » Wed Apr 03, 2013 3:18 pm


Dulocracy
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Re: Umbrella insurance with negative net worth

Post by Dulocracy » Thu Apr 04, 2013 5:47 pm

Get it. Why?
1) If you cause an accident or get a ticket, you may be ineligible for a year. If you get married and your spouse is prone to tickets, you may be ineligible for a while. Get it while you can.
2) If you have a long day at work and nod off driving home, accidentally hit a car, and kill the 19 year old college student with a bright future, you will be sued. If you are sued for millions of dollars, you may find that your wages are garnished for a long, long time. Laws in states vary, but there are some circumstances where you would not be able to file for bankruptcy against certain debts. Umbrella insurance is a solid idea not just for those who have money, but also for those who plan to have it.

(I have no ties to any insurance sales. I am, however, an attorney, so I see the other side of things.)
I'm not a financial professional. Post is info only & not legal advice. No attorney-client relationship exists with reader. Scrutinize my ideas as if you spoke with a guy at a bar. I may be wrong.

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ofcmetz
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Re: Umbrella insurance with negative net worth

Post by ofcmetz » Thu Apr 04, 2013 7:08 pm

I like the idea of protecting your future income from an accident that makes one liable. I think its a good idea to have maxed out liability car insurance as well as a million or so in umbrella coverage on top.
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