Umbrella excess liability policy

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pasour
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Umbrella excess liability policy

Post by pasour » Fri Apr 25, 2014 1:56 pm

How large should one's liability policy be relative to one's new worth?...are all owned assets (incuding tax-sheltered investments) at risk?

kenner
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Re: Umbrella excess liability policy

Post by kenner » Fri Apr 25, 2014 2:39 pm

In my opinion, after nearly 40 years of handling cases involving tragic personal injury and death, there is no easy answer to this question. Moreover, the answer will be different from individual to individual and from state to state (the applicable laws are wildly different).

It is my fervent hope that no one will ever be accused of causing a tragic injury. But sometimes accidents happen.

The notion that anyone should gauge the need for umbrella coverage based on their net worth is misplaced. In a case worth $10 million, what good is it to have a $1 million umbrella when net worth is $2 million and certain assets are at risk? How does someone react to a $10 million judgment against them?

In another recent post, it was stated that the best measure of needed umbrella coverage is determined by the "sleep test".

I agree with this, assuming the insured person makes an informed decision based on all knowable legal and financial factors.
Last edited by kenner on Fri Apr 25, 2014 2:49 pm, edited 1 time in total.

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TheTimeLord
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Re: Umbrella excess liability policy

Post by TheTimeLord » Fri Apr 25, 2014 2:42 pm

What logic are you using to relate it to Net Worth? It protects you against certain size settlement, it doesn't insure your net worth. Granted those with higher net worth's have more to lose but can also afford some out of pocket.
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Drain
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Re: Umbrella excess liability policy

Post by Drain » Fri Apr 25, 2014 2:49 pm

kenner wrote:In another recent post, it was stated that the best measure of needed umbrella coverage is determined by the "sleep test".

I agree with this.
So someone who is naturally calmer, or someone who just isn't interested in personal finance and therefore doesn't worry much, is at less risk than someone who does worry? Or are you saying that if the risk doesn't stress me out, I don't need umbrella insurance?
Darin

kenner
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Re: Umbrella excess liability policy

Post by kenner » Fri Apr 25, 2014 3:07 pm

Drain wrote:
kenner wrote:In another recent post, it was stated that the best measure of needed umbrella coverage is determined by the "sleep test".

I agree with this.
So someone who is naturally calmer, or someone who just isn't interested in personal finance and therefore doesn't worry much, is at less risk than someone who does worry?

Wrong! Anyone who evinces that attitude is probably at greater risk. The purpose of umbrella coverage, in my opinion, is two-fold: protect the guilty party from undo financial harm and compensate the victim from financial disaster. Hundreds of years of society confirm that both goals are desirable.

Or are you saying that if the risk doesn't stress me out, I don't need umbrella insurance?
Only you can decide whether you wish to protect your family's wealth and to compensate innocent victims for your misdeeds.

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Re: Umbrella excess liability policy

Post by Grt2bOutdoors » Fri Apr 25, 2014 3:08 pm

Drain wrote:
kenner wrote:In another recent post, it was stated that the best measure of needed umbrella coverage is determined by the "sleep test".

I agree with this.
So someone who is naturally calmer, or someone who just isn't interested in personal finance and therefore doesn't worry much, is at less risk than someone who does worry? Or are you saying that if the risk doesn't stress me out, I don't need umbrella insurance?
I'd say most people's umbrella will never come into play. However, when rain clouds appear on a particularly sunny day out of nowhere, it pays to have that umbrella handy. For me to sleep, the minimum I need is $1 million, if my net worth goes up I will revisit that limit - accidents do happen and we do live in a litigious society.
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Re: Umbrella excess liability policy

Post by Grt2bOutdoors » Fri Apr 25, 2014 3:10 pm

kenner wrote:
Drain wrote:
kenner wrote:In another recent post, it was stated that the best measure of needed umbrella coverage is determined by the "sleep test".

I agree with this.
So someone who is naturally calmer, or someone who just isn't interested in personal finance and therefore doesn't worry much, is at less risk than someone who does worry?

Wrong! Anyone who evinces that attitude is probably at greater risk. The purpose of umbrella coverage, in my opinion, is two-fold: protect the guilty party from undo financial harm and compensate the victim from financial disaster. Hundreds of years of society confirm that both goals are desirable.

Or are you saying that if the risk doesn't stress me out, I don't need umbrella insurance?
Only you can decide whether you wish to protect your family's wealth and to compensate innocent victims for your misdeeds.
Assuming a person has standard liability coverage and umbrella coverage, then in a full payout scenario - both limits would be tapped, would it not? In your experience, what is the standard umbrella coverage amount you've seen and has there been any instances where insurance coverage was not sufficient to settle case without liquidation or transference of assets to plaintiff?
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions

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Re: Umbrella excess liability policy

Post by Toons » Fri Apr 25, 2014 3:11 pm

Grt2bOutdoors wrote:
Drain wrote:
kenner wrote:In another recent post, it was stated that the best measure of needed umbrella coverage is determined by the "sleep test".

I agree with this.
So someone who is naturally calmer, or someone who just isn't interested in personal finance and therefore doesn't worry much, is at less risk than someone who does worry? Or are you saying that if the risk doesn't stress me out, I don't need umbrella insurance?


I'd say most people's umbrella will never come into play. However, when rain clouds appear on a particularly sunny day out of nowhere, it pays to have that umbrella handy. For me to sleep, the minimum I need is $1 million, if my net worth goes up I will revisit that limit - accidents do happen and we do live in a litigious society.
+1 :happy
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Re: Umbrella excess liability policy

Post by davegreen10 » Fri Apr 25, 2014 3:14 pm

Our net worth is $500k. We carry a $1million policy even though most of our assets are in protected (CA) retirement accounts. An umbrella policy gives me peace of mind for a very inexpensive price.

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Re: Umbrella excess liability policy

Post by Drain » Fri Apr 25, 2014 3:20 pm

kenner wrote:
Drain wrote:Only you can decide whether you wish to protect your family's wealth and to compensate innocent victims for your misdeeds.
But the whole question is, how does one make this decision? Invoking the sleep test is somewhat circular and certainly not helpful to someone who doesn't know where to start.

One's baseline estimate for how much umbrella insurance to buy needs to be driven by something other than emotion. If more insurance is required beyond that to allow sleep, okay, but the baseline number should not be related to sleep.

Yes, I know, there just isn't a good set of guidelines out there. I mentioned in another thread that this was one of the really tough insurance issues--not the most crucial, but difficult. The only one I think is harder is UM/UIM.
Darin

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Re: Umbrella excess liability policy

Post by kenner » Fri Apr 25, 2014 3:21 pm

Grt2bOutdoors wrote: I'd say most people's umbrella will never come into play. However, when rain clouds appear on a particularly sunny day out of nowhere, it pays to have that umbrella handy. For me to sleep, the minimum I need is $1 million, if my net worth goes up I will revisit that limit - accidents do happen and we do live in a litigious society.
I agree. There are certain types of insurance that we hope we will never have to use. Fire, health, dental, theft, etc. But we do not have total control over life's vicissitudes so we resort to actuaries/insurance to protect our families.

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Toons
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Re: Umbrella excess liability policy

Post by Toons » Fri Apr 25, 2014 3:24 pm

kenner wrote:
Grt2bOutdoors wrote: I'd say most people's umbrella will never come into play. However, when rain clouds appear on a particularly sunny day out of nowhere, it pays to have that umbrella handy. For me to sleep, the minimum I need is $1 million, if my net worth goes up I will revisit that limit - accidents do happen and we do live in a litigious society.
I agree. There are certain types of insurance that we hope we will never have to use. Fire, health, dental, theft, etc. But we do not have total control over life's vicissitudes so we resort to actuaries/insurance to protect our families.
Every year my umbrella policy comes up for renewal about this time and I find myself wasting energy debating whether I will ever "need" it or not ,should I cancel,,etc.You last sentence Sums it up though. :happy
"One does not accumulate but eliminate. It is not daily increase but daily decrease. The height of cultivation always runs to simplicity" –Bruce Lee

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Re: Umbrella excess liability policy

Post by Grt2bOutdoors » Fri Apr 25, 2014 3:28 pm

Toons wrote:
kenner wrote:
Grt2bOutdoors wrote: I'd say most people's umbrella will never come into play. However, when rain clouds appear on a particularly sunny day out of nowhere, it pays to have that umbrella handy. For me to sleep, the minimum I need is $1 million, if my net worth goes up I will revisit that limit - accidents do happen and we do live in a litigious society.
I agree. There are certain types of insurance that we hope we will never have to use. Fire, health, dental, theft, etc. But we do not have total control over life's vicissitudes so we resort to actuaries/insurance to protect our families.
Every year my umbrella policy comes up for renewal about this time and I find myself wasting energy debating whether I will ever "need" it or not ,should I cancel,,etc.You last sentence Sums it up though. :happy
Eh...I use my health and dental insurance annually.

I have the opposite thought when I get the bill, mine revolves around whether or not I should raise the limits. Then I add up all my policy liability limits plus the umbrella and deduct my ERISA protected values and say "I'm okay for now". Whew!
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions

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Re: Umbrella excess liability policy

Post by kenner » Fri Apr 25, 2014 3:57 pm

Grt2bOutdoors wrote: Assuming a person has standard liability coverage and umbrella coverage, then in a full payout scenario - both limits would be tapped, would it not? In your experience, what is the standard umbrella coverage amount you've seen and has there been any instances where insurance coverage was not sufficient to settle case without liquidation or transference of assets to plaintiff?
First and foremost, I'm an attorney in Florida and as such I cannot pretend to know the details of any other state's laws.

But I hope to be helpful to the members of this forum by expressing thoughts that are generally taught in law school, but these ideas may not be applicable in your state.

Grt2bOutdoors,

The answer to your first question is Yes.

As to question 2, the answer is that an extremely small number of people (maybe 5%) carry umbrella coverage. For those individuals who have umbrellas, $1 mill is typical. Major U. S. corporations carry $100 million or more, with the coverage/exposure spread internationally.

I have obtained judgments against individual defendants. Typically, they declare bankruptcy to avoid payment.

There are many reasons why I love this forum. One of the things I admire is the fact that the participants here are among the most considerate people I have encountered.

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Re: Umbrella excess liability policy

Post by Boglegrappler » Fri Apr 25, 2014 4:07 pm

What logic are you using to relate it to Net Worth? It protects you against certain size settlement, it doesn't insure your net worth. Granted those with higher net worth's have more to lose but can also afford some out of pocket.
It always seemed very logical to me to relate your coverage to your net worth. If have a 500k net worth and someone wins a judgement against me for $3 million, I simply declare bankruptcy. I'll probably lose my net worth under the court settlement.

If I have a $5million net worth, and someone wins a $5 million settlement, I'm broke again. But if I have an umbrella policy for $5mm, then they don't receive any of my money until the award exceeds my insurance coverage. Isn't this the whole point of insurance?.....to protect something that you own (earnings power, assets, etc) from peril? If you don't own it there's no reason to protect it. Plus, the higher your net worth, the bigger the target you are these days.

have obtained judgments against individual defendants. Typically, they declare bankruptcy to avoid payment.
Doesn't that work only if they have insufficient assets to begin with? If I have a million in assets (aside from my house, which in FL is exempt, I think) and you win a judgement against me, I can't escape paying it by filing bankruptcy, can I? And if that is the case, why does a lawyer sue them in the first place, other than to not appear to be pursuing only the deep pocketed bystanders?

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Re: Umbrella excess liability policy

Post by kenner » Fri Apr 25, 2014 4:20 pm

Drain wrote: Yes, I know, there just isn't a good set of guidelines out there. I mentioned in another thread that this was one of the really tough insurance issues--not the most crucial, but difficult. The only one I think is harder is UM/UIM.
Drain,

I'll start with the easiest question of all: Uninsured/Underinsured Coverage? Buy the most you can afford. I don't know what state you live in, but in some states about 30% of automobile owners/drivers have no insurance or absolute minimum insurance. UM coverage directly helps you, your family and your passengers.

You are right, there is no easy answer to how much umbrella insurance coverage is correct. I tell my clients to imagine a court ordering them to pay a $10 mill judgment; how would they respond? In my state, Florida, they could buy a $50 mill homestead property that is totally exempt from execution, no one can touch it. I don't think all states offer such protection from legal judgments.

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Re: Umbrella excess liability policy

Post by freddie » Fri Apr 25, 2014 5:05 pm

It makes no sense to use your net worth. If your willing to go bankrupt over a 1 million dollar lawsuit, why aren't you willing to bankrupt over a 500k one? You either want to protect your 500k or you don't. The problem of course is that total protection is unaffordable. There are 20 million + cases where an auto accident killed a couple of people and left the other 2 crippled. 3-4 million gets you covered in 99% of cases (which are already rare to begin with) and if one of the other cases happens you better have a real expensive house and retirement accounts in the right state.
Boglegrappler wrote:
What logic are you using to relate it to Net Worth? It protects you against certain size settlement, it doesn't insure your net worth. Granted those with higher net worth's have more to lose but can also afford some out of pocket.
It always seemed very logical to me to relate your coverage to your net worth. If have a 500k net worth and someone wins a judgement against me for $3 million, I simply declare bankruptcy. I'll probably lose my net worth under the court settlement.

If I have a $5million net worth, and someone wins a $5 million settlement, I'm broke again. But if I have an umbrella policy for $5mm, then they don't receive any of my money until the award exceeds my insurance coverage. Isn't this the whole point of insurance?.....to protect something that you own (earnings power, assets, etc) from peril? If you don't own it there's no reason to protect it. Plus, the higher your net worth, the bigger the target you are these days.

have obtained judgments against individual defendants. Typically, they declare bankruptcy to avoid payment.
Doesn't that work only if they have insufficient assets to begin with? If I have a million in assets (aside from my house, which in FL is exempt, I think) and you win a judgement against me, I can't escape paying it by filing bankruptcy, can I? And if that is the case, why does a lawyer sue them in the first place, other than to not appear to be pursuing only the deep pocketed bystanders?

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Re: Umbrella excess liability policy

Post by kenner » Fri Apr 25, 2014 5:24 pm

freddie wrote: why does a lawyer sue them in the first place, other than to not appear to be pursuing only the deep pocketed bystanders?
Can't respond to this because I have never heard of a "bystander" being sued. What's your legal theory?

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Re: Umbrella excess liability policy

Post by cowboysFan » Fri Apr 25, 2014 5:24 pm

kenner wrote:
Grt2bOutdoors wrote: Assuming a person has standard liability coverage and umbrella coverage, then in a full payout scenario - both limits would be tapped, would it not? In your experience, what is the standard umbrella coverage amount you've seen and has there been any instances where insurance coverage was not sufficient to settle case without liquidation or transference of assets to plaintiff?
First and foremost, I'm an attorney in Florida and as such I cannot pretend to know the details of any other state's laws.

But I hope to be helpful to the members of this forum by expressing thoughts that are generally taught in law school, but these ideas may not be applicable in your state.

Grt2bOutdoors,

The answer to your first question is Yes.

As to question 2, the answer is that an extremely small number of people (maybe 5%) carry umbrella coverage. For those individuals who have umbrellas, $1 mill is typical. Major U. S. corporations carry $100 million or more, with the coverage/exposure spread internationally.

I have obtained judgments against individual defendants. Typically, they declare bankruptcy to avoid payment.

There are many reasons why I love this forum. One of the things I admire is the fact that the participants here are among the most considerate people I have encountered.
Kenner,

On another thread you stated: "I have never collected even one penny from an individual, haven't even tried to." I'm confused as to whether you've ever collected from an individual's personal assets in an auto accident case or not.

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Re: Umbrella excess liability policy

Post by kenner » Fri Apr 25, 2014 5:50 pm

I have not; but I have often reduced fees in order to benefit my clients. Most individual defendants will not or cannot honor their legal obligations.

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Re: Umbrella excess liability policy

Post by Drain » Fri Apr 25, 2014 6:23 pm

kenner wrote:
Drain wrote:I'll start with the easiest question of all: Uninsured/Underinsured Coverage?

If you believe this is the easiest question of all, then you haven't gotten involved in a serious online debate over it. :)

Buy the most you can afford.
Aside: Saying someone should buy the most they can afford is not helpful. There is no particular amount I can afford or not afford, within realistic bounds of what the insurance is going to cost. If the coverage were important enough (it isn't), I could pay $25K annually for $100K of UM/UIM. I'd have to forgo lots of other things, but I could swing it. Thankfully, it's not remotely that expensive, but the point is that the notion of affordability is meaningless here. It's a trade-off between discretionary expenses, not a choice between insurance and food.

For the record, I have the maximum available to me without buying a special umbrella policy to add more.
I don't know what state you live in, but in some states about 30% of automobile owners/drivers have no insurance or absolute minimum insurance. UM coverage directly helps you, your family and your passengers.
The percentage of drivers in my area without enough insurance likely influences the premium, so it doesn't matter. The general point you're making is that there are uninsured and underinsured drivers out there, so I need protection. Fine, but the issue is whether the coverage has enough actual value for a given individual or family. Yes, there is a risk that something will happen that will cause it to kick in, but are the benefits worth the premium? That answer may vary widely, depending on personal circumstances and perspectives.

Let's use my case as an example. I have good health insurance, so my family is pretty well covered for medical costs. My wife and I also have some disability coverage--not as much as we'd like, but as much as we can have as feds. (Other reasons, too, but they're not important here.) And whether or not it makes sense to buy insurance for pain and suffering is a matter of philosophy. Oh, and if insuring for pain and suffering is the main reason to have the coverage, then there is the question of how much my insurer will pay me without me having to sue for it.

So this is not clear-cut, or at least I have yet to see a conclusive case made either for or against. Both sides make good arguments. I have UM/UIM coverage with high limits because it's not super-expensive and I'd rather be safe than sorry, as I wrote elsewhere. But I"m not at all convinced it's worthwhile for me.
You are right, there is no easy answer to how much umbrella insurance coverage is correct. I tell my clients to imagine a court ordering them to pay a $10 mill judgment; how would they respond?['/quote]
Unless you're suggesting that everyone should have a $10M umbrella policy, I don't see your point. As I said earlier, umbrella policy is an easier sell, in some sense, than UM/UIM, because almost all of us can agree that it would have substantial value for us. The hard part is knowing how much we should get. With UM/UIM, it's not even clear that it has that much value for some people, so the decision is not just the nearly arbitrary choice of how much to buy, but also whether any is worth buying at all. At least with umbrella, we know it's worth having--we just don't know if we should have $1M, $2M, $5M, $10M...or, if our need is low, whether we should stick with $0M. But even those people who rationally choose not to buy umbrella would concur that it would have value for them. They'd just prefer to be able to buy it in smaller chunks.
In my state, Florida, they could buy a $50 mill homestead property that is totally exempt from execution, no one can touch it. I don't think all states offer such protection from legal judgments.
No homestead provision in my state, and I believe most states don't have one.
Darin

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Re: Umbrella excess liability policy

Post by cowboysFan » Fri Apr 25, 2014 6:46 pm

Drain wrote:
kenner wrote:
Drain wrote:I'll start with the easiest question of all: Uninsured/Underinsured Coverage?

If you believe this is the easiest question of all, then you haven't gotten involved in a serious online debate over it. :)

Buy the most you can afford.
Aside: Saying someone should buy the most they can afford is not helpful. There is no particular amount I can afford or not afford, within realistic bounds of what the insurance is going to cost. If the coverage were important enough (it isn't), I could pay $25K annually for $100K of UM/UIM. I'd have to forgo lots of other things, but I could swing it. Thankfully, it's not remotely that expensive, but the point is that the notion of affordability is meaningless here. It's a trade-off between discretionary expenses, not a choice between insurance and food.
I look at UM/UIM as supplementary disability insurance. If you were permanently disabled in a car wreck and your long term disability policy only pays out 60% of your income, then how large of a settlement would you need to make you and your family at least economically whole. What's the present value of 40% of all your future paychecks? Then maybe double that, because your lawyer probably gets a third of the settlement and your health insurance company might get part of the settlement through subrogation.

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Re: Umbrella excess liability policy

Post by kenner » Fri Apr 25, 2014 7:14 pm

Darin,

Please post some links to the internet debates over the desirability (or not) of having UM coverage.

I see UM coverage as being the primary source of protecting my family from irresponsible automobile drivers/owners.

Thanks,
Ken

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Re: Umbrella excess liability policy

Post by cfs » Fri Apr 25, 2014 7:35 pm

Good conversation

And here is a question for those with knowledge of umbrella policy in the state of California and Utah for $1m -- what is the average monthly cost?

Thanks in advance.

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Re: Umbrella excess liability policy

Post by Drain » Fri Apr 25, 2014 7:41 pm

cowboysFan wrote:I look at UM/UIM as supplementary disability insurance. If you were permanently disabled in a car wreck and your long term disability policy only pays out 60% of your income, then how large of a settlement would you need to make you and your family at least economically whole.
Here's an example of insurance philosophy. Do I want to buy enough disability insurance so as to replace 100 percent of our income? For me, the answer is no. I'd want just enough insurance to prevent financial hardship. Others may feel otherwise.

As it happens, our disability coverage is only for a bit over 40% of our incomes, so yeah, I'd like to supplement that for a while. But I don't know how easy it is to convince my own insurance company to pay me that money.
What's the present value of 40% of all your future paychecks?[/quote[
A lot, but I ask again: Do I want to pay the premiums to replace all that? And let's say the amount is $1M, just to pick a number. Does that mean I want $1M of UM/UIM?
Then maybe double that, because your lawyer probably gets a third of the settlement and your health insurance company might get part of the settlement through subrogation.
Exactly. So I'm paying for $X of coverage, and the policy is priced for $X, yet the best case is that I get $(2/3)X. That doesn't sound like good value to me, even if the general idea of the benefit is theoretically appealing to me. I get to keep only 2/3 of the value I'm paying for.
Darin

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Re: Umbrella excess liability policy

Post by Drain » Fri Apr 25, 2014 7:42 pm

kenner wrote:Please post some links to the internet debates over the desirability (or not) of having UM coverage.
Oh, just search Bogleheads and FatWallet Finance. You'll find a bunch of them. But really, I think we're doing fine here as it is.
Darin

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Re: Umbrella excess liability policy

Post by ualdriver » Fri Apr 25, 2014 8:06 pm

After having read many threads/articles like this one, I'm still at a loss. If I don't base my umbrella coverage on my net worth, then I guess I would have to base the coverage upon what some future legal claim against me would look like.

So if I am sued for some sort of wrongdoing, will I be sued for MORE once they see that I have an umbrella policy that covers X millions of dollars, so that no matter how much coverage I have, they'll just sue me for more? If a jury knows that I have X millions dollars of coverage, are they more likely to award a large sum of money? Will they take pity on me if I come across as a nice guy who made an honest mistake and only make an award equal to the value of my umbrella/insurance coverage?

Further, what is a "typical" award against a defendant, if there is such a thing? I always imagine that if I were to be sued for a large amount of money, it would likely be due to an auto accident. If I'm texting and I run a stop sign and kill a family of 4, what does that legal award look like? What if it was an honest error, it was slippery outside, I slide through the stop sign, and I kill that family. What does that amount look like? Or is it a waste of time to determine what that award would look like because if the plantiffs find out I have a $10M umbrella policy, they'll just sue me for $10M + whatever they think my net worth is?

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Re: Umbrella excess liability policy

Post by kenner » Fri Apr 25, 2014 8:41 pm

Drain wrote:
kenner wrote:Please post some links to the internet debates over the desirability (or not) of having UM coverage.
Oh, just search Bogleheads and FatWallet Finance. You'll find a bunch of them. But really, I think we're doing fine here as it is.
Please excuse my ignorance. Never before have I encountered anyone who did not want to insure his/her family to the maximum extent feasible.

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Re: Umbrella excess liability policy

Post by kenner » Fri Apr 25, 2014 9:27 pm

ualdriver wrote:After having read many threads/articles like this one, I'm still at a loss. If I don't base my umbrella coverage on my net worth, then I guess I would have to base the coverage upon what some future legal claim against me would look like.

Correct. How would you respond to a massive judgment against you?

Please note: It is extremely unlikely that anyone who is responsible enough to participate in this forum will ever have to defend a massive lawsuit.


So if I am sued for some sort of wrongdoing, will I be sued for MORE once they see that I have an umbrella policy that covers X millions of dollars, so that no matter how much coverage I have, they'll just sue me for more?

Possibly, depends on the value of the underlying claims, the plaintiff's attitude and the plaintiff's attorney.


If a jury knows that I have X millions dollars of coverage, are they more likely to award a large sum of money?

I can only speak for Florida law. But in Florida the jury never learns the applicable policy limits.

Will they take pity on me if I come across as a nice guy who made an honest mistake and only make an award equal to the value of my umbrella/insurance coverage?

Juries tend to reward the "good guy", but they won't know policy limits (at least not in Florida).


Further, what is a "typical" award against a defendant, if there is such a thing?

No such thing.

I always imagine that if I were to be sued for a large amount of money, it would likely be due to an auto accident. If I'm texting and I run a stop sign and kill a family of 4, what does that legal award look like? What if it was an honest error, it was slippery outside, I slide through the stop sign, and I kill that family. What does that amount look like?

Way too many variables to assess.


Or is it a waste of time to determine what that award would look like because if the plantiffs find out I have a $10M umbrella policy, they'll just sue me for $10M + whatever they think my net worth is?

This depends on the client, the lawyer and state law. No defendant has control of these variables.

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Re: Umbrella excess liability policy

Post by kenner » Fri Apr 25, 2014 10:34 pm

cowboysFan wrote:
kenner wrote:
Grt2bOutdoors wrote: Assuming a person has standard liability coverage and umbrella coverage, then in a full payout scenario - both limits would be tapped, would it not? In your experience, what is the standard umbrella coverage amount you've seen and has there been any instances where insurance coverage was not sufficient to settle case without liquidation or transference of assets to plaintiff?
First and foremost, I'm an attorney in Florida and as such I cannot pretend to know the details of any other state's laws.

But I hope to be helpful to the members of this forum by expressing thoughts that are generally taught in law school, but these ideas may not be applicable in your state.

Grt2bOutdoors,

The answer to your first question is Yes.

As to question 2, the answer is that an extremely small number of people (maybe 5%) carry umbrella coverage. For those individuals who have umbrellas, $1 mill is typical. Major U. S. corporations carry $100 million or more, with the coverage/exposure spread internationally.

I have obtained judgments against individual defendants. Typically, they declare bankruptcy to avoid payment.

There are many reasons why I love this forum. One of the things I admire is the fact that the participants here are among the most considerate people I have encountered.
Kenner,

On another thread you stated: "I have never collected even one penny from an individual, haven't even tried to." I'm confused as to whether you've ever collected from an individual's personal assets in an auto accident case or not.
Had a few moments to review old posts and realized CowboysFan might have a point. My job as plaintiff's counsel is to obtain a result that is optimal for my client. Sometimes that requires obtaining a legal judgment.

I do not pursue individual judgments, I refer that to other (collection) experts. I have filed time-sensitive legal documents to preserve my client's rights until new counsel could get up to speed. Maybe CowboysFan will explain why protecting a client's rights is a bad thing.

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Re: Umbrella excess liability policy

Post by cowboysFan » Fri Apr 25, 2014 10:47 pm

kenner wrote:
Had a few moments to review old posts and realized CowboysFan might have a point. My job as plaintiff's counsel is to obtain a result that is optimal for my client. Sometimes that requires obtaining a legal judgment.

I do not pursue individual judgments, I refer that to other (collection) experts. I have filed time-sensitive legal documents to preserve my client's rights until new counsel could get up to speed. Maybe CowboysFan will explain why protecting a client's rights is a bad thing.
My view on umbrella insurance, as discussed in other threads, is that multi-million dollar jury verdicts are far rarer than most people on here seem to think. My question was really trying to just understand what you meant. So if I understand correctly, you have got excess judgments against individual defendants in auto accidents before, but another lawyer does the collection. After the other lawyer collected on the personal assets of the defendant, the recovered amounts were split between you, the other lawyer, and the client in some percentage fashion.

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Re: Umbrella excess liability policy

Post by kenner » Fri Apr 25, 2014 11:05 pm

cowboysFan wrote:
kenner wrote: My view on umbrella insurance, as discussed in other threads, is that multi-million dollar jury verdicts are far rarer than most people on here seem to think.

Agreed.

My question was really trying to just understand what you meant. So if I understand correctly, you have got excess judgments against individual defendants in auto accidents before, but another lawyer does the collection. After the other lawyer collected on the personal assets of the defendant, the recovered amounts were split between you, the other lawyer, and the client in some percentage fashion.
All disbursements are made according to a contract approved by the state bar association and agreed to by the client, sometimes signed years before the final outcome. I don't know if you are familiar with jury verdicts, but sometimes verdicts exceed liability insurance limits.

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Re: Umbrella excess liability policy

Post by placeholder » Sat Apr 26, 2014 12:15 am

kenner wrote:Never before have I encountered anyone who did not want to insure his/her family to the maximum extent feasible.
This is one of those statements that makes little sense as you don't define "maximum extent" or "feasible" because most of use could spend tens of thousands on insurance each year if desired.

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Re: Umbrella excess liability policy

Post by Professor Emeritus » Sat Apr 26, 2014 1:03 am

kenner wrote:
freddie wrote: why does a lawyer sue them in the first place, other than to not appear to be pursuing only the deep pocketed bystanders?
Can't respond to this because I have never heard of a "bystander" being sued. What's your legal theory?
I think that comment was not made by freddie but is in a nested quote in freddie's post

On the substantive point"bystander" is a common term used by those who do not understand the nature of negligence liability.
The term is not used for casual observers
The people using "bystander" often are referring to defendants whose passive pre disaster action enabled the actively negligent (or intentional) actor to cause injury.

as an example The term has frequently been thrown around in the Penn State /Paterno scandal

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Re: Umbrella excess liability policy

Post by Jack » Sat Apr 26, 2014 1:08 am

Since a million dollars of home insurance costs roughly 10 times as much as a million dollars of umbrella insurance, I figure the insurance company must know that I'm about 10 times more likely to burn my house to the ground than to run over someone in the street.

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Re: Umbrella excess liability policy

Post by Nuvoletta » Sat Apr 26, 2014 1:35 am

Grt2bOutdoors wrote:I'd say most people's umbrella will never come into play. However, when rain clouds appear on a particularly sunny day out of nowhere, it pays to have that umbrella handy. For me to sleep, the minimum I need is $1 million, if my net worth goes up I will revisit that limit - accidents do happen and we do live in a litigious society.
+1 Then I saw that the price of the $2M was only marginally higher than $1M, so I went for that on the idea that I could sleep even better (not working tonight but that's another issue, haha).

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Re: Umbrella excess liability policy

Post by kenner » Sat Apr 26, 2014 7:06 am

placeholder wrote:
kenner wrote:Never before have I encountered anyone who did not want to insure his/her family to the maximum extent feasible.
This is one of those statements that makes little sense as you don't define "maximum extent" or "feasible" because most of use could spend tens of thousands on insurance each year if desired.
I have confidence that the vast majority of individuals participating in this forum are capable of defining for themselves what is feasible and maximal for their life situation.

Again, certain types of insurance are not purchased in the hope they will ever be used.

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Re: Umbrella excess liability policy

Post by kenner » Sat Apr 26, 2014 7:24 am

Professor Emeritus wrote:
kenner wrote:
freddie wrote: why does a lawyer sue them in the first place, other than to not appear to be pursuing only the deep pocketed bystanders?
Can't respond to this because I have never heard of a "bystander" being sued. What's your legal theory?
I think that comment was not made by freddie but is in a nested quote in freddie's post

On the substantive point"bystander" is a common term used by those who do not understand the nature of negligence liability.
The term is not used for casual observers
The people using "bystander" often are referring to defendants whose passive pre disaster action enabled the actively negligent (or intentional) actor to cause injury.

as an example The term has frequently been thrown around in the Penn State /Paterno scandal
Wow. I've never encountered this concept before, maybe because I've never handled criminal cases. You are right - in the negligence world (at least in my state) a bystander would be a witness not a defendant.

Thank you, Professor, for the explanation.

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Re: Umbrella excess liability policy

Post by Drain » Sat Apr 26, 2014 8:21 am

kenner wrote:
placeholder wrote:
kenner wrote:Never before have I encountered anyone who did not want to insure his/her family to the maximum extent feasible.
This is one of those statements that makes little sense as you don't define "maximum extent" or "feasible" because most of use could spend tens of thousands on insurance each year if desired.
I have confidence that the vast majority of individuals participating in this forum are capable of defining for themselves what is feasible and maximal for their life situation.
Um, doesn't this thread--not to mention all the past threads on the topic--clearly indicate that many individuals have difficulty coming up with these numbers? Speaking for myself, I cannot define these things.

As I said earlier, my choice is not between insurance and food. I can always buy more insurance if I become convinced it's a good idea. The choice is between insurance and other discretionary spending. So the notion of "what I can afford" or "what is feasible" is meaningless for me. Assuming that Bogleheads, as a group, are affluent relative to the general population, I am confident that I'm not alone in this.

What seems odd to me is that...well, I'd think that your clients, as a group, would also be relatively affluent, meaning that they'd be in more or less the same position I am on this. It is hard to understand how you would be so unfamiliar with my perspective.
Darin

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Re: Umbrella excess liability policy

Post by Call_Me_Op » Sat Apr 26, 2014 8:23 am

If a jury is not allowed to know your insurance limits but is given information on your assets, then it seems logical that your assets should play a role in determination of your insurance limits. I am assuming that juries, while considering damages, also have an interest in not driving the defendant into bankruptcy or poverty.
Best regards, -Op | | "In the middle of difficulty lies opportunity." Einstein

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Re: Umbrella excess liability policy

Post by kenner » Sat Apr 26, 2014 8:34 am

Call_Me_Op wrote:If a jury is not allowed to know your insurance limits but is given information on your assets, then it seems logical that your assets should play a role in determination of your insurance limits.
In Florida, juries are given no direct evidence whatsoever about a defendant's assets. They might look at a defendant and assume certain things, but there is zero evidence allowed at trial as to a defendants financial status.

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Re: Umbrella excess liability policy

Post by Call_Me_Op » Sat Apr 26, 2014 8:39 am

kenner wrote:
Call_Me_Op wrote:If a jury is not allowed to know your insurance limits but is given information on your assets, then it seems logical that your assets should play a role in determination of your insurance limits.
In Florida, juries are given no direct evidence whatsoever about a defendant's assets. They might look at a defendant and assume certain things, but there is zero evidence allowed at trial as to a defendants financial status.
Interesting and important point. Thanks Ken. I wonder if that's more or less universal across the states.

I also wonder if the fact that there is even a trial suggests that the defendant has money. After all, there's no point in suing a destitute defendant.
Best regards, -Op | | "In the middle of difficulty lies opportunity." Einstein

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Re: Umbrella excess liability policy

Post by kenner » Sat Apr 26, 2014 9:11 am

Darin,

Quite simply, there is no "one size fits all" answer to your question. The only correct answer is the one that fits your life circumstances based on all available knowledge that you have acquired in your lifetime.

Here's an example of real life: I represented a young lady who was taking her 2-year old son and 4-year daughter to a doctor appointment. She turned on her car's left hand turn signal and brought her car to a stop, waiting for oncoming traffic to clear so she could turn left.

Unfortunately, a car approached her from behind at 60 miles per hour. That car never slowed down and a violent collision occurred.

Her son was killed, her daughter suffered permanent brain damage and Mom suffered injuies that have rendered her a paraplegic. She is essentially bed-ridden for the rest of her life. She cannot even adjust her sleep position. She cannot walk, cannot cook food for her daughter, you can imagine what her life is like, can't you?

I have visited her at her home (she lives in a trailer) and in the hospital (she suffers from recurring bedsores; hospital medical staff requires that I wear full surgical attire when I visit her in order to limit the risk of infection. The stench of rotting human flesh is unbearable).

I could further elaborate, but I imagine you get the picture.

Perhaps you have life insurance. If so, you perhaps utilized some metric in deciding how much insurance you needed. Just use common sense and your life experience to arrive at a reasonable amount of other insurance to help make your family more comfortable in the event of a catastrophe.
Last edited by kenner on Sat Apr 26, 2014 10:10 am, edited 1 time in total.

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Re: Umbrella excess liability policy

Post by kenner » Sat Apr 26, 2014 9:20 am

Call_Me_Op wrote:
kenner wrote:
Call_Me_Op wrote:If a jury is not allowed to know your insurance limits but is given information on your assets, then it seems logical that your assets should play a role in determination of your insurance limits.
In Florida, juries are given no direct evidence whatsoever about a defendant's assets. They might look at a defendant and assume certain things, but there is zero evidence allowed at trial as to a defendants financial status.
Interesting and important point. Thanks Ken. I wonder if that's more or less universal across the states.

Not sure.

I also wonder if the fact that there is even a trial suggests that the defendant has money. After all, there's no point in suing a destitute defendant.
All judges tell all juries that their decisions must be based on the law and the evidence presented during the trial. But I am convinced that juries often consider "other things" in reaching a verdict.

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Re: Umbrella excess liability policy

Post by Drain » Sat Apr 26, 2014 10:10 am

kenner wrote:Quite simply, there is no "one size fits all" answer to your question. The only correct answer is the one that fits your life circumstances based on all available knowledge that you have acquired in your lifetime.
If it's so simple, you should be able to tell me a way I could use the available knowledge I have acquired in my lifetime.
Here's an example [...]
Your example doesn't help. I understand that stuff happens and that I may need liability or UM/UIM insurance one day. I also understand that the numbers can be large. So what? That doesn't tell me how much coverage I should have.
Perhaps you have life insurance. If so, you perhaps utilized some metric in deciding how much insurance you needed. Just use common sense and your life experience to arrive at a reasonable amount of other insurance to help make your family more comfortable in the event of a catastrphe.
No, it's not the same, and I have to say I find it a little disturbing that someone who presents himself as something of an expert (40 years in the business and all) apparently has never thought about thees issues before and doesn't seem to be aware that they exist.

With respect to life insurance, it's not that hard. There are still different philosophies and different life considerations, but the amount I'm estimating is easier to identify. In my case, I want enough life insurance so that (1) my wife can hire help for the kids while they're young and (2) the insurance can help make up for college savings they would otherwise have had. Someone else might have different objectives, but you pick your objectives and you estimate a number.

Umbrella and UM/UIM aren't like that. With those coverages, I'm trying to estimate what someone else might want from me. And I have to guess at probabilities I have no good way to guess at. Furthermore, UM/UIM has the additional problem of potentially being useful coverage but a bad value--kind of like LTCI might be in that regard. (To collect a larger sum of money, I may have to hire an attorney to get it for me, in which case I lose a third of the award and I maybe have to deal with whatever is required of me in court.)

Again, this is a topic that comes up repeatedly on this board and others, and there doesn't seem to be any consensus on what to do. It isn't just me. [OT comments removed by admin LadyGeek]
Darin

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Re: Umbrella excess liability policy

Post by kenner » Sat Apr 26, 2014 10:23 am

Drain wrote: [OT comments removed by admin LadyGeek]
[Response to OT comments removed by admin LadyGeek]

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Re: Umbrella excess liability policy

Post by cowboysFan » Sat Apr 26, 2014 10:28 am

Call_Me_Op wrote: I also wonder if the fact that there is even a trial suggests that the defendant has money. After all, there's no point in suing a destitute defendant.
I think that is mostly true, but when you dig into some of the truly catastrophic verdicts, there is often more than one defendant. For example, the plaintiff doesn't sue just the destitute driver, but caltrans for improper roadway construction and sometimes for good measure, the engineering company caltrans hired to design the road.

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Re: Umbrella excess liability policy

Post by Jack » Sat Apr 26, 2014 11:33 am

Drain wrote:With those coverages, I'm trying to estimate what someone else might want from me. And I have to guess at probabilities I have no good way to guess at.
I gave you a simple way of gauging those probabilities above. It is about as good as you are going to get. Insurance companies have the best data and prices reflect that data.

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Re: Umbrella excess liability policy

Post by letsgobobby » Sat Apr 26, 2014 11:42 am

Drain wrote:
kenner wrote:Quite simply, there is no "one size fits all" answer to your question. The only correct answer is the one that fits your life circumstances based on all available knowledge that you have acquired in your lifetime.
If it's so simple, you should be able to tell me a way I could use the available knowledge I have acquired in my lifetime.
Here's an example [...]
Your example doesn't help. I understand that stuff happens and that I may need liability or UM/UIM insurance one day. I also understand that the numbers can be large. So what? That doesn't tell me how much coverage I should have.
Perhaps you have life insurance. If so, you perhaps utilized some metric in deciding how much insurance you needed. Just use common sense and your life experience to arrive at a reasonable amount of other insurance to help make your family more comfortable in the event of a catastrphe.
No, it's not the same, and I have to say I find it a little disturbing that someone who presents himself as something of an expert (40 years in the business and all) apparently has never thought about thees issues before and doesn't seem to be aware that they exist.

With respect to life insurance, it's not that hard. There are still different philosophies and different life considerations, but the amount I'm estimating is easier to identify. In my case, I want enough life insurance so that (1) my wife can hire help for the kids while they're young and (2) the insurance can help make up for college savings they would otherwise have had. Someone else might have different objectives, but you pick your objectives and you estimate a number.

Umbrella and UM/UIM aren't like that. With those coverages, I'm trying to estimate what someone else might want from me. And I have to guess at probabilities I have no good way to guess at. Furthermore, UM/UIM has the additional problem of potentially being useful coverage but a bad value--kind of like LTCI might be in that regard. (To collect a larger sum of money, I may have to hire an attorney to get it for me, in which case I lose a third of the award and I maybe have to deal with whatever is required of me in court.)

Again, this is a topic that comes up repeatedly on this board and others, and there doesn't seem to be any consensus on what to do. It isn't just me. [OT comments removed by admin LadyGeek]
What point are you trying to make? What answer do you have? What answer do you want?

Sometimes there are no easy answers. Life is like that. Why not throw up a poll and see how much total liability Bogleheads actually carry?

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Re: Umbrella excess liability policy

Post by Quasimodo » Sat Apr 26, 2014 12:17 pm

I don’t claim to know the answer to Pasour’s question, but here are links to some articles with various suggestions:

http://www.nytimes.com/2012/11/03/your- ... wsuit.html

http://www.investopedia.com/articles/re ... dawall.asp

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

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