At what point would you considering Umbrella Insurance

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investing1012
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At what point would you considering Umbrella Insurance

Post by investing1012 » Sat Sep 09, 2017 10:54 am

At what point would you consider getting Umbrella Insurance?

Does it depend on your net worth?

Carefreeap
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Re: At what point would you considering Umbrella Insurance

Post by Carefreeap » Sat Sep 09, 2017 11:07 am

Yes and the activities you are engaged in.

We bought our first policy when our NW hit about $1M. I was active on a non-profit board and something happened that made me realize that we could have been sued. Fortunately no suit was brought against the organization (instead the City was sued). The BoD did have directors' liability but I thought it was still good to have my own protection, the policy wasn't that expensive and it made my husband less nervous.

Since then we had as many as 5 rentals and upped the limits to $2M. We've now disposed of two and are living in a third. We'll keep that policy in place probably forever as I think our NW will always make us a target.

blueman457
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Re: At what point would you considering Umbrella Insurance

Post by blueman457 » Sat Sep 09, 2017 11:13 am

I have relatively low net worth, but relatively higher income. Purchased umbrella insurance.

Teague
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Re: At what point would you considering Umbrella Insurance

Post by Teague » Sat Sep 09, 2017 11:26 am

If I were a 20 year old college student who biked or took public transportation and lived in a dorm, probably not.

If I were a 40's age professional with a house, pool, dogs, boat, cars, family, I'd for sure get it.

Anything in between, maybe. Net worth factors into this, but so does anticipated future earnings. Since you're asking, you'll probably sleep better if you get it.
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livesoft
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Re: At what point would you considering Umbrella Insurance

Post by livesoft » Sat Sep 09, 2017 11:33 am

We didn't have an umbrella policy for many many years. We did have the highest liability on our autos. We didn't own a home until we were in our late thirties, too. We got an umbrella policy when the oldest child started driving and we had bought a house.

While net worth has something to do with it, some net worth may not be accessible to lawsuits. I forget whether retirement accounts or just 401(k)s or just IRAs are sometimes protected by state law.

And when our son started driving, we really upped the umbrella policy even though auto was at max.
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daveydoo
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Re: At what point would you considering Umbrella Insurance

Post by daveydoo » Sat Sep 09, 2017 11:34 am

It's for liability, which can impact any of us or our kids. Even if you don't have a ton of assets, you can still lose it all. And it's very inexpensive -- few hundred bucks annually for a lot of coverage (few million). I'm sure it's seldom invoked but I can much more readily predict the financial impact to my family if I were to die than I can predict the impact of some future "black swan" liability event ($50,000? $3,000,000?). So, in some respects, it's our family's most important insurance, imo.

JW-Retired
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Re: At what point would you considering Umbrella Insurance

Post by JW-Retired » Sat Sep 09, 2017 12:00 pm

investing1012 wrote:
Sat Sep 09, 2017 10:54 am
At what point would you consider getting Umbrella Insurance?

Does it depend on your net worth?
Yes, your net worth and current & future income. Also, in my (non-attorney) opinion, on the income of all the other people on the freeway that you might get in a pile up with. If it's like US 101 in Silicon Valley where every few cars has potential Google millionaires in it, any damages awarded could be sky high.
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Saving$
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Re: At what point would you considering Umbrella Insurance

Post by Saving$ » Sat Sep 09, 2017 12:58 pm

What calculation/ formula should a person use to determine the limits of an umbrella policy?
a. Total net worth
b. a above less 401k/403b accounts? Do you also subtract IRA & Roth accounts?
c. Total net worth + some percent of future earnings (what percent? The amount you typically save after expenses?)
d. c above less 401k/403b accounts? Do you also subtract IRA & Roth accounts?
e. other?

How should risk (owning rental property, vacation homes, pets, etc.) factor into the above?

runner540
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Re: At what point would you considering Umbrella Insurance

Post by runner540 » Sat Sep 09, 2017 1:45 pm

Saving$ wrote:
Sat Sep 09, 2017 12:58 pm
What calculation/ formula should a person use to determine the limits of an umbrella policy?
a. Total net worth
b. a above less 401k/403b accounts? Do you also subtract IRA & Roth accounts?
c. Total net worth + some percent of future earnings (what percent? The amount you typically save after expenses?)
d. c above less 401k/403b accounts? Do you also subtract IRA & Roth accounts?
e. other?

How should risk (owning rental property, vacation homes, pets, etc.) factor into the above?
Based on my (limited) understanding, it's not an exact science. It's more about, what is a big enough number to (a) make it worth the insurance company's lawyers' time and (b) cover a settlement big enough to avoid taking it to trial. You need to consider that future earnings can be garnished to pay a settlement, so consider your and your spouse's future earnings.

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celia
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Re: At what point would you considering Umbrella Insurance

Post by celia » Sat Sep 09, 2017 2:01 pm

Does it depend on your net worth?
No. It does not depend on your net worth alone. But if you have a significant net worth OR (future) earnings, you should consider it.

When we first became teachers in our 20s, we got it when we bought our first house, because other teachers said we could be sued by students' parents (although I've never heard of a local teacher being sued). We were young and didn't have much (except a mortgage), so we bought it. Now, we have a net worth and no earnings and have increased it so we can keep our net worth.

I think it primarily depends on if you serve the public in some kind of professional capacity or you have a hazard at your home, like a pool.

Saving$
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Re: At what point would you considering Umbrella Insurance

Post by Saving$ » Sat Sep 09, 2017 2:06 pm

celia wrote:
Sat Sep 09, 2017 2:01 pm
Does it depend on your net worth?
No. It does not depend on your net worth alone. But if you have a significant net worth OR (future) earnings, you should consider it.

When we first became teachers in our 20s, we got it when we bought our first house, because other teachers said we could be sued by students' parents (although I've never heard of a local teacher being sued). We were young and didn't have much (except a mortgage), so we bought it. Now, we have a net worth and no earnings and have increased it so we can keep our net worth.

I think it primarily depends on if you serve the public in some kind of professional capacity or you have a hazard at your home, like a pool.
Interesting - I understood that a personal umbrella policy EXCLUDES any claims associated with something you do in a professional capacity for your work. For that to be covered either your employer needs to provide coverage, or you need to buy a professional liability policy.

danaht
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Re: At what point would you considering Umbrella Insurance

Post by danaht » Sat Sep 09, 2017 2:12 pm

I think everyone should have some Umbrella insurance once they have $250,000 (or more) of assets that are not in a protected account (like a 401k).

JBTX
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Re: At what point would you considering Umbrella Insurance

Post by JBTX » Sat Sep 09, 2017 2:14 pm

livesoft wrote:
Sat Sep 09, 2017 11:33 am
We didn't have an umbrella policy for many many years. We did have the highest liability on our autos. We didn't own a home until we were in our late thirties, too. We got an umbrella policy when the oldest child started driving and we had bought a house.

While net worth has something to do with it, some net worth may not be accessible to lawsuits. I forget whether retirement accounts or just 401(k)s or just IRAs are sometimes protected by state law.

And when our son started driving, we really upped the umbrella policy even though auto was at max.
I think employer retirement plans / 401ks are automatically protected from creditors. Don't know if that is federal law or what.

In terms of personal IRA's, I think it depends on state law and it varies. I think here in TX there is some protection against creditors.

I'm not sure, but *I think* the only way to ultimately get "protection" against a large suit would be declaring bankruptcy, and then whether or not retirement assets are protected from 3rd party creditors in bankruptcy.

Perhaps one of the attorney/posters could clarify this.

JBTX
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Re: At what point would you considering Umbrella Insurance

Post by JBTX » Sat Sep 09, 2017 2:15 pm

Saving$ wrote:
Sat Sep 09, 2017 2:06 pm
celia wrote:
Sat Sep 09, 2017 2:01 pm
Does it depend on your net worth?
No. It does not depend on your net worth alone. But if you have a significant net worth OR (future) earnings, you should consider it.

When we first became teachers in our 20s, we got it when we bought our first house, because other teachers said we could be sued by students' parents (although I've never heard of a local teacher being sued). We were young and didn't have much (except a mortgage), so we bought it. Now, we have a net worth and no earnings and have increased it so we can keep our net worth.

I think it primarily depends on if you serve the public in some kind of professional capacity or you have a hazard at your home, like a pool.
Interesting - I understood that a personal umbrella policy EXCLUDES any claims associated with something you do in a professional capacity for your work. For that to be covered either your employer needs to provide coverage, or you need to buy a professional liability policy.
This is my general understanding.

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celia
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Re: At what point would you considering Umbrella Insurance

Post by celia » Sat Sep 09, 2017 2:22 pm

Saving$ wrote:
Sat Sep 09, 2017 2:06 pm
Interesting - I understood that a personal umbrella policy EXCLUDES any claims associated with something you do in a professional capacity for your work. For that to be covered either your employer needs to provide coverage, or you need to buy a professional liability policy.
That's my understanding too. I didn't mean to imply it would cover professional liability. But I don't think there was such a thing as "teachers liability insurance" in the 1970s.

Edit: I just googled it and there are some carriers that offer it for various professions. Got a kick out of this description of "teachers liability insurance that shows a photo of construction workers. Maybe we could have said we were "construction workers".
http://www.professionalliabilityinsuran ... chers.html

Regardless, I'm not going to research this, since we're retired now and only taught for a few years.

HIinvestor
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Re: At what point would you considering Umbrella Insurance

Post by HIinvestor » Sat Sep 09, 2017 6:54 pm

I worked as an attorney for some years. During that time , I noted that many of the best attorneys in town were on retainer with the insurers that folks carried umbrella policies with. I've had umbrella coverage since I graduated from law school decades ago. Recently the premiums went down so we doubled our coverage for the same few hundred dollar premium.

It's a matter of sleeping well at night. I sleep better knowing I've done what I can to protect my assets and anyone who may be accidentally harmed by me or a loved one. We do have rentals and automobiles.

We have encouraged S to buy his own umbrella coverage but I have no idea whether he has or not.

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Re: At what point would you considering Umbrella Insurance

Post by Barefoot » Sat Sep 09, 2017 7:05 pm

livesoft wrote:
Sat Sep 09, 2017 11:33 am
We got an umbrella policy when the oldest child started driving
That's what we did.

Recently, our youngest dropped off our auto policy and our umbrella premium dropped by more than half.

miles monroe
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Re: At what point would you considering Umbrella Insurance

Post by miles monroe » Sat Sep 09, 2017 7:42 pm

no one thinks they will ever be the one at fault in auto accident...but stuff happens. carry 250k (minimum in my state) liability on your cars and your umbrella sits on top of that.

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nedsaid
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Re: At what point would you considering Umbrella Insurance

Post by nedsaid » Sat Sep 09, 2017 8:52 pm

Everyone should consider umbrella insurance. Even if your net worth is relatively low, your wages could still be garnished if you were found liable in a lawsuit.
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boglerdude
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Re: At what point would you considering Umbrella Insurance

Post by boglerdude » Sat Sep 09, 2017 8:58 pm

Max your underlying policies and get 1M or 2M umbrella.

Examples:
https://www.rlicorp.com/real-life-scenarios

CurlyDave
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Re: At what point would you considering Umbrella Insurance

Post by CurlyDave » Sun Sep 10, 2017 2:32 am

boglerdude wrote:
Sat Sep 09, 2017 8:58 pm
Max your underlying policies and get 1M or 2M umbrella...
The highest my insurance company offers is $5M and it is only $10 or $20 more per year than $2M. If they offered more I would take that. The extra cost is nothing and what an umbrella policy really means is that if you ever need it they will send the "A" team of lawyers to defend you.

HIinvestor
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Re: At what point would you considering Umbrella Insurance

Post by HIinvestor » Sun Sep 10, 2017 3:04 am

Yes, defense coverage is expensive. Unbrella coverage an extra attorney on top of any other attorney your other insurance or other sources may provide. Having a good attorney is much cheaper than the premiums you pay.

I believe my umbrella is for $2mm, which is a decent amount. Was never given a quote for higher coverage and our agent believes it is adequate for us.

Daryl
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Re: At what point would you considering Umbrella Insurance

Post by Daryl » Sun Sep 10, 2017 5:09 am

Ummm.... Aren't we thinking about this all wrong? Auto (and umbrella) coverage is primarily for the benefit of third parties, specifically those whom we might injure while driving. Each person should ask themselves, "If I cause an accident today, how would I pay for the damages?" Insurance is great because it provides a partner who is required by law to step in and help the claimant.

In addition to liability coverage, I carry fairly high limits on my Uninsured/Under-insured motorist coverage. State minimum coverage in my area is woefully inadequate and I sometimes drive in areas where the other driver is likely to be "judgement proof".

HIinvestor
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Re: At what point would you considering Umbrella Insurance

Post by HIinvestor » Sun Sep 10, 2017 5:20 am

Yes, but in addition to damages, one needs to also have a defense attorney, representing you and looking out for your interests as well as compensating the parties who were injured. A good umbrella policy provides the attorney as well as payment up to policy limits to cover damages.

atlantaguy123
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Re: At what point would you considering Umbrella Insurance

Post by atlantaguy123 » Sun Sep 10, 2017 5:58 am

Just curious, has anyone who has an umbrella policy ever actually had damages paid out from the umbrella policy? That is, the required first line of defense policy (auto, home, etc) paid limits and the additional money provided by the umbrella policy was reached and dispensed?

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jimmyq
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Re: At what point would you considering Umbrella Insurance

Post by jimmyq » Sun Sep 10, 2017 7:24 am

atlantaguy123 wrote:
Sun Sep 10, 2017 5:58 am
Just curious, has anyone who has an umbrella policy ever actually had damages paid out from the umbrella policy? That is, the required first line of defense policy (auto, home, etc) paid limits and the additional money provided by the umbrella policy was reached and dispensed?
This question has been asked previously in this thread and there were some respondents:
viewtopic.php?t=193378

While odds of needing it are low, they are not zero and those that had it were thankful.

miles monroe
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Re: At what point would you considering Umbrella Insurance

Post by miles monroe » Sun Sep 10, 2017 7:36 am

atlantaguy123 wrote:
Sun Sep 10, 2017 5:58 am
Just curious, has anyone who has an umbrella policy ever actually had damages paid out from the umbrella policy? That is, the required first line of defense policy (auto, home, etc) paid limits and the additional money provided by the umbrella policy was reached and dispensed?
800k plus attorney.

sophie1
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Re: At what point would you considering Umbrella Insurance

Post by sophie1 » Sun Sep 10, 2017 8:23 am

I looked into this, but found that an umbrella policy is pointless for me, because I don't own a car. And yes, they exclude professional liability.

They're intended to provide extra liability insurance to supplement existing homeowner and auto insurance. It lets you combine the top end of those two insurance categories, that's all. It won't cover anything that isn't covered by one of those policies, at least that's my understanding after talking with a couple of insurance agents. I got quotes for non-auto driver's policy + umbrella (since I do drive rarely, mostly rental cars) but it was crazy expensive. I simply upped the liability insurance for my homeowner policy instead.

I'd be interested to hear different opinions from people in the same situation as me (i.e. non-car owners).

FRANK2009
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Re: At what point would you considering Umbrella Insurance

Post by FRANK2009 » Sun Sep 10, 2017 11:50 am

I have a pension and my net worth is approaching as they say around here, 2 commas. Amica quoted me $100 for a million in coverage; I bought it.

HIinvestor
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Re: At what point would you considering Umbrella Insurance

Post by HIinvestor » Sun Sep 10, 2017 11:55 am

We did get the excess policy limits tendered and paid in. Several cases where our client was injured. When the policy was significant, it made it much less likely that the injured party would have to pursue personal assets of the defendant.

daveydoo
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Re: At what point would you considering Umbrella Insurance

Post by daveydoo » Sun Sep 10, 2017 12:11 pm

I seem to recall that when we added umbrella years ago we reduced our auto liability coverage to the required minimum limit for the umbrella to be in place. Our auto had been very high and the umbrella was cheap -- I don't think we came out ahead but even the modest cost of the umbrella was significantly offset by reducing the auto liability coverage.

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dratkinson
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Re: At what point would you considering Umbrella Insurance

Post by dratkinson » Sun Sep 10, 2017 12:40 pm

daveydoo wrote:
Sun Sep 10, 2017 12:11 pm
I seem to recall that when we added umbrella years ago we reduced our auto liability coverage to the required minimum limit for the umbrella to be in place. ...
+1. Auto insurance minimum to qualify for umbrella policy. Recall it was the insurance rep's suggestion.
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HIinvestor
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Re: At what point would you considering Umbrella Insurance

Post by HIinvestor » Sun Sep 10, 2017 12:53 pm

Per our agent, there are certain policy limits on your various insurances that have to be in place so you can qualify for umbrella coverage. The limits required were lower than max possible auto coverage and cheaper to get that lower limit plus umbrella with better coverage.
Last edited by HIinvestor on Sun Sep 10, 2017 8:32 pm, edited 1 time in total.

Paul K
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Re: At what point would you considering Umbrella Insurance

Post by Paul K » Sun Sep 10, 2017 8:26 pm

danaht wrote:
Sat Sep 09, 2017 2:12 pm
I think everyone should have some Umbrella insurance once they have $250,000 (or more) of assets that are not in a protected account (like a 401k).
How did you come up with that number?

boglerdude
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Re: At what point would you considering Umbrella Insurance

Post by boglerdude » Tue Sep 12, 2017 7:53 pm

CurlyDave wrote:
Sun Sep 10, 2017 2:32 am
boglerdude wrote:
Sat Sep 09, 2017 8:58 pm
Max your underlying policies and get 1M or 2M umbrella. Examples:
https://www.rlicorp.com/real-life-scenarios
The highest my insurance company offers is $5M and it is only $10 or $20 more per year than $2M. If they offered more I would take that. The extra cost is nothing and what an umbrella policy really means is that if you ever need it they will send the "A" team of lawyers to defend you.
From Geico: "Currently, your umbrella premium is $189.00 for $1,000,000. The following premiums are if you were to increase this coverage:
- $2,000,000: $312.00
- $3,000,000: $454.00
- $4,000,000: $605.00
- $5,000,000: $756.00
- $6,000,000: $1,115.00
- $7,000,000: $1,474.00
- $8,000,000: $1,833.00
- $9,000,000: $2,192.00
- $10,000,000: $2,552.00

Anyone know how much it costs to pursue someone in court for their assets?

vshun
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Re: At what point would you considering Umbrella Insurance

Post by vshun » Tue Sep 12, 2017 7:59 pm

I went for it to protect my future earnings, however when my son started driving our company instituted surcharge not just on auto policy, but also on umprella policy. This was the last drop and we did not renew the insurance as I resented surcharge, I felt while my son is on active duty he does not represent extra risk and I did not want to pay for it.

Grt2bOutdoors
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Re: At what point would you considering Umbrella Insurance

Post by Grt2bOutdoors » Tue Sep 12, 2017 9:31 pm

boglerdude wrote:
Tue Sep 12, 2017 7:53 pm
CurlyDave wrote:
Sun Sep 10, 2017 2:32 am
boglerdude wrote:
Sat Sep 09, 2017 8:58 pm
Max your underlying policies and get 1M or 2M umbrella. Examples:
https://www.rlicorp.com/real-life-scenarios
The highest my insurance company offers is $5M and it is only $10 or $20 more per year than $2M. If they offered more I would take that. The extra cost is nothing and what an umbrella policy really means is that if you ever need it they will send the "A" team of lawyers to defend you.
From Geico: "Currently, your umbrella premium is $189.00 for $1,000,000. The following premiums are if you were to increase this coverage:
- $2,000,000: $312.00
- $3,000,000: $454.00
- $4,000,000: $605.00
- $5,000,000: $756.00
- $6,000,000: $1,115.00
- $7,000,000: $1,474.00
- $8,000,000: $1,833.00
- $9,000,000: $2,192.00
- $10,000,000: $2,552.00

Anyone know how much it costs to pursue someone in court for their assets?
Multiples of the highest premiums you list above. Ever hire an attorney? You have to cough up a minimum retainer and then hourly fees. $2,500 is cheap, a retainer will be multiples of that.

My umbrella company indicated to me that the umbrella sits above car and home insurance liability. Retirement assets are off limits, contributions to IRA's where the monies can be traced back to employer plans (ERISA) are also off limits - as in a rollover. Social Security benefits are also off limits as are pensions. Not off limits - current and future earnings, cash accounts, your Vanguard taxable account, brokerage accounts, securities, rental properties, etc.
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CurlyDave
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Re: At what point would you considering Umbrella Insurance

Post by CurlyDave » Sat Sep 16, 2017 3:36 am

I would not count on it costing a lot to sue someone for their assets. In many liability cases an attorney will take on a case against a defendant with deep pockets on contingency. They will get a part (30-50%) of the award.

My umbrella policy is not as expensive as Geico's policies. Possibly because I have all of my insurance with one company. If the same company issues both the underlying liability policy and the umbrella a defense is much easier because there is only one team of attorneys. If there are two separate companies, the teams will not have the same goals, and there will be conflict.

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