Do you have an umbrella policy?

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Re: Umbrella insurance..who has it? Is it recommended?

Post by abuss368 »

I also wanted to add that both our auto and home insurance had to be of certain minimum amounts of coverage.
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Re: Umbrella insurance..who has it? Is it recommended?

Post by TravelforFun »

I've had it for quite a while. Never had a claim so I don't know how useful it is.

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Re: Umbrella insurance..who has it? Is it recommended?

Post by Grt2bOutdoors »

Think of it this way - if it costs you $1 a day to have coverage for 1 million above and beyond your current liability insurance, why would you not do it? How much does it cost to retain an attorney today? How much do you think it'd cost you to fight a lawsuit that could drag on for years. We live in a litigious society unfortunately. I am not an attorney, but I do like quality sleep. I don't want to worry that I could lose my home and/or other assets because of an accident.
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Re: Umbrella insurance..who has it? Is it recommended?

Post by Dottie57 »

I purchased when my parents told me they had it. I have enough in accounts and could lose my retirement to a lawsuit.
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Re: Umbrella insurance..who has it? Is it recommended?

Post by Call_Me_Op »

abuss368 wrote: Sat Sep 01, 2018 12:00 pm I have always understood to buy an amount that is equal to your assets.
Why?
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Re: Umbrella insurance..who has it? Is it recommended?

Post by mpsz »

abuss368 wrote: Sat Sep 01, 2018 12:00 pm I have always understood to buy an amount that is equal to your assets. In my experience the insurance is very low cost.
I've read this in other threads on BH, but later someone usually offers a counterexample along the lines of: if you have $1MM in assets and buy a $1MM policy, you can still lose and have a judgement of $5MM entered against you, and your assets are now gone.
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Re: Umbrella insurance..who has it? Is it recommended?

Post by Grt2bOutdoors »

mpsz wrote: Sat Sep 01, 2018 2:36 pm
abuss368 wrote: Sat Sep 01, 2018 12:00 pm I have always understood to buy an amount that is equal to your assets. In my experience the insurance is very low cost.
I've read this in other threads on BH, but later someone usually offers a counterexample along the lines of: if you have $1MM in assets and buy a $1MM policy, you can still lose and have a judgement of $5MM entered against you, and your assets are now gone.
If you get sued, they'll likely settle for amount of available liability insurance. No one likes a long drawn out battle where outcomes are unknown. However, if you have a low policy and make $500K a year in income, they can garnish your wages. Insurance unfortunately is a necessary expense unless you can afford to insure yourself. Even corporations purchase insurance. It's cheaper to lose a million in premiums than pay out $100 million each time.
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Re: Umbrella insurance..who has it? Is it recommended?

Post by Mordoch »

mpsz wrote: Sat Sep 01, 2018 2:36 pm I've read this in other threads on BH, but later someone usually offers a counterexample along the lines of: if you have $1MM in assets and buy a $1MM policy, you can still lose and have a judgement of $5MM entered against you, and your assets are now gone.
Part of the answer is at some point you can't insure perfectly against absolutely all theoretical risks and have to draw the line at some point, although those who want to play it really extra safe could do something like get 2 million in umbrella insurance even though they have one million in assets. In plenty of those scenarios you could appeal that verdict and possibly eventually get it below or just barely above 1 million so you keep most of your assets.

A critical detail is a million in umbrella insurance is enough to provide a strong incentive for the the suing party and especially their lawyer to want to settle. Since typically lawyers work on a contingency basis in many of these scenarios, spending the extra/time money for the law firm to pursue the case but risk outright losing it or the jury giving a ruling with much less money is not worth the risk. (A jury is not told that you have 1 million plus is umbrella insurance so this does not factor into their verdict.) A key related detail is that settlement offer of 1 million or less is offered by the plaintiff and the insurance company were to decline it in such a scenario, generally by law its the insurance company ultimately on the hook for all of the verdict no matter how large it gets at that point. If you have 5 million in assets merely having 1 million in umbrella insurance might not be enough to always persuade the plaintiff/lawyer to seek a settlement, but there certainly is a practical benefit of having at least 1 million in umbrella insurance in most scenarios.

As already noted another general point is that 1 million in umbrella insurance should be enough for the insurance company of have "skin in the game" and make sure a really top notch lawyer is assigned to the case. A good enough lawyer makes it presumably less likely the jury will come back with an excessively large judgement in the first place. Ultimately if you have assets getting at least a million in umbrella insurance is a rather cheap way to help ensure you will not suddenly lose your assets in a lawsuit.
Last edited by Mordoch on Sat Sep 01, 2018 4:57 pm, edited 1 time in total.
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Re: Umbrella insurance..who has it? Is it recommended?

Post by cadreamer2015 »

I live in a HCOL area so my guess is the extra coverage isn’t a bad idea in the event I bump into someone’s Ferrari.
We have $2 million in umbrella coverage. The risk you are insuring against isn't the risk of bumping into someone's Ferrari. You are insuring against the risk that you accidentally kill the brain surgeon who was driving the Ferrari and his family sues you for 20 future years of a brain surgeon's earnings.
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Re: Umbrella insurance..who has it? Is it recommended?

Post by FrugalInvestor »

Here's a Forbes article on reasons for carrying umbrella insurance, how much to consider carrying and why......

https://www.forbes.com/sites/ashleaebel ... 8f691a6166

From the article.....
Don’t skimp on coverage. Coverage at least equal to your current net worth is the typical recommendation. However, if coverage falls short, a judge could order you to pay up, liquidating savings and investments (retirement plans and trusts are usually safe), real estate and personal property—and even garnishing your wages. Consider adding coverage to equal the present value of your employment income stream.
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Re: Umbrella insurance..who has it? Is it recommended?

Post by abuss368 »

mpsz wrote: Sat Sep 01, 2018 2:36 pm
abuss368 wrote: Sat Sep 01, 2018 12:00 pm I have always understood to buy an amount that is equal to your assets. In my experience the insurance is very low cost.
I've read this in other threads on BH, but later someone usually offers a counterexample along the lines of: if you have $1MM in assets and buy a $1MM policy, you can still lose and have a judgement of $5MM entered against you, and your assets are now gone.
I know. I have read that as well.
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Re: Umbrella insurance..who has it? Is it recommended?

Post by visualguy »

I think in many cases it's very reasonable to skip it... For example, if you and your spouse don't drive all that much, and have no driving kids, the probability of ever needing this insurance is extremely low. You can just max the liability on your auto insurance, and be done with it in my opinion. You're taking some chance, but it's extremely small, and there are higher probability bad things out there to worry about.
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Re: Umbrella insurance..who has it? Is it recommended?

Post by A440 »

Yep. Child #1 is driving this year and there are plenty of cars worth more than our home on the road around here. Plenty of school buses as well.
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Re: Umbrella insurance..who has it? Is it recommended?

Post by MikeG62 »

ASpenderInRecovery wrote: Sat Sep 01, 2018 11:12 am
Who on here has umbrella insurance or would recommend the additional coverage?
I have had umbrella insurance for well over two decades. Started at $1 million, increased to $2M after several years and then to $5 million a decade ago or so. I would not go without it and would buy as much as you can reasonably afford.

Usually each incremental $1 million costs less than the $1 million tranche before it, up to a point. For me that point was $5 million. My insurer (CNA) jumps from $5 million to $10 million (no single digit millions in between). The second $5 million was two times as expensive as the first $5 million. I stopped at $5 million.
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Re: Umbrella insurance..who has it? Is it recommended?

Post by InvestorThom »

FrugalInvestor wrote: Sat Sep 01, 2018 3:48 pm
“...retirement plans and trusts are usually safe...”
Can someone expand on this? From an asset protection perspective aren’t retirement plans, eg, IRAs and 401(k)s, treated differently because some are governed by federal vs state laws and state laws vary? For example, it’s my understanding that 401(k)s are generally more protected than IRAs, hence one reason some people prefer not to rollover to an IRA.

How are trusts “safe”?
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Re: Umbrella insurance..who has it? Is it recommended?

Post by FIREchief »

InvestorThom wrote: Sun Sep 02, 2018 1:20 am
FrugalInvestor wrote: Sat Sep 01, 2018 3:48 pm
“...retirement plans and trusts are usually safe...”
Can someone expand on this? From an asset protection perspective aren’t retirement plans, eg, IRAs and 401(k)s, treated differently because some are governed by federal vs state laws and state laws vary? For example, it’s my understanding that 401(k)s are generally more protected than IRAs, hence one reason some people prefer not to rollover to an IRA.

How are trusts “safe”?
IRA vs. 401k is dependent upon state laws. ERISA protection of 401k's is at federal level and covers all 50 states. Some states have similar protection for IRAs, others do not.

Trusts can be equally safe in all 50 states, provided they are correctly drafted (i.e. allowing the trustee discretion regarding payouts and never "forcing" any funds out to the beneficiaries). Assets owned by such a trust do not belong to the beneficiary, and therefore can not be awarded in a lawsuit. In some states, the trustee must be independent, but this is not true in all states. A conduit trust for IRA assets does not provide good asset protection. A properly drafted accumulation trust does.

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Re: Umbrella insurance..who has it? Is it recommended?

Post by boglerdude »

> the lawyers who post on here have not had anything to say on the topic

Each of them has said that all cases settle for policy limits, even very low limits. 1M umbrella is enough.

Recent discussion of how much umbrella to buy:
viewtopic.php?t=252692
Last edited by boglerdude on Sun Sep 02, 2018 5:37 am, edited 1 time in total.
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Re: Umbrella insurance..who has it? Is it recommended?

Post by afan »

Boglredude,

I saw lots of speculation, but nowhere did I see people who stated they were attorneys in this field at all. Let alone indicate that all cases settle within policy limits. Can you point out those attorneys who said that?

Thanks
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Re: Umbrella insurance..who has it? Is it recommended?

Post by theplayer11 »

In most states, retirement savings are protected against lawsuits. Something to keep in mind when figuring how much coverage you need.
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Re: Umbrella insurance..who has it? Is it recommended?

Post by MikeG62 »

boglerdude wrote: Sun Sep 02, 2018 1:37 am > the lawyers who post on here have not had anything to say on the topic

Each of them has said that all cases settle for policy limits, even very low limits. 1M umbrella is enough.

Recent discussion of how much umbrella to buy:
viewtopic.php?t=252692
I provided one personal example in this thread a while back:

viewtopic.php?f=2&t=216579&p=3328151&hi ... a#p3328151

Bottom line, $1 million is not necessarily enough (IMHO).
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Re: Umbrella insurance..who has it? Is it recommended?

Post by gasdoc »

My opinion only: Buy "enough" that an opposing lawyer will "settle" for going after your insurance and leave your personal stuff alone. I have $5M.

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Re: Umbrella insurance..who has it? Is it recommended?

Post by gd »

Call_Me_Op wrote: Sat Sep 01, 2018 2:30 pm
abuss368 wrote: Sat Sep 01, 2018 12:00 pm I have always understood to buy an amount that is equal to your assets.
Why?
My guess, clever marketing. Catchy, and ensures the insurance company maximizes available revenue from customers-- the more you have, the more they get.

I used to have a liability-prone hobby job, and fell into this story when I first researched insurance for it. The false association between my worth and insurance amount was so strong that it took curiously long to convince myself that I was not, in fact, actually shielding it. My queries got lots of blank stares. I shifted to getting enough to motivate the insurance company to defend itself.
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Re: Umbrella insurance..who has it? Is it recommended?

Post by Call_Me_Op »

gd wrote: Sun Sep 02, 2018 6:56 am
Call_Me_Op wrote: Sat Sep 01, 2018 2:30 pm
abuss368 wrote: Sat Sep 01, 2018 12:00 pm I have always understood to buy an amount that is equal to your assets.
Why?
My guess, clever marketing. Catchy, and ensures the insurance company maximizes available revenue from customers-- the more you have, the more they get.

I used to have a liability-prone hobby job, and fell into this story when I first researched insurance for it. The false association between my worth and insurance amount was so strong that it took curiously long to convince myself that I was not, in fact, actually shielding it. My queries got lots of blank stares. I shifted to getting enough to motivate the insurance company to defend itself.

I agree. I guess the other way to look at it (as gasdoc say above) is to get enough so that the plaintiff's attorney will leave your assets alone. I assume that the plaintiff's attorney will know your exposed net worth.
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Re: Umbrella insurance..who has it? Is it recommended?

Post by JW-Retired »

boglerdude wrote: Sun Sep 02, 2018 1:37 am > the lawyers who post on here have not had anything to say on the topic

Each of them has said that all cases settle for policy limits, even very low limits. 1M umbrella is enough.
There is somebody who still posts often here who lost some sort of business lawsuit and they drained his 6-figure IRA to pay for it. Don't recall any more about it or the name at the moment.

The post that really got my attention was from someone who claimed to be a lawyer. He said he had lost a big case where his client had been hit head on by a very drunk driver who swerved way across the hi-way median and hit the client head on. It killed the drunk and all of his family except one child in the back seat, who was left grievously handicapped. Under the state's law, if someone is only 10% at fault in a multiple car accident, but nobody else involved has any insurance or assets, the 10% guy can be liable for all damages. The court decided that the client met the 10% category because he could have "dodged" the collision instead of just mashing his brake. The client did have enough insurance that he could pay the whole very large judgement.

This latter post was a long while back and I've tried to find it before but never could. Can't say it wasn't exaggerated or maybe just made up, but I do know my own state (CA) has a law like that. So I don't chance it and have a $5M umbrella policy. It's very cheap.
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Re: Umbrella insurance..who has it? Is it recommended?

Post by talzara »

JW-Retired wrote: Sun Sep 02, 2018 7:22 am Under the state's law, if someone is only 10% at fault in a multiple car accident, but nobody else involved has any insurance or assets, the 10% guy can be liable for all damages. The court decided that the client met the 10% category because he could have "dodged" the collision instead of just mashing his brake. The client did have enough insurance that he could pay the whole very large judgement.

This latter post was a long while back and I've tried to find it before but never could. Can't say it wasn't exaggerated or maybe just made up, but I do know my own state (CA) has a law like that. So I don't chance it and have a $5M umbrella policy. It's very cheap.
Your state does not have a law like that. Nor does any other state in the Union.

California is a pure comparative fault state. A driver who is 10% at fault will only be liable for 10% of the damages, not "all damages."

Here is a list of negligence regimes in all 50 states and the District of Columbia. https://www.mwl-law.com/wp-content/uplo ... states.pdf
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Re: Umbrella insurance..who has it? Is it recommended?

Post by talzara »

visualguy wrote: Sat Sep 01, 2018 4:16 pm I think in many cases it's very reasonable to skip it... For example, if you and your spouse don't drive all that much, and have no driving kids, the probability of ever needing this insurance is extremely low. You can just max the liability on your auto insurance, and be done with it in my opinion. You're taking some chance, but it's extremely small, and there are higher probability bad things out there to worry about.
Maxing out your auto insurance can be cheaper than buying the same amount of umbrella. When you increase the policy limits, all of your auto insurance discounts will still apply. If you buy umbrella, you go into a new risk pool with no discounts.

Many auto insurers will write up to $1 million of primary liability. State Farm will go up to $2 million in some states.

If you need more than that, then umbrella is the only option.
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Re: Umbrella insurance..who has it? Is it recommended?

Post by afan »

Regarding protection of retirement assets:
The 401(k) protection is federal law. But even there it depends on what kind of plan it is. The federal protection is greatest for large companies. If you have a small company or sole proprietorship then you are not is as good shape.

IRA protection depends on state law. Some are more protective than others.

Inherited IRAs are not protected. Spouses can adopt an inherited IRA as their own and have the same protection as their own IRA (back to state law). But an inherited IRA owned by anyone other than the surviving spouse is fair game.

Money in retirement plans is protected only so long as it remains in the plan. If you start taking money out to live on, or to satisfy RMDs then the amounts you take out will lose that protection.

For young people it is probably reasonable to assume that no plaintiff will wait decades to get paid. But even for young people, the plaintiff may happily take wage garnishment now and a steady stream of income from your retirement plan later.

To the extent you are counting on the retirement asset protection, dig a little deeper to see just how much protection you have.
Last edited by afan on Sun Sep 02, 2018 10:04 am, edited 1 time in total.
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Re: Umbrella insurance..who has it? Is it recommended?

Post by afan »

talzara wrote: Sun Sep 02, 2018 9:43 am
Maxing out your auto insurance can be cheaper than buying the same amount of umbrella. When you increase the policy limits, all of your auto insurance discounts will still apply. If you buy umbrella, you go into a new risk pool with no discounts.

Many auto insurers will write up to $1 million of primary liability. State Farm will go up to $2 million in some states.

If you need more than that, then umbrella is the only option.
But that higher auto liability coverage only covers you for liability arising from automobile related problems. Getting an umbrella policy gives much broader coverage.

There are lots of permutations, but I had not heard of liability coverage being cheaper in the narrow- auto only- form than the same policy limit via the -broader- umbrella. But insurance costs vary widely and I suppose that could be the case for some people.
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Re: Umbrella insurance..who has it? Is it recommended?

Post by Steelersfan »

TravelforFun wrote: Sat Sep 01, 2018 12:10 pm I've had it for quite a while. Never had a claim so I don't know how useful it is.

TravelforFun
If my memory is correct, the question has been asked several times about whether or not a Boglehead had ever used it and no one ever said yes.

OTOH - I finally bought it a few years ago. I settled for $1mm, figuring that should be enough to motivate the insurance company to help me (and them).
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Re: Umbrella insurance..who has it? Is it recommended?

Post by golfCaddy »

afan wrote: Sun Sep 02, 2018 9:49 am For young people it is probably reasonable to assume that no plaintiff will wait decades to get paid. But even for young people, the plaintiff may happily take wage garnishment now and a steady stream of income from your retirement plan later.
No rational person gets their wages garnished for decades after auto accidents, barring exceptional factors like DUIs. If you have a judgment against you in excess of policy limits and your non-exempt net worth, then you file Chapter 7 bankruptcy.
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Re: Umbrella insurance..who has it? Is it recommended?

Post by afan »

Don't you have to be bankrupt to file for bankruptcy? Having a judgment for more than your policy limits does not equal bankruptcy. What if you had the resources to pay the excess and remain solvent?

Bankruptcy does not mean that all claims against you go away. It means that the court works out how to distribute what you can pay among the people to whom it decides you owe money.

I am not sure many people would want to include bankruptcy in their asset protection planning. Certainly not if they could avoid it for a few hundred dollars per year.
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Re: Umbrella insurance..who has it? Is it recommended?

Post by golfCaddy »

afan wrote: Sun Sep 02, 2018 10:24 am Don't you have to be bankrupt to file for bankruptcy? Having a judgment for more than your policy limits does not equal bankruptcy. What if you had the resources to pay the excess and remain solvent?
If you have the non-exempt assets to pay the judgment, then why are your wages getting garnished? Wouldn't you pay the judgment immediately and in full in that case? Couldn't they attach directly to your financial accounts in that case?
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Re: Umbrella insurance..who has it? Is it recommended?

Post by Mordoch »

afan wrote: Sun Sep 02, 2018 10:24 am Don't you have to be bankrupt to file for bankruptcy? Having a judgment for more than your policy limits does not equal bankruptcy. What if you had the resources to pay the excess and remain solvent?

Bankruptcy does not mean that all claims against you go away. It means that the court works out how to distribute what you can pay among the people to whom it decides you owe money.
The first part is true, but the point is that a young person without much in assets will only basically lose assets that are unprotected and basically nothing else in bankruptcy without having to worry about something like long term wage garnishments barring a situation like a DUI. (If you have the exposed assets to pay you presumably will end up ultimately paying rather than letting things get to a point where your wages are garnished.) A key point to emphasize is that the money in 401ks are protected in bankruptcy from creditors, while regardless of the state IRAs are protected up to at least currently roughly $1,128,000 in this scenario. (Edit: One detail to be aware of is depending on the state you might have to specifically file for Federal bankruptcy in order to protect the IRA in that situation) On top of this states will at least add a limited amount of what would be unprotected assets which are still considered shielded when going through the bankruptcy process.

While the claims don't immediately go away upon declaration, all your creditors (or theoretically the one who won the lawsuit) get to fight over the remainder of your exposed assets and can't simply continue a wage garnishment. (Barring a DUI or a select number of other unusual scenarios basically involving intentional wrongdoing on your part or possibly someone else in your household rather than say merely happening to get involved in a car accident.)

Having said all this, even if you are mostly judgement proof some may feel that they have a moral responsibility to be able to pay out a certain amount of compensation in insurance if somehow they did really happen to hurt someone in a car accident or the like. (Once you have measurable exposed assets the calculations in terms of risk become very different.)
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Re: Umbrella insurance..who has it? Is it recommended?

Post by afan »

As a non drinker, not my problem, but I assume the umbrella insurance would not pay if you injured someone while intentionally committing a crime? Would it pay if you injured someone while committing the crime of driving drunk?

I gather that bankruptcy means that your various creditors are fighting with each other to get as much as they can of what used to be YOUR money. That is a situation that I think most would want to avoid.

If someone who is judgment proof declares bankruptcy, who pays their lawyer? Or do they have to do it themselves?

Wage garnishment then, I gather, would not arise out of bankruptcy? Only assets you had at the time are up for grabs?

Perhaps not the case for the most dedicated drunk drivers, but most young people expect at some point to become old. When they do the RMDs and need to draw money from retirement accounts becomes a near term thing. I suppose one could plan to wait until at or close to retirement before worrying about it...
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Re: Umbrella insurance..who has it? Is it recommended?

Post by Mordoch »

afan wrote: Sun Sep 02, 2018 11:20 am If someone who is judgment proof declares bankruptcy, who pays their lawyer? Or do they have to do it themselves?
The assumption is you have enough money to pay the lawyer so you can declare bankruptcy either through assets or income coming in from your job. (If you are so broke you can't do this, you are generally not an attractive personal target in terms of a creditor really trying to get your assets in the first place.) The system is basically set up so the bankruptcy lawyer gets paid before any other creditor does.
Wage garnishment then, I gather, would not arise out of bankruptcy? Only assets you had at the time are up for grabs?

Perhaps not the case for the most dedicated drunk drivers, but most young people expect at some point to become old. When they do the RMDs and need to draw money from retirement accounts becomes a near term thing. I suppose one could plan to wait until at or close to retirement before worrying about it...
The only thing a creditor might be able to target in addition to exposed assets is any income you have coming in at that exact time, while you would need to talk to a lawyer or someone more knowledgeable for precise timing, by the time the bankruptcy process is complete any wage garnishment would go away even if it had previously been successfully filled. (Barring a DUI situation or the like.)

The key is the judgement goes away when the bankruptcy process is complete, so the creditors can't touch money still in the 401K or Roth IRA after that point. The one thing I do not know is what happens to an RMD that goes through during the bankruptcy process in terms of creditors. (Bankruptcy would at least protect some income from wages or what you are drawing from retirement accounts so you could continue to pay for some truly necessary basic expenses.)
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Re: Umbrella insurance..who has it? Is it recommended?

Post by RAchip »

If you are uhnw, its more difficult. If you have multiple homes, 10 cars, boats, jet skis and 3+ teenage drivers it becomes a big project to get a 10mm umbrella policy and its expensive I cant get coverage anywhere near my nw.
2pedals
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Re: Umbrella insurance..who has it? Is it recommended?

Post by 2pedals »

Yes it is worth it to have insurance for an unexpected lawsuit event.
Last edited by 2pedals on Mon Sep 03, 2018 8:55 am, edited 1 time in total.
golfCaddy
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Re: Umbrella insurance..who has it? Is it recommended?

Post by golfCaddy »

RAchip wrote: Sun Sep 02, 2018 12:34 pm If you are uhnw, its more difficult. If you have multiple homes, 10 cars, boats, jet skis and 3+ teenage drivers it becomes a big project to get a 10mm umbrella policy and its expensive I cant get coverage anywhere near my nw.
Have you checked with high end carriers? AIG advertises they go up to $100 million.
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Re: Umbrella insurance..who has it? Is it recommended?

Post by bottlecap »

I don't really buy umbrella insurance to protect my assets. It is more to protect me and my family.

Most of my assets are in retirement accounts and can't be touched by creditors.

However, without umbrella insurance, an uninsured driver hit us, cripple the entire family for the rest of our lives, and we would all split a measly $300,000 policy limits.

Thus, we have umbrella insurance, which will cover us.

JT
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Re: Umbrella insurance..who has it? Is it recommended?

Post by InvestorThom »

afan wrote: Sun Sep 02, 2018 9:49 am Regarding protection of retirement assets:
The 401(k) protection is federal law. But even there it depends on what kind of plan it is. The federal protection is greatest for large companies. If you have a small company or sole proprietorship then you are not is as good shape.
Can you expand on this? Isn’t a 401(k) a 401(k) regardless of the size of the company? Why is federal protection for a 401(k) for a large company greater than for a 401(k) at a small company?
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Re: Umbrella insurance..who has it? Is it recommended?

Post by visualguy »

bottlecap wrote: Sun Sep 02, 2018 1:24 pm I don't really buy umbrella insurance to protect my assets. It is more to protect me and my family.

Most of my assets are in retirement accounts and can't be touched by creditors.

However, without umbrella insurance, an uninsured driver hit us, cripple the entire family for the rest of our lives, and we would all split a measly $300,000 policy limits.

Thus, we have umbrella insurance, which will cover us.

JT
What umbrella insurance covers you for that? The ones I know about only cover you for liability claims against you.
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Re: Umbrella insurance..who has it? Is it recommended?

Post by Ricola »

Are there any sources that report or measure the real-life performance of these policies? We had the occasion to read a rental property insurance policy in detail and found it contained enough non-coverage and weasel statements that if it were ever to really be called upon, it could almost be called a fictitious insurance policy.
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Re: Umbrella insurance..who has it? Is it recommended?

Post by daveydoo »

Another yes
"I mean, it's one banana, Michael...what could it cost? Ten dollars?"
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Re: Umbrella insurance..who has it? Is it recommended?

Post by JW-Retired »

talzara wrote: Sun Sep 02, 2018 9:29 am
JW-Retired wrote: Sun Sep 02, 2018 7:22 am Under the state's law, if someone is only 10% at fault in a multiple car accident, but nobody else involved has any insurance or assets, the 10% guy can be liable for all damages. The court decided that the client met the 10% category because he could have "dodged" the collision instead of just mashing his brake. The client did have enough insurance that he could pay the whole very large judgement.

This latter post was a long while back and I've tried to find it before but never could. Can't say it wasn't exaggerated or maybe just made up, but I do know my own state (CA) has a law like that. So I don't chance it and have a $5M umbrella policy. It's very cheap.
Your state does not have a law like that. Nor does any other state in the Union.

California is a pure comparative fault state. A driver who is 10% at fault will only be liable for 10% of the damages, not "all damages."

Here is a list of negligence regimes in all 50 states and the District of Columbia. https://www.mwl-law.com/wp-content/uplo ... states.pdf
I still believe the driver is liable just for the 10% only if the other drivers can pay their share. If they can't it's all on him. This law firm below says there could indeed be a requirement for all damages to be paid by one slightly at fault party. (excepting pain and suffering damages since Prop 51)

From https://www.wmlawyers.com/firm-highligh ... alifornia/

"Under California law, a party who is found to be at fault, no matter how small the percentage of fault, is responsible for payment of all of a victim's economic losses including past and future medical bills and past and future wage loss. However, since the passage of Proposition 51, a wrongdoer is only responsible for payment of the plaintiff's pain and suffering damages based on his or her percentage of fault."

(I added the underline, and CA Prop 51 was in 1986))

This doesn't contradict the lawyer poster's story since the victim had very large & long term medical bills to pay. That was the issue.
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Re: Umbrella insurance..who has it? Is it recommended?

Post by MnD »

A co-worker was found liable in a swimming pool accident at her apartment involving a child (not hers) and had nothing like a umbrella policy. She had low max coverage auto and no renters insurance. Lost the civil suit so owes something like $1.3M. Her garnishments don't even cover the interest so her balance goes up every month. She says she is "in between" the 2 forms of bankruptcy with her income and amount owed so can not do either forms. Pretty much financially screwed for life.
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tadamsmar
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Re: Umbrella insurance..who has it? Is it recommended?

Post by tadamsmar »

ASpenderInRecovery wrote: Sat Sep 01, 2018 11:12 am Bogleheads,

I just reviewed my coverage with USAA and got a quote for $1M umbrella insurance policy for auto/home liability for an extra $26 per month. I'm a bit ignorant on umbrella insurance so I have no idea if it’s necessary or overkill. I live in a HCOL area so my guess is the extra coverage isn’t a bad idea in the event I bump into someone’s Ferrari.

Who on here has umbrella insurance or would recommend the additional coverage?

Thanks for your responses!
I have umbrella insurance through USAA. They use RLI to provide the insurance.

Not sure about additional coverage.

But I have found that any coverage through RLI is valuable for reasons that are not obvious:

1. Just by filling out the application form, I realized that I had a canoe that my MIL had given us that I had lended to a friend of my daughters that was a liability issue. I gave it to the friend since we never used it.

2. I counter-signed a loan for a car (or was it a house, I don't remember). RLI sent me a notice that my insurance would be canceled at the next renewal date if I did not correct my application. They have some way to detect this. I did not realize the liability implications of countersigning a loan.

3. They required me to adjust my limits on auto insurance. I was arguably underinsured even though I met my state's minimums.

I find that just the information about the sources of my liability is helpful. I think it is worth the minor yearly fee.
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Re: Umbrella insurance..who has it? Is it recommended?

Post by NoHeat »

Government agencies have guidelines for the value of a human life in the range of $7 million to $9 million.
https://www.theglobalist.com/the-cost-o ... -speaking/
And an insurer in the aviation industry has told me that $7 million is about how much they take into account, in assessing insurance need for one human life.

So I think $7 million would be a reasonable target, for an umbrella policy, assuming that in the worst case you kill just one person, and the plaintiff seeks an amount that's close to the guidelines.

My insurer has a maximum of $5 million, so that's what I have.
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Re: Umbrella insurance..who has it? Is it recommended?

Post by golfCaddy »

MnD wrote: Sun Sep 02, 2018 5:27 pm A co-worker was found liable in a swimming pool accident at her apartment involving a child (not hers) and had nothing like a umbrella policy. She had low max coverage auto and no renters insurance. Lost the civil suit so owes something like $1.3M. Her garnishments don't even cover the interest so her balance goes up every month. She says she is "in between" the 2 forms of bankruptcy with her income and amount owed so can not do either forms. Pretty much financially screwed for life.
This doesn't make sense on several levels. Why would she, and not the apartment complex, be liable for a swimming pool accident? Was she babysitting the child at the time? The Chapter 7 means test applies to consumer debts, and doesn't apply in liability cases. Even if the debt was consumer debt, there's always the Chapter 11 option, although it's rarely used in individual cases.
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Re: Umbrella insurance..who has it? Is it recommended?

Post by talzara »

afan wrote: Sun Sep 02, 2018 9:51 am But that higher auto liability coverage only covers you for liability arising from automobile related problems. Getting an umbrella policy gives much broader coverage.
Excess auto liability is 85% of the umbrella risk. If you're worried about the other 15%, many homeowners insurers also offer $1 million liability limits.
afan wrote: Sun Sep 02, 2018 9:51 am There are lots of permutations, but I had not heard of liability coverage being cheaper in the narrow- auto only- form than the same policy limit via the -broader- umbrella. But insurance costs vary widely and I suppose that could be the case for some people.
It will be true for about half of the people who buy umbrella insurance.
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Re: Umbrella insurance..who has it? Is it recommended?

Post by MnD »

golfCaddy wrote: Sun Sep 02, 2018 5:57 pm
MnD wrote: Sun Sep 02, 2018 5:27 pm A co-worker was found liable in a swimming pool accident at her apartment involving a child (not hers) and had nothing like a umbrella policy. She had low max coverage auto and no renters insurance. Lost the civil suit so owes something like $1.3M. Her garnishments don't even cover the interest so her balance goes up every month. She says she is "in between" the 2 forms of bankruptcy with her income and amount owed so can not do either forms. Pretty much financially screwed for life.
This doesn't make sense on several levels. Why would she, and not the apartment complex, be liable for a swimming pool accident? Was she babysitting the child at the time? The Chapter 7 means test applies to consumer debts, and doesn't apply in liability cases. Even if the debt was consumer debt, there's always the Chapter 11 option, although it's rarely used in individual cases.
As to to your first question she was supervising children (not for pay and not for a business) and I'm not interested in being Perry Mason as to why she contends she can't declare bankruptcy. But I do know she lost a very big civil lawsuit, she's being garnished for payments associated for it and has communicated she owes more than $1M and she claims the balance after interest charges increases monthly. My only point is that I think an umbrella policy could have come in very handy in this situation which didn't involve something that happened in a person's home or an auto accident.
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