How much Auto Insurance to get

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dingdongditch
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Joined: Wed Mar 15, 2017 7:25 pm

How much Auto Insurance to get

Post by dingdongditch » Sun Dec 17, 2017 10:29 am

Hello,

I am re-examining our Car insurance and was not sure how to determine how much we need to have. Can someone help explain:

1. What auto liability $ amount to hold? (Currently we have $100k/300k liability with $50k property)
2. When should we get an umbrella policy? (I heard you have to raise maximums in Car insurance before umbrella will actually be underwritten)
3. When factoring assets, how does retirement assets come into play? (Do we need to protect 401k, IRA, SE 401k and SEP IRAs?)

Our current networth is ~$500k with ~$300K in retirement assets if that helps with the above factors also I feel we are a bit under-insured given our assets and retirement accounts.

badger42
Posts: 211
Joined: Thu Apr 09, 2015 9:01 am

Re: How much Auto Insurance to get

Post by badger42 » Sun Dec 17, 2017 11:59 am

1) whatever you need to get umbrella. Otherwise, 250/500/100. 50k is half a Tesla.
2) almost certainly yes, you have a meaningful positive net worth, future earnings, etc
3) 401k is protected under ERISA, rest depends on the state

Unless you are judgment proof (no assets, income is only social security, etc), if you drive in 2017 you should have umbrella.

lazyeval
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Re: How much Auto Insurance to get

Post by lazyeval » Sun Dec 17, 2017 12:18 pm

badger42 wrote:
Sun Dec 17, 2017 11:59 am
Unless you are judgment proof (no assets, income is only social security, etc), if you drive in 2017 you should have umbrella.
Noob here, could you please briefly go into why umbrella is a must have these days? thanks.

tj
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Joined: Thu Dec 24, 2009 12:10 am

Re: How much Auto Insurance to get

Post by tj » Sun Dec 17, 2017 12:44 pm

I don't have umbrella, but I do have $1M/$1M liability on my auto. That seemed sufficient.

Why have $1M? So that you aren't forced into bankruptcy after a major at fault-accident....
2. When should we get an umbrella policy? (I heard you have to raise maximums in Car insurance before umbrella will actually be underwritten)
I suppose it could vary by insurance company, but when I had a an umbrella, there was a minimum amount of liability on the underlying policies - it was not a requirement that you maxed out the underlying as far as they could go.


With your assets, I would recommend at least $1M.

badger42
Posts: 211
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Re: How much Auto Insurance to get

Post by badger42 » Sun Dec 17, 2017 12:49 pm

lazyeval wrote:
Sun Dec 17, 2017 12:18 pm
badger42 wrote:
Sun Dec 17, 2017 11:59 am
Unless you are judgment proof (no assets, income is only social security, etc), if you drive in 2017 you should have umbrella.
Noob here, could you please briefly go into why umbrella is a must have these days? thanks.
Damages in an at-fault auto accident can easily hit $1m or more. Umbrella is so that one at-fault accident hopefully will not bankrupt you.

You could (as another poster mentioned) raise your car insurance to $1m/$1m if your insurer allows it, but Umbrella is generally a broader coverage (and goes over $1m if needed - $2m is the new $1m, especially if you live in a high-cost state like NY / MA / CA)

tj
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Joined: Thu Dec 24, 2009 12:10 am

Re: How much Auto Insurance to get

Post by tj » Sun Dec 17, 2017 12:59 pm

When factoring assets, how does retirement assets come into play? (Do we need to protect 401k, IRA, SE 401k and SEP IRAs?)
The protections for IRA's vary by state. 401k(s) I believe have pretty strong federal protections.

I found this to be a helpful article:

https://www.marketwatch.com/story/how-t ... 2014-06-30

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dm200
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Location: Washington DC area

Re: How much Auto Insurance to get

Post by dm200 » Sun Dec 17, 2017 1:28 pm

tj wrote:
Sun Dec 17, 2017 12:59 pm
When factoring assets, how does retirement assets come into play? (Do we need to protect 401k, IRA, SE 401k and SEP IRAs?)
The protections for IRA's vary by state. 401k(s) I believe have pretty strong federal protections.

I found this to be a helpful article:

https://www.marketwatch.com/story/how-t ... 2014-06-30
Note the BIG difference between asset protection from civil judgments and in bankruptcy. As asset (an IRA, for example, may be protected if you go bankrupt, but NOT if you have a civil judgment and do not go bankrupt. This is very dependent on applicable state law.

theplayer11
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Joined: Tue Jul 22, 2014 8:55 pm

Re: How much Auto Insurance to get

Post by theplayer11 » Sun Dec 17, 2017 2:19 pm

dm200 wrote:
Sun Dec 17, 2017 1:28 pm
tj wrote:
Sun Dec 17, 2017 12:59 pm
When factoring assets, how does retirement assets come into play? (Do we need to protect 401k, IRA, SE 401k and SEP IRAs?)
The protections for IRA's vary by state. 401k(s) I believe have pretty strong federal protections.

I found this to be a helpful article:

https://www.marketwatch.com/story/how-t ... 2014-06-30
Note the BIG difference between asset protection from civil judgments and in bankruptcy. As asset (an IRA, for example, may be protected if you go bankrupt, but NOT if you have a civil judgment and do not go bankrupt. This is very dependent on applicable state law.
Is there a list somewhere by state?

Edit: Found this chart, most every state protects IRA's, including Roth from creditors...few exceptions, including CA
https://www.thetaxadviser.com/content/d ... achart.pdf

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MP123
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Re: How much Auto Insurance to get

Post by MP123 » Sun Dec 17, 2017 3:51 pm

You could also have liability related to home ownership, boats, other toys, and so on. An umbrella policy would cover that while a high limit Auto policy wouldn't do anything for a slip/fall injury at your house for example.

DrGoogle2017
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Re: How much Auto Insurance to get

Post by DrGoogle2017 » Sun Dec 17, 2017 4:10 pm

My 22 year old with kid with zero or almost zero asset has upped her property damage to $100k for just $9. She thought in the Bay Area, she has much higher chance of hitting a much more expensive car. She also has uninsured motorist with similar liability.

tj
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Joined: Thu Dec 24, 2009 12:10 am

Re: How much Auto Insurance to get

Post by tj » Mon Dec 18, 2017 10:35 am

MP123 wrote:
Sun Dec 17, 2017 3:51 pm
You could also have liability related to home ownership, boats, other toys, and so on. An umbrella policy would cover that while a high limit Auto policy wouldn't do anything for a slip/fall injury at your house for example.
That's why I also have a $1 mill limit on my Homeowner's policy.

miamivice
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Joined: Tue Jun 11, 2013 11:46 am

Re: How much Auto Insurance to get

Post by miamivice » Mon Dec 18, 2017 10:52 am

dingdongditch wrote:
Sun Dec 17, 2017 10:29 am
Hello,

I am re-examining our Car insurance and was not sure how to determine how much we need to have. Can someone help explain:

1. What auto liability $ amount to hold? (Currently we have $100k/300k liability with $50k property)
2. When should we get an umbrella policy? (I heard you have to raise maximums in Car insurance before umbrella will actually be underwritten)
3. When factoring assets, how does retirement assets come into play? (Do we need to protect 401k, IRA, SE 401k and SEP IRAs?)

Our current networth is ~$500k with ~$300K in retirement assets if that helps with the above factors also I feel we are a bit under-insured given our assets and retirement accounts.
I would recommend $300 combined single limits or 300/300/100.

If you smash into someone's nice car (SUV, newer truck, or luxury car) you could easily exceed $50k in damages.

$100k is not enough if you cause big medical injuries to another party. Say you hit them and they aren't wearing a seat belt, for example. They might need a longer hospital stay and that exceeds $100k pretty quick.

$300k is better, but an umbrella policy would be the best.

new2bogle
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Joined: Fri Sep 11, 2009 2:05 pm

Re: How much Auto Insurance to get

Post by new2bogle » Mon Dec 18, 2017 12:26 pm

You are already in need of an umbrella policy, I'd recommend $1 million to start with. Should be fairly cheap ($100-$200/year).

Your insurance company may up your auto coverage limits to get the umbrella. $50k property damage is nowhere near enough. I see 1-2 Teslas during my morning commute and another 1 or 2 during my evening commute (and this is in TX, not bay area). I don't think there is a Tesla available cheaper than $85k (?). That doesn't include all the other luxury cars that a substantial portion of the population can now afford to buy/lease.

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