Umbrella Policy- 1M or 2M?

Non-investing personal finance issues including insurance, credit, real estate, taxes, employment and legal issues such as trusts and wills.
Topic Author
guppyguy
Posts: 483
Joined: Tue Jan 30, 2018 3:24 pm

Umbrella Policy- 1M or 2M?

Post by guppyguy »

Just doing an annual review of our insurance policies....we've carried a 1M umbrella policy with Amica for years. Pretty standard assets, 4 cars, 1 house, 401K.

When/why would one increase coverage from 1M to something higher, 2M being the next step up? Currently 1M coverage is $582 annually, it would be an extra $374 for 2M.

Thoughts???
User avatar
birdog
Posts: 1511
Joined: Fri Apr 07, 2017 1:35 pm
Location: Anytown, USA

Re: Umbrella Policy- 1M or 2M?

Post by birdog »

Similar numbers for me. I chose to stay at 1M. It seems that the vast majority of claims were settled w/in that limit and I felt that the increase in premium wasn't worth it, in my opinion.
terran
Posts: 3202
Joined: Sat Jan 10, 2015 9:50 pm

Re: Umbrella Policy- 1M or 2M?

Post by terran »

Some people try to equal or exceed their net worth, I don't really know why. Others try to cover the largest non-medical/non-business civil case in their state or an amount that would cover most such cases, which seems like it's at least a little more logical. I'm not sure if you can find that information for all states, but it's certainly available for some. At the end of the day you want to make it seem unlikely to the other party's lawyers that they could get more from you than the insurance policy will cover given the merits of the case. If your assets + your future income are low then a smaller umbrella policy is fine, if there larger then you might want to cover more up to the most you might be successfully sued for.
cricket49
Posts: 282
Joined: Sun Apr 05, 2015 4:14 pm

Re: Umbrella Policy- 1M or 2M?

Post by cricket49 »

We paid 200.00 to increase the umbrella from 1M to 2M.
Umbrella increase was based on our net worth.
Expect the best. Prepare for the worst.
Topic Author
guppyguy
Posts: 483
Joined: Tue Jan 30, 2018 3:24 pm

Re: Umbrella Policy- 1M or 2M?

Post by guppyguy »

cricket49 wrote: Thu Mar 28, 2024 10:51 am We paid 200.00 to increase the umbrella from 1M to 2M.
Umbrella increase was based on our net worth.
Just curious if you excluded retirements assets from the net worth total (I'm presuming they are judgement proof?)?
Lmf1171
Posts: 16
Joined: Thu Jan 09, 2020 10:09 am

Re: Umbrella Policy- 1M or 2M?

Post by Lmf1171 »

I recently increased our umbrella insurance from $1M to $2M (premium increased from $215 to $325).

The reason had nothing to do with our assets (in the ~$2M range, but mostly in protected retirement accounts) and was based on a family member receiving a large award following a MVA. The defendant had a $1M umbrella plus $250K underlying insurance, which did not cover the full amount of the award.
realclemsongrad
Posts: 366
Joined: Sat May 16, 2020 4:37 pm

Re: Umbrella Policy- 1M or 2M?

Post by realclemsongrad »

guppyguy wrote: Thu Mar 28, 2024 10:32 am Just doing an annual review of our insurance policies....we've carried a 1M umbrella policy with Amica for years. Pretty standard assets, 4 cars, 1 house, 401K.

When/why would one increase coverage from 1M to something higher, 2M being the next step up? Currently 1M coverage is $582 annually, it would be an extra $374 for 2M.

Thoughts???
This depends on if you have young drivers on your policy esp boys :). We had to up to 2M for that reason. It is a small cost for additional coverage.
lazydavid
Posts: 5246
Joined: Wed Apr 06, 2016 1:37 pm

Re: Umbrella Policy- 1M or 2M?

Post by lazydavid »

realclemsongrad wrote: Thu Mar 28, 2024 12:47 pm This depends on if you have young drivers on your policy esp boys :). We had to up to 2M for that reason. It is a small cost for additional coverage.
We did similarly, only went with 3M. The premium more than doubled when our son got his license, currently $1,247/yr. It was $5xx before.
FunOnABudget
Posts: 63
Joined: Sat Sep 10, 2022 9:33 am

Re: Umbrella Policy- 1M or 2M?

Post by FunOnABudget »

I know that during a lawsuit a common discovery question (which is allowed) is how much liability insurance coverage you have.

For the lawyers out there, can they also learn your net worth?

And what are the impacts on what plaintiffs do if these numbers are high or low?
madbrain
Posts: 7480
Joined: Thu Jun 09, 2011 5:06 pm
Location: San Jose, California

Re: Umbrella Policy- 1M or 2M?

Post by madbrain »

guppyguy wrote: Thu Mar 28, 2024 10:55 am Just curious if you excluded retirements assets from the net worth total (I'm presuming they are judgement proof?)?
In CA, some retirement assets are not judgment proof. This depends on the state.
Last edited by madbrain on Fri Mar 29, 2024 6:47 am, edited 1 time in total.
madbrain
Posts: 7480
Joined: Thu Jun 09, 2011 5:06 pm
Location: San Jose, California

Re: Umbrella Policy- 1M or 2M?

Post by madbrain »

FunOnABudget wrote: Thu Mar 28, 2024 9:58 pm For the lawyers out there, can they also learn your net worth?
IANAL, but it easy to find one's home value if it is owned as well as liens against it from county records.
The home is the largest asset for most people, though maybe not Bogleheads.
madbrain
Posts: 7480
Joined: Thu Jun 09, 2011 5:06 pm
Location: San Jose, California

Re: Umbrella Policy- 1M or 2M?

Post by madbrain »

I carry a $2M Umbrella. This was based on my net worth some years ago. It has more than doubled now. I might consider increasing the coverage.
WolfgangPauli
Posts: 619
Joined: Sun Aug 23, 2015 8:28 am

Re: Umbrella Policy- 1M or 2M?

Post by WolfgangPauli »

I am one that had my umbrella keep up with net worth.
Twitter: @JAXbogleheads | EM: JAXbogleheads@gmail.com
Firemenot
Posts: 1506
Joined: Wed Apr 01, 2020 8:48 pm

Re: Umbrella Policy- 1M or 2M?

Post by Firemenot »

2M. That’s expensive umbrella insurance.
madbrain
Posts: 7480
Joined: Thu Jun 09, 2011 5:06 pm
Location: San Jose, California

Re: Umbrella Policy- 1M or 2M?

Post by madbrain »

Firemenot wrote: Thu Mar 28, 2024 10:17 pm 2M. That’s expensive umbrella insurance.
Umbrella is relatively cheap. $300-$500 per year is typical for a $2M coverage amount. What's expensive is that you have to carry maximum coverage on your auto and home policies.
Looks like one insurer can write me a $5M umbrella for $499.
tibbitts
Posts: 23941
Joined: Tue Feb 27, 2007 5:50 pm

Re: Umbrella Policy- 1M or 2M?

Post by tibbitts »

guppyguy wrote: Thu Mar 28, 2024 10:32 am Just doing an annual review of our insurance policies....we've carried a 1M umbrella policy with Amica for years. Pretty standard assets, 4 cars, 1 house, 401K.

When/why would one increase coverage from 1M to something higher, 2M being the next step up? Currently 1M coverage is $582 annually, it would be an extra $374 for 2M.

Thoughts???
Rephrasing: "Is increasing my umbrella from $1M to $2M worth $374?" It doesn't help you to know rates other people are paying. I assume you've shopped rates, or have other reasons why $374 is your cost. Umbrella insurance isn't a commodity and is very specific to you. It's not like the consumer questions we get about how much to pay for a new Corolla with a specified list of options and MSRP.

I'd probably consider factors like my age, whether I had a spouse or kids, what some of my lifestyle exposures were, what my income and expenses were (so, how much $374 meant to me), how much I had in assets... and maybe other things I can't think of right now. We don't know you well enough to consider those things.
User avatar
Lee_WSP
Posts: 10477
Joined: Fri Apr 19, 2019 5:15 pm
Location: Arizona

Re: Umbrella Policy- 1M or 2M?

Post by Lee_WSP »

FunOnABudget wrote: Thu Mar 28, 2024 9:58 pm I know that during a lawsuit a common discovery question (which is allowed) is how much liability insurance coverage you have.

For the lawyers out there, can they also learn your net worth?

And what are the impacts on what plaintiffs do if these numbers are high or low?
Yes and no. A lot of stuff is public information, but more importantly, if the plaintiff settles for the limits, they're going to ask for an affidavit of financial position.
LookinAround
Posts: 927
Joined: Tue Mar 27, 2018 5:41 am

Re: Umbrella Policy- 1M or 2M?

Post by LookinAround »

guppyguy wrote: Thu Mar 28, 2024 10:32 am Just doing an annual review of our insurance policies....we've carried a 1M umbrella policy with Amica for years. Pretty standard assets, 4 cars, 1 house, 401K.

When/why would one increase coverage from 1M to something higher, 2M being the next step up? Currently 1M coverage is $582 annually, it would be an extra $374 for 2M.

Thoughts???
Double check, but I believe your retirement assets (e.g. IRA, 401K funds) are protected from lawsuits. Inherited IRAs aren't considered a retirement account and are not protected.

So, the umbrella policy $ coverage should protect your non-retirement assets. Whether you want to protect all of it or just a portion of it is up to you. If you don't want to protect all of it, ask yourself how much risk are you willing to take should you lose the non-covered amount? Can you still survive? Is the premium savings worth the risk?
madbrain
Posts: 7480
Joined: Thu Jun 09, 2011 5:06 pm
Location: San Jose, California

Re: Umbrella Policy- 1M or 2M?

Post by madbrain »

LookinAround wrote: Fri Mar 29, 2024 6:41 am Double check, but I believe your retirement assets (e.g. IRA, 401K funds) are protected from lawsuits.
This is incorrect. It depends on the state and type of plan.

https://www.experian.com/blogs/ask-expe ... -lawsuits/
So, the umbrella policy $ coverage should protect your non-retirement assets. Whether you want to protect all of it or just a portion of it is up to you. If you don't want to protect all of it, ask yourself how much risk are you willing to take should you lose the non-covered amount? Can you still survive? Is the premium savings worth the risk?
Even if your state law protects all your retirement assets, If you take distributions from them, and they end up in an unprotected taxable account, the amount of distributions would be at risk. You could stop the distributions if you can afford to, but in some cases you can't - got example with SEPP, or at least, not without very heavy penalties.
NYHawkeye
Posts: 122
Joined: Mon May 15, 2023 5:43 pm

Re: Umbrella Policy- 1M or 2M?

Post by NYHawkeye »

Recently bumped up our umbrella to keep up with net worth - depending on the state some retirement assets and a homesteaded property can be shielded. It is very state by state specific so a bit of research is necessary.
snic
Posts: 775
Joined: Wed Jun 28, 2023 11:37 am

Re: Umbrella Policy- 1M or 2M?

Post by snic »

madbrain wrote: Fri Mar 29, 2024 6:51 am
LookinAround wrote: Fri Mar 29, 2024 6:41 am Double check, but I believe your retirement assets (e.g. IRA, 401K funds) are protected from lawsuits.
This is incorrect. It depends on the state and type of plan.

https://www.experian.com/blogs/ask-expe ... -lawsuits/
So, the umbrella policy $ coverage should protect your non-retirement assets. Whether you want to protect all of it or just a portion of it is up to you. If you don't want to protect all of it, ask yourself how much risk are you willing to take should you lose the non-covered amount? Can you still survive? Is the premium savings worth the risk?
Even if your state law protects all your retirement assets, If you take distributions from them, and they end up in an unprotected taxable account, the amount of distributions would be at risk. You could stop the distributions if you can afford to, but in some cases you can't - got example with SEPP, or at least, not without very heavy penalties.
What if you live in a state that protects retirement accounts, visit a state that does not, and an incident occurs there that causes someone to sue you? Would your home state law protect your retirement assets? The case would be tried (if it goes to court) in the state you visited.
User avatar
Kagord
Posts: 1699
Joined: Fri Nov 23, 2018 12:28 pm
Location: Peaksville, Ohio

Re: Umbrella Policy- 1M or 2M?

Post by Kagord »

If you follow the formula of umbrella insurance to net worth (less house), it's a pretty trivial cost, IMHO. IE, trivial if you have $2M of net worth, that $374 extra is less than 0.02% annual carrying cost for the bump from $1M to $2M. If you're going to throw money out the window, I'd do this over other things.
Rocinante Rider
Posts: 286
Joined: Fri Aug 19, 2022 12:52 pm

Re: Umbrella Policy- 1M or 2M?

Post by Rocinante Rider »

As homeowners with two cars, my spouse and I pay $799 for 5M coverage. Each additional 1M unit typically costs much less in premiums. Personal injury liability is the only otherwise uncovered risk of financial calamity. Even if we had only 1M in assets, a 1M umbrella policy would still wipe us out if we incurred a 2M settlement or judgement.
NYCaviator
Posts: 2028
Joined: Sat Apr 09, 2016 5:06 pm
Location: NYC

Re: Umbrella Policy- 1M or 2M?

Post by NYCaviator »

There are other things to consider too, outside of pure net worth. Are you a higher profile business person? Are you driving a nicer car? Do you own a nicer home?

Many people talk about how they've had "$1m for years" but that's the problem. $1m five or ten years ago may have been sufficient, but with inflation skyrocketing medical costs, and the fact that people are earning more than ever, it's really not that much. Consider if you seriously injured a surgeon who made $600,000 a year. That $1m umbrella isn't going to go very far. I'd say that $5m is the new $1m.
scifilover
Posts: 550
Joined: Sun Apr 14, 2013 12:56 pm

Re: Umbrella Policy- 1M or 2M?

Post by scifilover »

People tend to think only of events for which they might be the primary cause of an accident. In many states today various forms of comparative negligence control who pays for what. Suppose you were in an accident in which a speeding intoxicated driver crossed the center line and hit you head on. At the time of the accident, you were going 5mph over the speed limit. In the other car are three people who are seriously injured and one fatality. The driver is uninsured. One of the injured is a small baby who will need long lifelong care.

At trial, you might be found to be one percent negligent, because you were speeding, and this might have prevented you from dodging the on-coming car. Under these circumstances in California for example, you could be stuck paying for the the losses in the other car even if that driver was 99% fault. After all, the baby needs care, and had nothing to do with the event.

This is a link which contains a state-by-state summary of these laws.

https://1800lionlaw.com/negligence-laws ... ed-states/
scifilover
Posts: 550
Joined: Sun Apr 14, 2013 12:56 pm

Re: Umbrella Policy- 1M or 2M?

Post by scifilover »

scifilover wrote: Fri Mar 29, 2024 8:37 am People tend to think only of events for which they might be the primary cause of an accident. In many states today various forms of comparative negligence control who pays for what. Suppose you were in an accident in which a speeding intoxicated driver crossed the center line and hit you head on. At the time of the accident, you were going 5mph over the speed limit. In the other car are three people who are seriously injured and one fatality. The driver is uninsured. One of the injured is a small baby who will need lifelong care.

At trial, you might be found to be one percent negligent, because you were speeding, and this might have prevented you from dodging the on-coming car. Under these circumstances in California for example, you could be stuck paying for the the losses in the other car even if that driver was 99% fault. After all, the baby needs care, and had nothing to do with the event.

This is a link which contains a state-by-state summary of these laws.

https://1800lionlaw.com/negligence-laws ... ed-states/
Bobby206
Posts: 682
Joined: Fri Oct 05, 2018 4:01 pm

Re: Umbrella Policy- 1M or 2M?

Post by Bobby206 »

We went to $3m but I will acknowledge I am fairly cautious. To me it's so cheap to add an extra million so why not!? The better I sleep the better!

Also, it's not hard to imagine a lawsuit exceeding $1m these days. Like everything it costs more today than in the past!
legalwriter1
Posts: 128
Joined: Tue Aug 16, 2022 9:59 am

Re: Umbrella Policy- 1M or 2M?

Post by legalwriter1 »

If you are concerned about protecting assets from potential creditors, another option besides insurance is to create a Domestic Asset Protection Trust (DAPT) which is available in some states. It is considered an irrevocable trust, but you can name yourself and your adult child as co-trustees.
User avatar
Lee_WSP
Posts: 10477
Joined: Fri Apr 19, 2019 5:15 pm
Location: Arizona

Re: Umbrella Policy- 1M or 2M?

Post by Lee_WSP »

legalwriter1 wrote: Fri Mar 29, 2024 8:55 am If you are concerned about protecting assets from potential creditors, another option besides insurance is to create a Domestic Asset Protection Trust (DAPT) which is available in some states. It is considered an irrevocable trust, but you can name yourself and your adult child as co-trustees.
Never would I ever recommend a DAPT for that reason or before insurance.
Bobby206
Posts: 682
Joined: Fri Oct 05, 2018 4:01 pm

Re: Umbrella Policy- 1M or 2M?

Post by Bobby206 »

legalwriter1 wrote: Fri Mar 29, 2024 8:55 am If you are concerned about protecting assets from potential creditors, another option besides insurance is to create a Domestic Asset Protection Trust (DAPT) which is available in some states. It is considered an irrevocable trust, but you can name yourself and your adult child as co-trustees.
That's a great thing to have if your state allows but it doesn't protect all assets. For example, my IRA exceeds the amount protected in my state.
Bobby206
Posts: 682
Joined: Fri Oct 05, 2018 4:01 pm

Re: Umbrella Policy- 1M or 2M?

Post by Bobby206 »

Lee_WSP wrote: Fri Mar 29, 2024 9:23 am
legalwriter1 wrote: Fri Mar 29, 2024 8:55 am If you are concerned about protecting assets from potential creditors, another option besides insurance is to create a Domestic Asset Protection Trust (DAPT) which is available in some states. It is considered an irrevocable trust, but you can name yourself and your adult child as co-trustees.
Never would I ever recommend a DAPT for that reason or before insurance.
100% agree with you. Insurance first. Avoid lawsuits if you can!
WestCoastPhan
Posts: 431
Joined: Sun Apr 24, 2022 10:30 pm

Re: Umbrella Policy- 1M or 2M?

Post by WestCoastPhan »

Like some of the other posters, above, I upgraded to $5M a few years ago. It's not that expensive.
exodusNH
Posts: 10542
Joined: Wed Jan 06, 2021 7:21 pm

Re: Umbrella Policy- 1M or 2M?

Post by exodusNH »

guppyguy wrote: Thu Mar 28, 2024 10:32 am Just doing an annual review of our insurance policies....we've carried a 1M umbrella policy with Amica for years. Pretty standard assets, 4 cars, 1 house, 401K.

When/why would one increase coverage from 1M to something higher, 2M being the next step up? Currently 1M coverage is $582 annually, it would be an extra $374 for 2M.

Thoughts???
It sounds like you've got young drivers on your policy. As most umbrella claims are as a result of auto claims, young drivers increase the cost.

You could price out increasing your auto liability amounts and see if that's a better option, keeping in mind that the umbrella is on top of those limits. E.g., if you currently have $500k in liability, you actually have $1.5M in coverage.
tibbitts
Posts: 23941
Joined: Tue Feb 27, 2007 5:50 pm

Re: Umbrella Policy- 1M or 2M?

Post by tibbitts »

For those with an umbrella, how many of you have the umbrella with your base insurance provider vs. another insurance provider for the umbrella only?
User avatar
queso
Posts: 1344
Joined: Thu Jan 07, 2016 2:52 pm

Re: Umbrella Policy- 1M or 2M?

Post by queso »

tibbitts wrote: Fri Mar 29, 2024 10:57 am For those with an umbrella, how many of you have the umbrella with your base insurance provider vs. another insurance provider for the umbrella only?
Same provider. 4M.
NYHawkeye
Posts: 122
Joined: Mon May 15, 2023 5:43 pm

Re: Umbrella Policy- 1M or 2M?

Post by NYHawkeye »

tibbitts wrote: Fri Mar 29, 2024 10:57 am For those with an umbrella, how many of you have the umbrella with your base insurance provider vs. another insurance provider for the umbrella only?
Had everything bundled with Geico but premiums were going up rapidly. Shopped it out without worrying about bundling and saved ~25%. Two homes are with different companies and auto/umbrella with Progressive now. Separate umbrella didn't really save anything.
tibbitts
Posts: 23941
Joined: Tue Feb 27, 2007 5:50 pm

Re: Umbrella Policy- 1M or 2M?

Post by tibbitts »

exodusNH wrote: Fri Mar 29, 2024 10:22 am It sounds like you've got young drivers on your policy. As most umbrella claims are as a result of auto claims, young drivers increase the cost.
I've been surprised that the number of drivers (number of people included in the umbrella in general) didn't change the cost of a policy in my case. Maybe changing the characteristics of the people would. Given multiple cars and it being impossible for one person to drive more than one at once, that seems odd.
tibbitts
Posts: 23941
Joined: Tue Feb 27, 2007 5:50 pm

Re: Umbrella Policy- 1M or 2M?

Post by tibbitts »

NYHawkeye wrote: Fri Mar 29, 2024 11:05 am
tibbitts wrote: Fri Mar 29, 2024 10:57 am For those with an umbrella, how many of you have the umbrella with your base insurance provider vs. another insurance provider for the umbrella only?
Had everything bundled with Geico but premiums were going up rapidly. Shopped it out without worrying about bundling and saved ~25%. Two homes are with different companies and auto/umbrella with Progressive now. Separate umbrella didn't really save anything.
I wonder if there are practical problems in coordinating whatever defense/assitance would be provided for the first $250 or $500k base coverage with a different company providing the defense/assitance for the overage?
Jovby
Posts: 431
Joined: Sat Sep 18, 2021 7:14 pm

Re: Umbrella Policy- 1M or 2M?

Post by Jovby »

guppyguy wrote: Thu Mar 28, 2024 10:32 am Currently 1M coverage is $582 annually, it would be an extra $374 for 2M.

Thoughts???
We also paid about $200 to go up from 1M to 2M @guppyguy. Curious why yours is almost double. Perhaps shop around and see if you are getting a reasonable quote.

We went with 2M because the cost is negligible, and we'd rather be over then under prepared. Also I don't want to have to review it every year as the cost of settlements goes up. I figure I'm good for at least 10 years or so.
FIRWYW
Posts: 358
Joined: Thu Dec 23, 2021 8:11 am

Re: Umbrella Policy- 1M or 2M?

Post by FIRWYW »

I carry 2 mil. Mainly b/c it was something like $14 more than 1 mil with our insurance and we have a trampoline, but total is still something like $380/yr when we last renewed. That being said, they markedly increased our auto insurance with last renewal (despite no new tickets, accidents, etc so we will be reshopping the whole package soon). Allstate
NYHawkeye
Posts: 122
Joined: Mon May 15, 2023 5:43 pm

Re: Umbrella Policy- 1M or 2M?

Post by NYHawkeye »

tibbitts wrote: Fri Mar 29, 2024 11:09 am
I wonder if there are practical problems in coordinating whatever defense/assitance would be provided for the first $250 or $500k base coverage with a different company providing the defense/assitance for the overage?
Yes, hopefully no issues if it ever comes to that. I do now have to make sure any changes to my policies in the future are aligned with the umbrella requirements. GEICO also automatically updated the umbrella when things changed on the base policies and I am sure I will have to do most of that myself. Premium savings were too large to pass up.
lazydavid
Posts: 5246
Joined: Wed Apr 06, 2016 1:37 pm

Re: Umbrella Policy- 1M or 2M?

Post by lazydavid »

NYHawkeye wrote: Fri Mar 29, 2024 11:23 am Yes, hopefully no issues if it ever comes to that. I do now have to make sure any changes to my policies in the future are aligned with the umbrella requirements. GEICO also automatically updated the umbrella when things changed on the base policies and I am sure I will have to do most of that myself. Premium savings were too large to pass up.
Yep, when we inherited my FIL's car, we let SF know, and they moved the policy over (same household, same agent) since it was prepaid. But when I got the declarations page I noticed that the limits were below the Required Underlying Insurance levels on our Umbrella, so I immediately called and had them raised.
User avatar
White Coat Investor
Posts: 17527
Joined: Fri Mar 02, 2007 8:11 pm
Location: Greatest Snow On Earth

Re: Umbrella Policy- 1M or 2M?

Post by White Coat Investor »

guppyguy wrote: Thu Mar 28, 2024 10:32 am Just doing an annual review of our insurance policies....we've carried a 1M umbrella policy with Amica for years. Pretty standard assets, 4 cars, 1 house, 401K.

When/why would one increase coverage from 1M to something higher, 2M being the next step up? Currently 1M coverage is $582 annually, it would be an extra $374 for 2M.

Thoughts???
We changed from $1M to $5M a few years ago mostly because we just had a lot more to lose not because our risk went up in any way. The additional premium is a trivial part of our assets at this point. I figure $5 million buys a much better defense than $1 million. My malpractice coverage remains at $1 million.
1) Invest you must 2) Time is your friend 3) Impulse is your enemy | 4) Basic arithmetic works 5) Stick to simplicity 6) Stay the course
User avatar
Steelersfan
Posts: 4141
Joined: Thu Jun 19, 2008 8:47 pm

Re: Umbrella Policy- 1M or 2M?

Post by Steelersfan »

After considering this for years I decided, after reading this new thread, to increase my policy from $1,000,000 to $2,000,000. The cost went from $70 a year to $140.
My policies are with Erie Insurance.
syngameon
Posts: 61
Joined: Sun Jan 21, 2024 5:35 pm

Re: Umbrella Policy- 1M or 2M?

Post by syngameon »

WolfgangPauli wrote: Thu Mar 28, 2024 10:14 pm I am one that had my umbrella keep up with net worth.
And what will you do if you get sued for more than your umbrella policy limits. Then the plaintiffs are coming after your net worth. Umbrella limits should be dictated by the amount of risk and potential to get sued, not by your net worth. Though of course if you don't have any net worth, then you are barely living paycheck to paycheck and no one is going to come after you.
Bobby206
Posts: 682
Joined: Fri Oct 05, 2018 4:01 pm

Re: Umbrella Policy- 1M or 2M?

Post by Bobby206 »

tibbitts wrote: Fri Mar 29, 2024 10:57 am For those with an umbrella, how many of you have the umbrella with your base insurance provider vs. another insurance provider for the umbrella only?
Same provider. $3m.
exodusNH
Posts: 10542
Joined: Wed Jan 06, 2021 7:21 pm

Re: Umbrella Policy- 1M or 2M?

Post by exodusNH »

tibbitts wrote: Fri Mar 29, 2024 11:06 am
exodusNH wrote: Fri Mar 29, 2024 10:22 am It sounds like you've got young drivers on your policy. As most umbrella claims are as a result of auto claims, young drivers increase the cost.
I've been surprised that the number of drivers (number of people included in the umbrella in general) didn't change the cost of a policy in my case. Maybe changing the characteristics of the people would. Given multiple cars and it being impossible for one person to drive more than one at once, that seems odd.
Admittedly, I made an assumption that four cars meant four drivers and the further assumption that the extra two were young. That umbrella policy at $582 for $1M seems awfully expensive otherwise. But throw in one 20 year-old driver, and it makes sense.
chuckwalla
Posts: 201
Joined: Wed Mar 24, 2021 12:25 pm

Re: Umbrella Policy- 1M or 2M?

Post by chuckwalla »

I wonder how many claims are made against these umbrella policies every year and how much are paid out. I would assume far fewer and less than typical home and auto. It must be quite a cash cow for these insurance companies.
tibbitts
Posts: 23941
Joined: Tue Feb 27, 2007 5:50 pm

Re: Umbrella Policy- 1M or 2M?

Post by tibbitts »

chuckwalla wrote: Fri Mar 29, 2024 3:19 pm I wonder how many claims are made against these umbrella policies every year and how much are paid out. I would assume far fewer and less than typical home and auto. It must be quite a cash cow for these insurance companies.
Actually I would guess that having such a policy would increase the odds of being liable for a judgement in the amounts they cover.
Rocinante Rider
Posts: 286
Joined: Fri Aug 19, 2022 12:52 pm

Re: Umbrella Policy- 1M or 2M?

Post by Rocinante Rider »

tibbitts wrote: Fri Mar 29, 2024 3:28 pm
chuckwalla wrote: Fri Mar 29, 2024 3:19 pm I wonder how many claims are made against these umbrella policies every year and how much are paid out. I would assume far fewer and less than typical home and auto. It must be quite a cash cow for these insurance companies.
Actually I would guess that having such a policy would increase the odds of being liable for a judgement in the amounts they cover.
Maybe someone with legal expertise in this area will weigh-in, but I think that in addition to providing a greater financial buffer, a higher coverage amount might actually lower the odds of trial and judgement (as with criminal matters, probably 95% or more of civil litigation gets settled without trial). An auto/umbrella insurer owes a good faith duty to their insured. If the insurer refuses a "reasonable" within-limits settlement offer, the insurer could be liable for the out-of-pocket loses of the insured should the case go to trial and the damages exceed the insurance cap. It's more likely that a plaintiff will agree to a settlement of up to 5M than up to 1M, and less likely that the insurer will refuse the settlement and risk even greater losses at trial.
Post Reply