Do I need umbrella insurance?

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Phooey
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Do I need umbrella insurance?

Post by Phooey » Mon Jul 28, 2014 11:44 am

Reviewed a bunch of old umbrella insurance threads, some of which I think answered my question (liability with adult children driving their cars) but just wanted to make sure.

I am 30 years old, living at home, and driving car listed in my father's name. Have accumulated significant assets (no rent, living like a cheapskate boglehead) and recently advised in general by vanguard personal advisor to have liability insurance. Do not own home/car, car ownership done in father's name for business deduction/tax purposes, this may change when father passes business to me. My understand from reading the "umbrella covering children driving my car" threads was that I would be covered under my father's umbrella insurance, which is 1 M. Do not own any other boat/property.

Aside from moving out / other life changes, is umbrella insurance needed for me beyond my father's coverage?

bucksfan2
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Re: Do I need umbrella insurance?

Post by bucksfan2 » Mon Jul 28, 2014 2:55 pm

In my experience umbrella insurance is cheap and well worth it.

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Meg77
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Re: Do I need umbrella insurance?

Post by Meg77 » Mon Jul 28, 2014 3:10 pm

If you don't own a car or home I'm not even sure you can get umbrella coverage, since the umbrella is usually tacked on to your home and/or car insurance as an extension of whatever liability coverage you have opted for there.

In any case I don't think you need it. If someone gets hurt in your house (i.e. your parents' house) then it will be your parents getting sued. If you kill somebody while driving your dad's car, it will be your dad being sued most likely. They could sue you too, but that's unlikely unless everyone knows you to be wealthy. Even if they did your dad's insurer should step in to defend you since your dad would almost certainly be on the suit too, as he owned the car.
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Globalviewer58
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Re: Do I need umbrella insurance?

Post by Globalviewer58 » Mon Jul 28, 2014 3:11 pm

Read the auto policy umbrella language to understand what coverage applies to your acts while driving the company auto. Does the umbrella apply for events while the driver is not on company business? If the auto policy and umbrella coverage limits are not sufficient to cover the damages, the next source of payment is your assets. Which drivers are covered? You may need to be on the list of additional insured for coverage to extend to damages for which you are at fault.

You might consider a renter's policy with a liability umbrella as a less expensive way to protect your assets. The umbrella covers liability for your acts that exceed other coverage.

+1 that liability coverage is inexpensive asset protection.

Calm Man
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Re: Do I need umbrella insurance?

Post by Calm Man » Mon Jul 28, 2014 3:21 pm

Phooey,
In order to answer your question, actually for you to even ask the question, you need to specify what you are looking for Umbrella insurance to cover. You say that you own no home. You own no car. What are you going to insure against?

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interplanetjanet
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Re: Do I need umbrella insurance?

Post by interplanetjanet » Mon Jul 28, 2014 3:55 pm

Phooey wrote:I am 30 years old, living at home, and driving car listed in my father's name. Have accumulated significant assets (no rent, living like a cheapskate boglehead) and recently advised in general by vanguard personal advisor to have liability insurance. Do not own home/car, car ownership done in father's name for business deduction/tax purposes, this may change when father passes business to me. My understand from reading the "umbrella covering children driving my car" threads was that I would be covered under my father's umbrella insurance, which is 1 M. Do not own any other boat/property.
The real answer here will only come if you read the policy descriptions for the various insurance policies involved (auto, homeowners/renters, umbrella) held by your father. Most policies I have seen will include immediate relatives by blood or marriage if they are living in the same household.

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Aptenodytes
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Re: Do I need umbrella insurance?

Post by Aptenodytes » Mon Jul 28, 2014 4:00 pm

Phooey wrote:I ... [h]ave accumulated significant assets ... is umbrella insurance needed for me ?
I edited out all the irrelevant stuff. If you have significant assets, you have risk. Umbrella insurance is a cheap way to get it. Usually it is a supplement to homeowners and auto, which it sounds like you lack. But I'm sure with some digging you can find a way to buy it.

Phooey
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Re: Do I need umbrella insurance?

Post by Phooey » Tue Jul 29, 2014 9:58 pm

Thanks for all the replies. The general consensus on all previous umbrella threads I've read is "Buy it!" I'll look into buying, even without auto/home if it is possible. Cars are all personal, father's business is a PC, so while it nominally belongs to business, its all personal usage for the most part.
Calm Man wrote:Phooey,
In order to answer your question, actually for you to even ask the question, you need to specify what you are looking for Umbrella insurance to cover. You say that you own no home. You own no car. What are you going to insure against?
I'm in the medical profession, so wary of frivolous things that might happen outside of work that wouldn't be covered by anything else. Riskiest thing I do is social dancing, which is not risky at all. My father thinks that it isn't necessary, but it sounds as if it'd be silly to need it and not have it.

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LAlearning
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Re: Do I need umbrella insurance?

Post by LAlearning » Tue Jul 29, 2014 10:09 pm

You could be liable for any injury that occurs in your apartment. And while you do not own the car, you would be named the defendant.

1MM policy is ~$200-300. Like all things, its something to consider.
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LeeMKE
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Re: Do I need umbrella insurance?

Post by LeeMKE » Tue Jul 29, 2014 10:19 pm

I was in the camp of "You don't need it today" until you mentioned that you are in the medical field.

That alone sets of bells for attorney's looking for deep pockets to include in a lawsuit, so you are not as "under the radar" as some professions might be.

If it is available, I'd get it, and if not, just be ready to pick it up when you do have auto or home insurance.

I was included in a nuisance lawsuit because the lawyer looked at my website and determined that I probably had assets. Nonsense, but the client's bite, and they ended up regretting naming me in their frivolous lawsuit. This is the most common use of umbrella coverage: lawsuits.
Last edited by LeeMKE on Tue Jul 29, 2014 10:21 pm, edited 1 time in total.
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dual
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Re: Do I need umbrella insurance?

Post by dual » Tue Jul 29, 2014 10:20 pm

I think that if you get it, you should take steps to be sure the insurance company pays up if you need it. Explain your situation to the insurance agent and include a letter with your application summarizing it--perhaps counter-signed and dated by the agent, and keep a copy of it.

Would you be liable for a good Samaritan lawsuit if you help someone out in an emergency? If so, make sure you have insurance for that.

cowboysFan
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Re: Do I need umbrella insurance?

Post by cowboysFan » Tue Jul 29, 2014 10:34 pm

Assuming your parent's umbrella policy would cover you when at home or driving, I can't imagine why you need it. 80%+ of umbrella payments happen as a result of auto accidents. Most of the rest probably happen due to homeowner/renter liability, dog bites, or boating accidents. What are you going to get sued for that would be covered by a PUP? PUPs don't cover business liability and generally don't cover intentional acts or acts alleged to be intentional.

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JonnyDVM
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Re: Do I need umbrella insurance?

Post by JonnyDVM » Tue Jul 29, 2014 10:57 pm

You don't need umbrella and I don't think they would even sell it to you given your current living scenario.
Sometimes the questions are complicated and the answers are simple. -Dr. Seuss

Rocketfella
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Re: Do I need umbrella insurance?

Post by Rocketfella » Fri Aug 01, 2014 9:10 pm

What are the "accumulated significant assets"? Also what kind of "medical professional"?

Certain types of assets are protected from creditors in lawsuits and bankruptcy. This would depend on the creditor protection laws of your state and the bankruptcy law that your state follows. You should speak to an estate planning or bankruptcy attorney in your state to see if your assets are significant enough and not already automatically protected to warrant an umbrella policy or asset protection planning.

spectec
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Re: Do I need umbrella insurance?

Post by spectec » Fri Aug 01, 2014 9:59 pm

You've mentioned enough info to suggest that you need umbrella insurance if you can get it. Virtually anyone with assets needs it. But I'm not sure I'd make a decision of this magnitude based on recommendations from a public forum, even one as good as this one. The stakes are too great not to get professional advice, even if you have to pay for it. Otherwise, and after it is too late, you might find yourself on the painful side of the "penny wise and pound foolish" issue.
Don't gamble; take all your savings and buy some good stock and hold it till it goes up, then sell it. If it don't go up, don't buy it. - Will Rogers

goldendad
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Re: Do I need umbrella insurance?

Post by goldendad » Fri Aug 01, 2014 11:34 pm

It is cheap. I currently have 3 million for about 350 per year. Well worth it.

Call_Me_Op
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Re: Do I need umbrella insurance?

Post by Call_Me_Op » Sat Aug 02, 2014 6:57 am

JonnyDVM wrote:You don't need umbrella and I don't think they would even sell it to you given your current living scenario.
This seems illogical. Why wouldn't they sell to someone with little exposure to liability?
Best regards, -Op | | "In the middle of difficulty lies opportunity." Einstein

carolinaman
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Re: Do I need umbrella insurance?

Post by carolinaman » Sat Aug 02, 2014 7:00 am

3 thoughts: 1 - when bad stuff happens, victims and lawyers tend to look for deep pockets to go after. 2 - people need to protect their assets, even for low probability events that high a high impact (loss of assets). 3 - we live in a litigious society.

Since you have accumulated a sizable savings, IMO, it is prudent for you to buy umbrella insurance because it is so cheap to protect your assets.

kenner
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Re: Do I need umbrella insurance?

Post by kenner » Sat Aug 02, 2014 7:32 am

Phooey wrote:Reviewed a bunch of old umbrella insurance threads, some of which I think answered my question (liability with adult children driving their cars) but just wanted to make sure.

What "answer" did you come up with?

I am 30 years old, living at home, and driving car listed in my father's name.

If you drive a car, you are at risk of being sued.


Have accumulated significant assets

If you have assets that are subject to claims of judgment creditors, your assets and income are at risk.

(no rent, living like a cheapskate boglehead) and recently advised in general by vanguard personal advisor to have liability insurance. Do not own home/car, car ownership done in father's name for business deduction/tax purposes, this may change when father passes business to me. My understand from reading the "umbrella covering children driving my car" threads was that I would be covered under my father's umbrella insurance, which is 1 M. Do not own any other boat/property.

Aside from moving out / other life changes, is umbrella insurance needed for me beyond my father's coverage?
I haven't seen anyone address the most important question here: how does applicable state law affect the decision-making process? If OP was my son, I'd advise him to spend an hour with a creditors rights attorney/expert in his state to devise an effective plan that takes all knowable facts into account. There are issues here that may need to be seriously evaluated, such as car ownership/permissive use, business vs. casual use, etc.

amitb00
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Re: Do I need umbrella insurance?

Post by amitb00 » Sat Aug 02, 2014 8:14 am

Golendad: who is your insurer? My quotes are way higher. Of course it depends on particular circumstance but I will give them a try.

placeholder
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Re: Do I need umbrella insurance?

Post by placeholder » Sat Aug 02, 2014 10:09 am

Call_Me_Op wrote:This seems illogical. Why wouldn't they sell to someone with little exposure to liability?
Because it doesn't sound like the OP has primary liability insurance in his name which is generally how umbrella works.

sport
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Re: Do I need umbrella insurance?

Post by sport » Sat Aug 02, 2014 10:35 am

placeholder wrote:
Call_Me_Op wrote:This seems illogical. Why wouldn't they sell to someone with little exposure to liability?
Because it doesn't sound like the OP has primary liability insurance in his name which is generally how umbrella works.
It would seem that he would need to also have renter's insurance on his belongings. That would provide the primary liability insurance.
Jeff

placeholder
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Re: Do I need umbrella insurance?

Post by placeholder » Sat Aug 02, 2014 11:36 am

jsl11 wrote:It would seem that he would need to also have renter's insurance on his belongings. That would provide the primary liability insurance.
The OP doesn't even have auto insurance as I understand it so probably non-owner auto insurance as well but it's best to ask prospective umbrella providers what they would require in the OP's situation.

Call_Me_Op
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Re: Do I need umbrella insurance?

Post by Call_Me_Op » Sun Aug 03, 2014 10:28 am

placeholder wrote:
Call_Me_Op wrote:This seems illogical. Why wouldn't they sell to someone with little exposure to liability?
Because it doesn't sound like the OP has primary liability insurance in his name which is generally how umbrella works.
The reason that umbrella providers require primary liability is because they seek to minimize their exposure to that liability. However, if the liability doesn't exist, why wouldn't they still sell insurance to the customer? Aren't they in business ultimately to make money?
Best regards, -Op | | "In the middle of difficulty lies opportunity." Einstein

placeholder
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Re: Do I need umbrella insurance?

Post by placeholder » Sun Aug 03, 2014 4:14 pm

Call_Me_Op wrote:The reason that umbrella providers require primary liability is because they seek to minimize their exposure to that liability. However, if the liability doesn't exist, why wouldn't they still sell insurance to the customer? Aren't they in business ultimately to make money?
I don't know if they do or don't but if they don't it's probably because the product is structured a certain way and they don't have something else BUT if that's the case then the OP would need to get renter's and non owner auto.

Phooey
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Re: Do I need umbrella insurance?

Post by Phooey » Thu Sep 18, 2014 8:49 pm

Update for anyone interested and for posterity for anyone in similar situation---I spoke to insurance agent who attempted to secure the insurance for me, insurance company would not sell it. I am considered covered (listed as driver and resident) under father's umbrella of 1 M for home/auto, so do not require own umbrella at present. Thanks all for advice.

kenner
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Re: Do I need umbrella insurance?

Post by kenner » Thu Sep 18, 2014 9:02 pm

Phooey wrote:Update for anyone interested and for posterity for anyone in similar situation---I spoke to insurance agent who attempted to secure the insurance for me, insurance company would not sell it. I am considered covered (listed as driver and resident) under father's umbrella of 1 M for home/auto, so do not require own umbrella at present. Thanks all for advice.
Thank you for bringing us up-to-date. It is always appreciated.

Best wishes.

skepticalobserver
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Re: Do I need umbrella insurance?

Post by skepticalobserver » Mon Sep 22, 2014 8:40 am

Have you read the policy? Are you named as an insured? Are you rated? Do you live at home? You may or may not be covered by your dad's policy.Speak with his agent.

If you have "accumulated significant assets" why in the world would you not get liability and umbrella coverage? Renter's and umbrella insurance are cheap. If you think that because the car is in your dad's name/business and this somehow insulates you from being named as a defendant, think again. Any attorney will name you, your dad and related business entity as co-defendants in a complaint. A settlement/judgement in excess of your dad's policy limits puts your "significant assets" at risk.

Also, liability situations can sneak up in many different ways that insurance can help with. One true, perhaps odd, case (in DC) involved a guy who mistakenly left his briefcase on the floor after entering a Metro turnstile. The person in back of him tripped on it. Bad fall. Homeowner's covered the problem.

Lastly, if you're not properly covered you'll have to dig into some of those assets to pay for an attorney.The cost of just preparing and filing an answer will surprise you.

JamesSF
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Re: Do I need umbrella insurance?

Post by JamesSF » Tue Sep 23, 2014 1:49 am

I do not have auto insurance since I don't own a car. I went to State Farm to try to get umbrella insurance, but they wouldn't sell it to me unless I had auto insurance.

I was able to get $1m umbrella coverage only after purchasing max-limit non-owner auto insurance, which was more expensive than the umbrella policy. But my assets are now covered even if I'm driving someone else's car who doesn't have great insurance.

opus360
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Re: Do I need umbrella insurance?

Post by opus360 » Tue Sep 23, 2014 9:54 am

Just how does an umbrella insurance work? Let us say you got auto liability of $250k. You got an umbrella of $1 million. You got sued for $2 million. Your assets are $500k. Are your $500k assets save or not? Do you pay with your assets first then the umbrella insurance pays you?

ralph124cf
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Re: Do I need umbrella insurance?

Post by ralph124cf » Tue Sep 23, 2014 10:11 am

If living in parents home, you can buy renters insurance to cover possessions, and also basic liability insurance. It is this liability insurance that would enable you to buy an umbrella policy.

If you have a drivers license, the umbrella seller will also require non-owned auto liability insurance. You may be driving the car of somebody other than the parent's, or rent a car.

The biggest asset to protect is future earnings.

Ralph

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Re: Do I need umbrella insurance?

Post by placeholder » Tue Sep 23, 2014 12:42 pm

opus360 wrote:Just how does an umbrella insurance work? Let us say you got auto liability of $250k. You got an umbrella of $1 million. You got sued for $2 million. Your assets are $500k. Are your $500k assets save or not? Do you pay with your assets first then the umbrella insurance pays you?
If you're saying that there was a judgment for 2 million (much different than being sued for that amount) then the insurance company will kick in 1.25 million and you will be liable for the rest however the insurance company will have first provided the attorneys for defense.

opus360
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Re: Do I need umbrella insurance?

Post by opus360 » Wed Sep 24, 2014 7:51 am

placeholder wrote:
opus360 wrote:Just how does an umbrella insurance work? Let us say you got auto liability of $250k. You got an umbrella of $1 million. You got sued for $2 million. Your assets are $500k. Are your $500k assets save or not? Do you pay with your assets first then the umbrella insurance pays you?
If you're saying that there was a judgment for 2 million (much different than being sued for that amount) then the insurance company will kick in 1.25 million and you will be liable for the rest however the insurance company will have first provided the attorneys for defense.
Thanks. I now see how it works.

That is what I meant, judgment of $2 million.

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tadamsmar
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Re: Do I need umbrella insurance?

Post by tadamsmar » Wed Sep 24, 2014 7:54 am

I have a policy with RLI. Based on my experience, I'd say just the education I have gotten is well worth the $100/year or so it costs to get 1M of coverage.

I co-signed a auto loan for my adult daughter and got a cancellation notice from RLI within a few weeks. I think RLI's computers detected it. It did not occur to me that co-signing a loan put me as risk, I got my daughter to increase her insurance coverage to the required level and I added it to the policy before the cancellation actually occurred so I had no lapse of coverage.

The checklist for the policy alerted me that an old canoe my MIL had give us was a liability. I never used it and had loaned it to my daughter's boyfriend. I gave it away.

As a result, I am much better at self-monitoring my liability risks and addressing problems ASAP.

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Quasimodo
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Re: Do I need umbrella insurance?

Post by Quasimodo » Sat Sep 27, 2014 9:11 pm

Hi Phooey;

I’m curious about a couple of things. What would a lawyer say about whether you could be sued for a substantial amount, even though you live with your parents. You’re 30 years old and have “substantial assets”. I would be surprised if you were considered a dependent of your parents and therefore a lawsuit against you individually could not be filed.

Maybe your agent and or insurer didn’t understand the question, or didn’t feel it was worth investigating further.

You don’t have to abandon your insurer or agent to get another opinion. There are some direct writer insurers like Progressive or GEICO whom you could contact with the question of whether they’d offer umbrella coverage. I’m guessing they would tell you that if you carry hired and non-owned auto liability, and personal liability, you should be able to also buy an umbrella liability policy to provide limits over those coverages. It should be pretty easy to just call one or both of those insurers and explain your situation, asking if they’d write umbrella liability for you.

Good luck.

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

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JonnyDVM
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Re: Do I need umbrella insurance?

Post by JonnyDVM » Sat Sep 27, 2014 10:00 pm

Phooey wrote:Update for anyone interested and for posterity for anyone in similar situation---I spoke to insurance agent who attempted to secure the insurance for me, insurance company would not sell it. I am considered covered (listed as driver and resident) under father's umbrella of 1 M for home/auto, so do not require own umbrella at present. Thanks all for advice.
I was actually right about something for once??? That's awesome. Thanks for the update. I personally have come to the conclusion that umbrella insurance is dumb but I have it anyway. What are the actual odds of something happening that exceeds the already high liability limits on my home or auto insurance? Probably infinitesimally slim. I would also assume most people would settle before it got to court for the 500k limit or less before we needed to whip out the umbrella policy. Also, whenever this topic gets brought up, someone always posts a link with the five or six random cases where someone actually used their umbrella policy. It's always the same cases listed. Makes me think the pool of cases where an umbrella policy actually came in handy is pretty shallow. We carry a 3 million dollar policy. I'm not getting rid of it. I just hate cutting that dumb check every year. Would definitely cover a couple of nice dinners out.
Sometimes the questions are complicated and the answers are simple. -Dr. Seuss

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