Reviewing my insurance now that I have money

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wholeinone04
Posts: 243
Joined: Thu May 27, 2010 12:45 pm
Location: California

Reviewing my insurance now that I have money

Post by wholeinone04 » Tue Apr 08, 2014 12:48 pm

I've never been a big fan of insurance since it seems whenever you need them to pay they always try to weasel out of it. But now that my NW is moving up to a more substantial amount I want to make sure I'm adequately covered. I know I can't prepare for everything but in this sue happy society that we live in I don't want to lose my hard earned money to some idiot who trips on my door sill and hits his head.

My NW is around 320k right now and I'll be getting married this summer if that matters. I have about 100k in equity in my condo that is currently being rented out(I rent an apartment in another city). I have about 150k in 401k/Roth/HSA's, 10k in I bonds and the rest(60k) is in cash/CD's. No debt other than my mortgage although my fiancee will have around 200k of debt when she graduates med school in 3 years.

I'm really not concerned about insuring about the value of my belongings(car collision, personal property, etc) but I'm more concerned about getting sued or something like that. Does that make sense?

Auto Insurance: I currently have a 2004 Lexus RX 330(worth about 10-15k) and my insurance through Wawanesa covers the following(annual premiums listed to the right):
Bodily Injury Liability 100,000/300,000 - $286
Property Damage Liability 50,000 - $202
Comprehensive (500 Deductible) - $38
Collision (500 Deductible) - $361

Thoughts: I think I probably need to bump up my liability since 100k/300k seems a little low considering how expensive medical treatment can be. I don't have any uninsured insurance which I may need to add? If I was not at fault, and I got injured wouldn't my regular health insurance cover this though? I guess if I was at fault and I injured someone without insurance I would not be covered right? Even though that's BS that I could get sued by someone w/o insurance i should probably insure against this right?

Homeowners Insurance: : I have a condo that I bought for 280k in 2009 that is currently rented out and I have H06 insurance on this. The annual premium is $175 and there is a $1,000 deductible and it covers:
Building Property $25,000
Personal Property - $2,000
Loss of Rents - Actual Loss Sustained

Business Liability $300,000/$600,000
Premises Medical Payments - $5,000

Thoughts: I honestly don't know much about homeowners insurance but it seems like my coverage would be adequate??

Renter's Insurance
I currently don't have any but it's something I've thought about. I know it's cheap but does it make sense? No need to spend money if I don't have to.

Umbrella Policy
I don't have an umbrella policy either, but I've been reading a lot about them lately. I think maybe once my net worth gets a little higher or in 10 years when we have all my fiancee's debt paid off umbrella policy might make more sense.

I see a lot of people saying that you should have coverage equal to your net worth but I don't really understand why. What does your NW have to do with how much you'll be getting sued for. If your net work is 500k and you carry 500k policy, if you get sued for a million now your entire NW is at risk right?

MattE
Posts: 123
Joined: Sun Mar 04, 2012 8:44 pm

Re: Reviewing my insurance now that I have money

Post by MattE » Tue Apr 08, 2014 12:52 pm

Renter's insurance is one of those things that's so cheap for the level of protection it provides that not having it is borderline negligent.

placeholder
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Re: Reviewing my insurance now that I have money

Post by placeholder » Tue Apr 08, 2014 1:27 pm

You should really examine your exposure as 401k money is not attachable in most lawsuits/bankruptcies and your Roth money might not be depending on state.

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Quasimodo
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Re: Reviewing my insurance now that I have money

Post by Quasimodo » Tue Apr 08, 2014 2:01 pm

An umbrella liability premium just isn’t that significant (ours is $105 a year for a$1M limit), and along with the insurance limits you get a team of insurance attorneys seriously interested in defending you against a lawsuit for a fraction of the cost you would have to pay to hire lawyers yourself. With the auto insurance limits you described, you’d probably have to increase them to qualify for an umbrella liability policy. My personal opinion is that it’s worth doing.

Some reasons why we carry automobile medical payments coverage are that the medical payments limit applies separately for each person in our car, including non-family members. A friend or his child who were injured as passengers in our car get their medical expenses paid without having to sue, because determining who is at fault in an accident is not required for this coverage. That could save everyone involved out-of-pocket expenses while waiting for a decision by a court or liability insurer. Med pay could save the expense of a health insurance deductible or copay. Our $10,000 automobile medical payments coverage costs $68 a year.

Unfortunately, there are some uninsured motorists on the roads. With this coverage I can make sure people in my car at least have the same dollar amount of coverage we carry to pay for injuries to someone else.We have uninsured motorists coverage for the same limits as our automobile bodily injury liability coverage ($300,000). UM coverage is broader than medical insurance in the kinds of bills it will pay, passengers in your car are covered - not just family members, there is no deductible or copay as there usually is with medical insurance, and you aren't limited to in-network medical facilities as you are with an HMO. Our UM premium is $49 every six months. In the context of car expenses, this seems cheap insurance to me.

My wife and I are retired and of modest income. I believe the peace of mind is worth it for us to have the above coverages, and I sincerely hope our premium goes to pay someone else’s claim. In the context of expenses for driving a car, the premiums are negligible, and would be worth paying even if they were higher.

I’m a retired business insurance underwriter, not in sales, and this is a personal opinion.

Good luck whatever you decide.

John
Many wealthy people are little more than janitors of their possessions. | | Frank Lloyd Wright, architect (1867-1959)

wholeinone04
Posts: 243
Joined: Thu May 27, 2010 12:45 pm
Location: California

Re: Reviewing my insurance now that I have money

Post by wholeinone04 » Tue Apr 08, 2014 5:08 pm

Quasimodo wrote:An umbrella liability premium just isn’t that significant (ours is $105 a year for a$1M limit), and along with the insurance limits you get a team of insurance attorneys seriously interested in defending you against a lawsuit for a fraction of the cost you would have to pay to hire lawyers yourself. With the auto insurance limits you described, you’d probably have to increase them to qualify for an umbrella liability policy. My personal opinion is that it’s worth doing.


Good luck whatever you decide.

John
Appreciate the response, medical payments seems like double-double insurance(liability and regular healthcare). It's not a lot but I'm probably going to pass on it. If I'm not at fault, the other person/insurer should have to pay for it. If I am at fault, my liability will cover it. Either way, not a huge deal compared to the rest of the items IMO.

Again, if someone hits me and they're uninsured I don't see why I should carry insurance to pay for my medical bills for myself(in addition to someone else) when I have health insurance and so does everyone else now thanks to Obamacare.

This might all be moot though since if I go with an umbrella policy I bet they would make me up those limits anyways haha. I'm definitely going to look into an umbrella policy but just wanted to see what other people think is appropriate for a younger person with increasing NW.

Still don't understand why people carry insurance equal to their NW though..

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interplanetjanet
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Location: the wilds of central California

Re: Reviewing my insurance now that I have money

Post by interplanetjanet » Tue Apr 08, 2014 6:03 pm

wholeinone04 wrote:Appreciate the response, medical payments seems like double-double insurance(liability and regular healthcare). It's not a lot but I'm probably going to pass on it. If I'm not at fault, the other person/insurer should have to pay for it. If I am at fault, my liability will cover it. Either way, not a huge deal compared to the rest of the items IMO.
Probably not unreasonable. Medpay usually has a low limit anyway.
Again, if someone hits me and they're uninsured I don't see why I should carry insurance to pay for my medical bills for myself(in addition to someone else) when I have health insurance and so does everyone else now thanks to Obamacare.
Well...I am certain that there are going to be a number of people out there who will be uncovered for a while. That said, the point of uninsured/underinsured motorist insurance isn't just to cover medical expenses, it's to "make you whole" - this includes lost wages from being out of work, pain and suffering, and compensation for lifelong issues (say you lose a hand or something in an accident).

If you have good individual disability insurance then a lot of this need may go away. I don't and can't get it, so I carry plenty of UI.
This might all be moot though since if I go with an umbrella policy I bet they would make me up those limits anyways haha. I'm definitely going to look into an umbrella policy but just wanted to see what other people think is appropriate for a younger person with increasing NW.

Still don't understand why people carry insurance equal to their NW though..
My NW is a bit lower than yours and I carry an umbrella. It's cheap and lets me sleep at night. I think that the idea behind carrying insurance roughly at parity with NW is to make collecting at the insurance limits more tempting to lawyers - sure, they could squeeze harder and go to trial, but it makes a lot more sense in most cases to take a payout of $X immediately than to possibly collect up to $2X in a year or two.

Part of the reason I carry an umbrella is to get the help of high powered lawyers if push comes to shove. When the insurance company has >$1M on the line, they are going to want to defend vigorously.

cowboysFan
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Re: Reviewing my insurance now that I have money

Post by cowboysFan » Tue Apr 08, 2014 11:06 pm

interplanetjanet wrote: My NW is a bit lower than yours and I carry an umbrella. It's cheap and lets me sleep at night. I think that the idea behind carrying insurance roughly at parity with NW is to make collecting at the insurance limits more tempting to lawyers - sure, they could squeeze harder and go to trial, but it makes a lot more sense in most cases to take a payout of $X immediately than to possibly collect up to $2X in a year or two.
Do plaintiff's attorney even know your net worth before they have a verdict and try to collect? I don't understand how they can find out your net worth before trial.

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