Umbrella Insurance

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Barefootgirl
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Umbrella Insurance

Post by Barefootgirl » Wed Mar 14, 2018 3:24 am

I know it's recommended and I know it's often considered reasonably priced, but what might be some real-world examples of when it would come in handy to have?
How many retired people does it take to screw in a lightbulb? Only one, but he takes all day.

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Top99%
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Re: Umbrella Insurance

Post by Top99% » Wed Mar 14, 2018 7:29 am

There are some people who have posted real life examples on this board but here are a couple:
1) You are in a car crash which is deemed to be your fault and get sued for an amount of money greater than your auto policy will cover. This happened to at least one person on this board.
2) Someone injures themselves on your property and sues.
The idea behing having umbrella liability insurance for $2m or so is your insurance company now has $2m worth of skin in the game and will come to your defence with their army of lawyers. So, I kind of view it like having a defense lawyer on retainer.
Adapt or perish

carolinaman
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Location: North Carolina

Re: Umbrella Insurance

Post by carolinaman » Wed Mar 14, 2018 7:35 am

I cannot give you a real example but essentially umbrella insurance gives you liability coverage above what standard auto and homeowner policies cover. I know people who were at fault in fatal accidents and were sued. I do not know what the outcome was but a 7 figure settlement in excess of auto liability coverage could easily occur. For example, if you were at fault in the death of a young neurologist with a large family, a large settlement is likely. An umbrella policy can cover these high risk, very low probability events. Also, umbrella policies may cover liabilities not covered under either auto or homeowners. We live in a litigious society with lots of lawyers looking for clients. Our risk of being sued may be low, but it is greater than zero. Another advantage of umbrella insurance is that if you are sued, the insurance company lawyers will represent you, at least to the extent of their liability.

I pay $315 for a $3M policy. Also, I can reduce my liability coverage on my auto and homeowner's policies because of my umbrella policy, which reduces those premiums. Cheap insurance.

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TinyElvis
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Re: Umbrella Insurance

Post by TinyElvis » Wed Mar 14, 2018 7:42 am

carolinaman wrote:
Wed Mar 14, 2018 7:35 am
Also, I can reduce my liability coverage on my auto and homeowner's policies because of my umbrella policy, which reduces those premiums. Cheap insurance.
May I ask with whom you have your umbrella policy?

I had to max out my auto liability before I could get an umbrella policy. :-\

JW-Retired
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Re: Umbrella Insurance

Post by JW-Retired » Wed Mar 14, 2018 7:52 am

Top99% wrote:
Wed Mar 14, 2018 7:29 am
1) You are in a car crash which is deemed to be your fault and get sued for an amount of money greater than your auto policy will cover.
In some states like CA the crash doesn't have to be deemed "your fault". Only 10% your fault, such as you choose to mash the brake instead of "dodging" the drunk driver who swerved across the road and hit you head on.

I can't find the thread but there was one several years back where the defending attorney here described such a case.... that he/she lost.

Umbrella insurance is very cheap.
JW
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bampf
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Re: Umbrella Insurance

Post by bampf » Wed Mar 14, 2018 8:00 am

People suggest it is very cheap, and I suppose it is considering the alternatives. Looking at it, I see about $800 for a $2M policy per year. Is that with in the norm?

JW-Retired
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Re: Umbrella Insurance

Post by JW-Retired » Wed Mar 14, 2018 8:23 am

bampf wrote:
Wed Mar 14, 2018 8:00 am
People suggest it is very cheap, and I suppose it is considering the alternatives. Looking at it, I see about $800 for a $2M policy per year. Is that with in the norm?
We pay $550 for $5M. We are retired and don't have teenage kids, but we do drive Silicon Valley freeways where millionaire drivers looking at their Iphones abound.
JW
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Jon H
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Re: Umbrella Insurance

Post by Jon H » Wed Mar 14, 2018 8:29 am

bampf wrote:
Wed Mar 14, 2018 8:00 am
People suggest it is very cheap, and I suppose it is considering the alternatives. Looking at it, I see about $800 for a $2M policy per year. Is that with in the norm?
Factors that elevated my umbrella cost included a young driver (25 y or less) and an area with high litigation. I have quotes similar to you.
Consider gain and loss, but never be greedy and everything will be alright (fortune cookie)

letsgobobby
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Re: Umbrella Insurance

Post by letsgobobby » Wed Mar 14, 2018 8:32 am

We pay $100 per million. No teenage drivers.

golfCaddy
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Re: Umbrella Insurance

Post by golfCaddy » Wed Mar 14, 2018 5:19 pm

I read somewhere 80-90% of umbrella claims were for auto accidents. Take a look at these threads:
viewtopic.php?t=131550 (there's a 32 million dollar case)
viewtopic.php?t=193378
viewtopic.php?t=130042

j0nnyg1984
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Re: Umbrella Insurance

Post by j0nnyg1984 » Wed Mar 14, 2018 6:39 pm

letsgobobby wrote:
Wed Mar 14, 2018 8:32 am
We pay $100 per million. No teenage drivers.
Same here. No dogs, no swimming pool :mrgreen:

av111
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Re: Umbrella Insurance

Post by av111 » Wed Mar 14, 2018 7:08 pm

AIG is offering 1500 for 5 mill with teenage driver and several rental homes. Must also take primary home coverage from them at 2.5 x our current premium (but they have higher home coverage).

We already have 1 mill liability on each of the rentals. And auto liability is the highest Geico offers. Still leaning to buying just because ...

ryman554
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Re: Umbrella Insurance

Post by ryman554 » Thu Mar 15, 2018 9:48 am

TinyElvis wrote:
Wed Mar 14, 2018 7:42 am
carolinaman wrote:
Wed Mar 14, 2018 7:35 am
Also, I can reduce my liability coverage on my auto and homeowner's policies because of my umbrella policy, which reduces those premiums. Cheap insurance.
May I ask with whom you have your umbrella policy?

I had to max out my auto liability before I could get an umbrella policy. :-\
I was also under the impression that the liability with auto/home is *cheaper* than the liability under umbrella, so use the rule of thumb to max out auto and/or home liability and reduce the umbrella by $1M.

smackboy1
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Re: Umbrella Insurance

Post by smackboy1 » Thu Mar 15, 2018 11:51 am

Umbrella insurance is excess liability coverage which is secondary to the primary auto and HO insurance. Umbrella only pays out if the primary insurance is exhausted first. Think of the primary insurance payout limits as the "deductible" before the umbrella kicks in. This makes umbrella relatively inexpensive on a $ cost per $ covered basis. This is why most insurers want the insured to carry at least a threshold high level of primary coverage before they are eligible to buy umbrella. So if the primary policy has a $500K bodily injury limit and $1MM umbrella, it will pay a max total of $1.5MM for that type of claim. Statistically, most people never experience a payout and lower claim payouts are more common than higher ones. This is why generally $2MM of umbrella is less than twice the cost of $1MM.

Another reason not to skimp on primary insurance coverage is uninsured motorist. Some insurers limit UM coverage to the same as the other coverage. So if you and your family get hit by an uninsured motorist who is 100% at fault, the max payout will be the same as the for the other limits. Also, most insurers don't sell umbrella for UM.
Disclaimer: nothing written here should be taken as legal advice, but I did stay at a Holiday Inn Express last night.

skeptical
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Re: Umbrella Insurance

Post by skeptical » Thu Mar 15, 2018 3:25 pm

If you are looking for more than $1M in umbrella insurance, I would take a look at PURE.

I was not even able to get more than $2M from my old insurance company, switched everything over to PURE and got a lot more coverage for actually a little less money. Roughly a little less than $200 per $1M with two teenagers in a high cost, and presumably high litigation, location.

You do need to move everything to get the benefits, but they seem to be a solid place to work with. And I think you would want the same company to be handling both the basic and umbrella. While it is difficult to understand all the fine print, a few things stood out for me:

- Your umbrella coverage starts after you exhaust your basic insurance (not all places do this, for some the umbrella is really the umbrella minus the basic insurance).
- Uninsured motorist is pretty generous, several times larger than the insured motorist amounts.
- Replacement property coverage allows you to take the cash, other places force you to spend the money to rebuild.
- Part of your yearly payments go to some internal fund the company uses to provide discounts for customers who stay, so your premiums effectively go down over the years (though might be offset by normal premium increases). You can look at it as you pay more as a new customer, but their package for me saved me money over other places, so I do look at it as a discount as a stay.
- From what I can tell, the policies seem to cover more.
- Significant discounts as you take larger deductibles, seems to be larger than other places I looked at. Altogether, I am playing a lot less now, but have large deductibles.

carolinaman
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Location: North Carolina

Re: Umbrella Insurance

Post by carolinaman » Thu Mar 15, 2018 4:36 pm

TinyElvis wrote:
Wed Mar 14, 2018 7:42 am
carolinaman wrote:
Wed Mar 14, 2018 7:35 am
Also, I can reduce my liability coverage on my auto and homeowner's policies because of my umbrella policy, which reduces those premiums. Cheap insurance.
May I ask with whom you have your umbrella policy?

I had to max out my auto liability before I could get an umbrella policy. :-\
State Farm who also has my auto and homeowners

talzara
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Re: Umbrella Insurance

Post by talzara » Thu Mar 15, 2018 5:55 pm

ryman554 wrote:
Thu Mar 15, 2018 9:48 am
I was also under the impression that the liability with auto/home is *cheaper* than the liability under umbrella, so use the rule of thumb to max out auto and/or home liability and reduce the umbrella by $1M.
Usually, but not always.

If you have lots of discounts, then auto and homeowners will cost less than umbrella. If you don't, then umbrella will cost less than auto and homeowners.

Umbrella insurance has a very simple rate structure and very few discounts. When you buy umbrella insurance, you lose the discounts that you had on auto insurance.

Keep in mind that insurance companies only accept above-average risks for umbrella policies. To save money, you have to beat the average risk for umbrella insurance, not the average risk for auto insurance.

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