Stand Alone Umbrella Insurance

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SlowMovingInvestor
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Stand Alone Umbrella Insurance

Post by SlowMovingInvestor » Sun Jan 07, 2018 8:54 am

I currently have personal umbrella insurance with GEICO, and they upped prices. I used to have umbrella with State Farm, and it was cheaper for the same coverage. But I changed auto from State Farm to GEICO 3-4 years back (it's cheaper even with more expensive umbrella).

State Farm does not sell stand alone umbrella. I have my home owners insurance at another large firm and they don't sell umbrella unless you have auto with them. Are there any good (reputable) firms that sell low cost umbrella insurance ?

Also, how much umbrella insurance (as %age of assets) should a low risk individual carry ? I already have $500K in auto and house, I do not drive much, am in a very low (or no risk) profession, own only one home, rarely have visitors or children on my property etc.

UpperNwGuy
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Re: Stand Alone Umbrella Insurance

Post by UpperNwGuy » Sun Jan 07, 2018 9:14 am

By what percentage did Geico increase the price?

jucor
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Re: Stand Alone Umbrella Insurance

Post by jucor » Sun Jan 07, 2018 9:23 am

OP, have you shopped your whole insurance package recently? In my experience multi line discounts tend to make it worth having all of your lines with one carrier -- and as you're discovering, sometimes companies will not issue umbrella w/o holding other coverages as well.

How much umbrella coverage do you have? What's the cost? What % did it go up?

FWIW, I pay about $300 annually for $2m umbrella with the carrier who also has my home and car polices. YMMV depending upon location, etc.

MikeG62
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Re: Stand Alone Umbrella Insurance

Post by MikeG62 » Sun Jan 07, 2018 9:28 am

AAA will get you a stand alone policy if you are a AAA member.

I have a stand alone policy with CNA, initially purchased some two decades ago when I was a member of a professional association (AIPCA). So maybe you belong to something similar based upon your profession?

I pay $1,250 for a $5M policy with CNA. Got a quote from AAA two years ago that was somewhere around $850 for the same coverage limit. However, the insurer was Stillwater, which in my eyes was not as financially sound as CNA. So I did not consider changing. I also got a quote from my home/auto insurer (New Jersey Manufacturers) and they were somewhere around $1,650 again for the same level of coverage. So I remain with CNA.

As far as how much to get, some say an amount equal to your net worth. I don’t necessarily see the connection between the two. Personally I’d get as much as you can reasonably afford. FWIW, I asked CNA for a quote on the next higher coverage tier ($10M) and they came back at around $3,300 (this was several years ago). I decided against the higher coverage tier.

One personal story. Aunt of my brother-in-law (retired college professor, married with one grown adult son) was killed in an automobile accident. The family sued the driver of the SUV who hit them. Case was settled for $5M ($4M to the now widowed husband for pain and suffering (he was pretty badly injured in the accident too, but has since recovered) and loss of spouse and $1M to the child for loss of mom). Some food for thought as you consider whether you participate in high risk activities or not..
Real Knowledge Comes Only From Experience

SlowMovingInvestor
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Re: Stand Alone Umbrella Insurance

Post by SlowMovingInvestor » Sun Jan 07, 2018 9:55 am

Thnaks for the replies. My current premium is $440 for $2M coverage (which is significantly below my net worth, although I agree the link with net worth is primarily psychological). It went up by around 20%. To be fair, I did add a new car to my auto policy (also with GEICO), but I'm not going to be driving more because I have a new car. And the rate was uncompeitive with my old State Farm state even before this increase.

Moving my entire insurance package is a little complicated right now because of some multi-state coverage I have. Also, GEICO's home owners policy in my state is through a third party less known insurance company (GEICO is only the agent) and is not competitive.

Mike, thanks for the suggestion to try AAA (I am indeed a member). I do remember their auto insurance being grossly uncompetitive the one time I asked for a quote, but that was long ago.

runner3081
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Re: Stand Alone Umbrella Insurance

Post by runner3081 » Sun Jan 07, 2018 11:12 am

We saw the same thing with Stillwater insurance for our 2018 renewal notice.

For $1 million and no changes or events, it went from $160 to $200 AND THEN they now have a $30 policy fee they slap on top.

Grand total is now $230, which is around a 45% yearly increase.

AAA (where we have homeowners and auto) can write us the same $1 million for $190.

We will be shopping around as well.

On your note about adding a car, it is expected for your umbrella to go up with that addition. When we had a 3rd car, it was an extra $30 per year.

ETadvisor
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Re: Stand Alone Umbrella Insurance

Post by ETadvisor » Sun Jan 07, 2018 11:23 am

I am paying $37 per month ($445 per year) for $1m policy. This board is really making me think I am vastly overpaying which I thought anyway. Everything is with Allstate and only two cars with nobody under 18 driving. Does location (S. Florida) make for such a discrepancy? I am not a AAA member but I would consider to lower premium for umbrella policy.

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simplesimon
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Re: Stand Alone Umbrella Insurance

Post by simplesimon » Sun Jan 07, 2018 11:26 am

ETadvisor wrote:
Sun Jan 07, 2018 11:23 am
I am paying $37 per month ($445 per year) for $1m policy. This board is really making me think I am vastly overpaying which I thought anyway. Everything is with Allstate and only two cars with nobody under 18 driving. Does location (S. Florida) make for such a discrepancy? I am not a AAA member but I would consider to lower premium for umbrella policy.
Hard to say without shopping around for your own situation.

I pay ~$100/yr for $1M but don't own a home and have no kids.

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Re: Stand Alone Umbrella Insurance

Post by neilpilot » Sun Jan 07, 2018 11:55 am

jucor wrote:
Sun Jan 07, 2018 9:23 am
OP, have you shopped your whole insurance package recently? In my experience multi line discounts tend to make it worth having all of your lines with one carrier -- and as you're discovering, sometimes companies will not issue umbrella w/o holding other coverages as well.

FWIW, I pay about $300 annually for $2m umbrella with the carrier who also has my home and car polices. YMMV depending upon location, etc.
This has been debated in many previous thread, and then people with very different risks compare their premiums. I can say that when I shopped my auto/home/umbrella coverage, I found that the multi line discounts offered were not sufficient to offset the low-priced provider savings, which is why I went with GEICO for auto/umbrella & elsewhere for homeowners.

FWIW I pay $272 for $2m umbrella from GEICO. I started coverage in 2015, and so far the premium has remained unchanged. This simply demonstrated that my experience is highly individual, since as I understood the OP GEICO increased their premium.

SlowMovingInvestor
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Re: Stand Alone Umbrella Insurance

Post by SlowMovingInvestor » Sun Jan 07, 2018 12:12 pm

neilpilot wrote:
Sun Jan 07, 2018 11:55 am
jucor wrote:
Sun Jan 07, 2018 9:23 am
OP, have you shopped your whole insurance package recently? In my experience multi line discounts tend to make it worth having all of your lines with one carrier -- and as you're discovering, sometimes companies will not issue umbrella w/o holding other coverages as well.

FWIW, I pay about $300 annually for $2m umbrella with the carrier who also has my home and car polices. YMMV depending upon location, etc.
This has been debated in many previous thread, and then people with very different risks compare their premiums. I can say that when I shopped my auto/home/umbrella coverage, I found that the multi line discounts offered were not sufficient to offset the low-priced provider savings, which is why I went with GEICO for auto/umbrella & elsewhere for homeowners.

FWIW I pay $272 for $2m umbrella from GEICO. I started coverage in 2015, and so far the premium has remained unchanged. This simply demonstrated that my experience is highly individual, since as I understood the OP GEICO increased their premium.
In my case they went up after I got a new car (and GEICO knew about it automatically, since my auto is with them !). I personally don't see why rates should go up after a new car, but I'm obviously not privy to their algorithms and data. In most other respects, I am probably a very low risk customer, but I do live in an expensive metro area.

I think the umbrella insurance market is subject to adverse selection, and as a result there is a lot of variability in pricing. But the adverse selection problem may also be why companies are reluctant to offer standalone umbrella policies.

Tachyon
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Re: Stand Alone Umbrella Insurance

Post by Tachyon » Sun Jan 07, 2018 2:39 pm

I had GEICO auto and umbrella, and the umbrella rates also went up with a new vehicle. I had a $1M umbrella. Their rate for $60 per vehicle for me. From my standpoint, I didn't drive more total which makes my risk the same. But that's how they priced their umbrella. I suspect once I get rid of one vehicle, the umbrella will drop back down.

ncbill
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Re: Stand Alone Umbrella Insurance

Post by ncbill » Sun Jan 07, 2018 4:24 pm

Looking at my umbrella, additional automobiles + one "Youthful Operator" is what increases the premium above the standard.

talzara
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Re: Stand Alone Umbrella Insurance

Post by talzara » Sun Jan 07, 2018 6:05 pm

There are also a few companies that specialize in standalone umbrella: https://www.irmi.com/articles/expert-co ... a-policies

You will probably pay more than you're already paying at GEICO, though. 20% is a very reasonable increase for a second car. You may not drive more, but people who buy a second car apparently drive 20% more on average. That's why the insurance company charges 20% more.
SlowMovingInvestor wrote:
Sun Jan 07, 2018 9:55 am
Moving my entire insurance package is a little complicated right now because of some multi-state coverage I have. Also, GEICO's home owners policy in my state is through a third party less known insurance company (GEICO is only the agent) and is not competitive.
GEICO's bundling discount is only 3-5%. There's no good reason to bundle if you can buy a better homeowners policy elsewhere. The optimal strategy may be keeping auto and umbrella at GEICO, but homeowners from another company.

SlowMovingInvestor
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Re: Stand Alone Umbrella Insurance

Post by SlowMovingInvestor » Sun Jan 07, 2018 6:24 pm

talzara wrote:
Sun Jan 07, 2018 6:05 pm

You will probably pay more than you're already paying at GEICO, though. 20% is a very reasonable increase for a second car. You may not drive more, but people who buy a second car apparently drive 20% more on average. That's why the insurance company charges 20% more.
In my case, it's a 3rd car, with only 2 people in the household (long story). And umbrella covers excess homeowners and other types of liability too (which would remain the same even with an additional car). So an extra 20% definitely seems like a mis-pricing. Possibly GEICO's background in auto insurance makes it more sensitive to vehicle coverage changes.

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GerryL
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Re: Stand Alone Umbrella Insurance

Post by GerryL » Sun Jan 07, 2018 6:32 pm

Glad to see this thread as I have been trying to learn more about umbrella insurance and may need to go for stand-alone.

A few years ago I switched my auto policy to USAA for the better rates. I opted to keep my home with Farmers, where I've been for decades, because I'm grandfathered in with their earthquake insurance, which is now hard or expensive to come by.

I spoke with USAA recently about getting umbrella insurance and they had me talk with a rep who coordinates umbrella insurance with 3rd-party providers. We talked about the hikes in existing coverage I would need to make to my current policies qualify for the stand-alone umbrella and it was looking reasonable. Then I discovered that after the first year my premium would go up dramatically because I would be 70 years old. I don't have my notes in front of me, but I think the insurer he was looking at was RLI.

Has anyone with umbrella insurance seen premiums jump at certain ages?

talzara
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Re: Stand Alone Umbrella Insurance

Post by talzara » Sun Jan 07, 2018 6:45 pm

SlowMovingInvestor wrote:
Sun Jan 07, 2018 6:24 pm
In my case, it's a 3rd car, with only 2 people in the household. And umbrella covers homeowners and other types of liability too (which would remain the same even with an additional car). So an extra 20% definitely seems like a mis-pricing. Possibly GEICO's background in auto insurance makes it more sensitive to vehicle coverage changes.
You're thinking of insurance the wrong way.

You say that you will not drive more just because you bought a third car. However, the insurance company is not looking at individual behavior. They're looking at correlations across the entire risk pool. People who own three cars tend to make 20% more claims than people who own two cars, so they charge you 20% more.

85% of the umbrella risk is excess automobile liability, so 20% sounds about right.

GEICO is not alone. I don't know of any company that won't surcharge for a third car. There are some companies that don't surcharge for a second car -- they bundle two cars in the standard umbrella policy. People who only own one car will just overpay.

SlowMovingInvestor
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Re: Stand Alone Umbrella Insurance

Post by SlowMovingInvestor » Sun Jan 07, 2018 7:02 pm

talzara wrote:
Sun Jan 07, 2018 6:45 pm
SlowMovingInvestor wrote:
Sun Jan 07, 2018 6:24 pm
In my case, it's a 3rd car, with only 2 people in the household. And umbrella covers homeowners and other types of liability too (which would remain the same even with an additional car). So an extra 20% definitely seems like a mis-pricing. Possibly GEICO's background in auto insurance makes it more sensitive to vehicle coverage changes.
You're thinking of insurance the wrong way.

You say that you will not drive more just because you bought a third car. However, people who own three cars tend to make 20% more claims than people who own two cars. The insurance companies is looking at correlations across the entire coverage pool.

85% of the umbrella risk is excess automobile liability. I don't know of any company that won't surcharge for a third car. There are some companies that don't surcharge for a second car, though. They bundle two cars in the standard umbrella policy, and people who only own one car will overpay.
Your original statement (when I hadn't specified the number of cars) was that people who own 2 cars tend to drive 20% more on average than with one car. And now you're saying that for 3 cars, there are likely to be 20% more claims than with 2 cars ? Are you just assuming that because GEICO increased my rates by 20%, there has to be a solid statistical basis for it ?

Given that payouts for umbrella are relatively rare, I doubt that even GEICO has statistically significant data showing 20% higher claims for 3 cars vs 2 cars as relates to umbrella insurance (especially when you consider other dependent factors that influence claims). GEICO may have such data for auto insurance claims in general, but not for umbrella claims.

My point is that not every insurance charge or surcharge (or discount for that matter) is based on solid data -- some it may just be guesswork, extrapolation or a pricing analyst's idea of optimal pricing. Or in some cases, just relying on inertia and unwillingness to move on the client's part.

talzara
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Re: Stand Alone Umbrella Insurance

Post by talzara » Sun Jan 07, 2018 7:16 pm

GerryL wrote:
Sun Jan 07, 2018 6:32 pm
We talked about the hikes in existing coverage I would need to make to my current policies qualify for the stand-alone umbrella and it was looking reasonable. Then I discovered that after the first year my premium would go up dramatically because I would be 70 years old. I don't have my notes in front of me, but I think the insurer he was looking at was RLI.
Here is a graph of fatal crash risk by age: https://www.fhwa.dot.gov/policyinformat ... ts1231.gif

Drivers aged 75-79 are as risky as teenagers. Drivers over age 80 are riskier than teenagers. The insurance company will charge a higher premium to cover that risk.

Not every company will start surcharging at age 70. Some start surcharging at 80, some at 85, and some don't surcharge at all.

talzara
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Re: Stand Alone Umbrella Insurance

Post by talzara » Sun Jan 07, 2018 7:56 pm

SlowMovingInvestor wrote:
Sun Jan 07, 2018 7:02 pm
Given that payouts for umbrella are relatively rare, I doubt that even GEICO has statistically significant data showing 20% higher claims for 3 cars vs 2 cars as relates to umbrella insurance (especially when you consider other dependent factors that influence claims). GEICO may have such data for auto insurance claims in general, but not for umbrella claims.

My point is that not every insurance charge or surcharge (or discount for that matter) is based on solid data -- some it may just be guesswork, extrapolation or a pricing analyst's idea of optimal pricing. Or in some cases, just relying on inertia and unwillingness to move on the client's part.
Yes, that's true. There are not enough umbrella claims to do the kind of statistical analysis that they've done for auto insurance. Because 85% of the umbrella risk is excess auto insurance, they just take the numbers from auto insurance and extrapolate it upwards.

I was responding to what you originally wrote:
SlowMovingInvestor wrote:
Sun Jan 07, 2018 9:55 am
To be fair, I did add a new car to my auto policy (also with GEICO), but I'm not going to be driving more because I have a new car.
You may be 0% more risk because you will not drive more. However, policies with 3 cars are, taken as a group, riskier than policies with 2 cars.

My point is not that it's exactly 20% more risk. It may be 15% more or 25% more, but it's not 0%.

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Re: Stand Alone Umbrella Insurance

Post by boglerdude » Mon Jan 08, 2018 6:15 am

> Aunt of my brother-in-law (retired college professor, married with one grown adult son) was killed in an automobile accident. The family sued the driver of the SUV who hit them. Case was settled for $5M

Interesting, that's the largest settlement I've heard of. It's likely they wouldve settled for the insurance limit even if it had only been $1M. Unless the SUV driver's behavior was egregious enough to easily sway a jury. And in addition the SUV driver would need millions in assets to make the expense and risk of a trial worth it.

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Re: Stand Alone Umbrella Insurance

Post by ncbill » Mon Jan 08, 2018 10:41 am

boglerdude wrote:
Mon Jan 08, 2018 6:15 am
> Aunt of my brother-in-law (retired college professor, married with one grown adult son) was killed in an automobile accident. The family sued the driver of the SUV who hit them. Case was settled for $5M

Interesting, that's the largest settlement I've heard of. It's likely they would've settled for the insurance limit even if it had only been $1M. Unless the SUV driver's behavior was egregious enough to easily sway a jury. And in addition, the SUV driver would need millions in assets to make the expense and risk of a trial worth it.
Yeah, there's no context to the above - did the driver have a $5 million personal umbrella, or perhaps a company (add'l insurance/deeper pockets) vehicle was involved?

Given it was a voluntary, negotiated solution ("settlement") the defendant was clearly not bankrupted by the case.

afan
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Re: Stand Alone Umbrella Insurance

Post by afan » Mon Jan 08, 2018 12:55 pm

Two different expert attorneys have told me that umbrella insurance is well worth having. Even at higher levels of coverage, they say, it is a good deal compared to any other asset protection steps one can take.

For the OP, painful as it is, the best thing to do is shop. Figure out what you want for auto, home and umbrella. Then get prices for coverage individually as well combined. Some things, like umbrella, may not be readily available from many companies without the underlying policies. Get prices from the captives and from independent agents.

Maybe you will be best off with homeowners from one company, auto from a second and umbrella from still another. That is usually not the case, but your situation may make that the best option.

Companies use complicated methods to price policies. It is interesting but a waste of time to try to understand them and the companies definitely will not tell you. You just need to find out how much your options will cost.
We don't know how to beat the market on a risk-adjusted basis, and we don't know anyone that does know either | --Swedroe | We assume that markets are efficient, that prices are right | --Fama

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mclovin
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Re: Stand Alone Umbrella Insurance

Post by mclovin » Mon Jan 08, 2018 3:36 pm

I had a stand along policy with RLI when I was outside of the country and my normal carrier would not offer coverage.

It was more expensive than bundling it with my homeowner's and auto policies by a few hundred dollars per year, but the peace of mind was still worth it.

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Re: Stand Alone Umbrella Insurance

Post by MikeG62 » Mon Jan 08, 2018 4:01 pm

ncbill wrote:
Mon Jan 08, 2018 10:41 am
boglerdude wrote:
Mon Jan 08, 2018 6:15 am
> Aunt of my brother-in-law (retired college professor, married with one grown adult son) was killed in an automobile accident. The family sued the driver of the SUV who hit them. Case was settled for $5M

Interesting, that's the largest settlement I've heard of. It's likely they would've settled for the insurance limit even if it had only been $1M. Unless the SUV driver's behavior was egregious enough to easily sway a jury. And in addition, the SUV driver would need millions in assets to make the expense and risk of a trial worth it.
Yeah, there's no context to the above - did the driver have a $5 million personal umbrella, or perhaps a company (add'l insurance/deeper pockets) vehicle was involved?

Given it was a voluntary, negotiated solution ("settlement") the defendant was clearly not bankrupted by the case.
There is not a lot of context, because I was not privy to all the details. What I would add (in addition to what I posted above) was that I was told the driver of the vehicle was not the owner of the vehicle (but was the boyfriend or fiance of the owner or daughter of the vehicle owner). I was told the owner of the vehicle was quite wealthy and that the driver was not at all wealthy. I assume the $5M may have come from umbrella, but it is just an assumption. I really don't know.

Additionally, I would add that the woman killed was a "retired" professor. Her husband was also a "retired" professor. There were no small children involved. No one was relying on the income stream of the woman who died to make ends meet. Yet, the settlement was $5M.

Imagine what the settlement might be if you killed someone in a car accident who was a young professional in a high (or very high) wage earning position, with possibly a stay at home wife and several young children relying on the deceased's earnings. It is not hard to imagine quite a large settlement in a situation like that.

The takeaway for me is to get the largest umbrella one can reasonably afford to purchase. As someone else rightly said, it is the cheapest type of insurance you can buy.
Real Knowledge Comes Only From Experience

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Re: Stand Alone Umbrella Insurance

Post by boglerdude » Tue Jan 09, 2018 7:48 am

> Imagine what the settlement might be if you killed someone in a car accident who was a young professional

There are 0 examples of a $1M umbrella being refused, a trial, then a judgement over 1M.

Because a trial fought tooth-and-nail takes years and could cost $1M+. If plaintiff loses he pays the legal bills and gets no settlement. Who's to say the young professional killed wasn't planning an early retirement. Would be among many mitigating theories suggested to a jury.

Agreed, buy as much insurance as you can afford. Just explaining why more than 2M starts to become unreasonable

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Re: Stand Alone Umbrella Insurance

Post by ncbill » Tue Jan 09, 2018 8:40 am

MikeG62 wrote:
Mon Jan 08, 2018 4:01 pm
ncbill wrote:
Mon Jan 08, 2018 10:41 am
boglerdude wrote:
Mon Jan 08, 2018 6:15 am
> Aunt of my brother-in-law (retired college professor, married with one grown adult son) was killed in an automobile accident. The family sued the driver of the SUV who hit them. Case was settled for $5M

Interesting, that's the largest settlement I've heard of. It's likely they would've settled for the insurance limit even if it had only been $1M. Unless the SUV driver's behavior was egregious enough to easily sway a jury. And in addition, the SUV driver would need millions in assets to make the expense and risk of a trial worth it.
Yeah, there's no context to the above - did the driver have a $5 million personal umbrella, or perhaps a company (add'l insurance/deeper pockets) vehicle was involved?

Given it was a voluntary, negotiated solution ("settlement") the defendant was clearly not bankrupted by the case.
There is not a lot of context because I was not privy to all the details. What I would add (in addition to what I posted above) was that I was told the driver of the vehicle was not the owner of the vehicle (but was the boyfriend or fiance of the owner or daughter of the vehicle owner). I was told the owner of the vehicle was quite wealthy and that the driver was not at all wealthy. I assume the $5M may have come from an umbrella policy, but it is just an assumption. I really don't know.

Additionally, I would add that the woman killed was a "retired" professor. Her husband was also a "retired" professor. There were no small children involved. No one was relying on the income stream of the woman who died to make ends meet. Yet, the settlement was $5M.

Imagine what the settlement might be if you killed someone in a car accident who was a young professional in a high (or very high) wage earning position, with possibly a stay at home wife and several young children relying on the deceased's earnings. It is not hard to imagine quite a large settlement in a situation like that.

The takeaway for me is to get the largest umbrella one can reasonably afford to purchase. As someone else rightly said, it is the cheapest type of insurance you can buy.
"quite wealthy" = at least $5 million umbrella policy, assuming their accountant/lawyer were competent advisors.

it also implies the owner's wealth was reachable by creditors, which is very difficult when investments are held in tax-deferred (or Roth) accounts, as I suspect is the case with most Bogleheads.

Still, I keep an umbrella policy after seeing a friend have their vehicle borrowed by someone whose careless driving crippled a young mother. Given my friend was still in graduate school I doubt they carried much more than the minimum coverage.

So I want sufficient funds to be available to an injured party should anyone in my family accidentally cause the above.

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snackdog
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Re: Stand Alone Umbrella Insurance

Post by snackdog » Tue Jan 09, 2018 9:32 am

mclovin wrote:
Mon Jan 08, 2018 3:36 pm
I had a stand along policy with RLI when I was outside of the country and my normal carrier would not offer coverage.

It was more expensive than bundling it with my homeowner's and auto policies by a few hundred dollars per year, but the peace of mind was still worth it.
How did you contract it? As I understand it you need to work through an independent agent who purchases the coverage via RLI.

Thanks

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Re: Stand Alone Umbrella Insurance

Post by DrGoogle2017 » Tue Jan 09, 2018 10:19 am

ncbill wrote:
Tue Jan 09, 2018 8:40 am
MikeG62 wrote:
Mon Jan 08, 2018 4:01 pm
ncbill wrote:
Mon Jan 08, 2018 10:41 am
boglerdude wrote:
Mon Jan 08, 2018 6:15 am
> Aunt of my brother-in-law (retired college professor, married with one grown adult son) was killed in an automobile accident. The family sued the driver of the SUV who hit them. Case was settled for $5M

Interesting, that's the largest settlement I've heard of. It's likely they would've settled for the insurance limit even if it had only been $1M. Unless the SUV driver's behavior was egregious enough to easily sway a jury. And in addition, the SUV driver would need millions in assets to make the expense and risk of a trial worth it.
Yeah, there's no context to the above - did the driver have a $5 million personal umbrella, or perhaps a company (add'l insurance/deeper pockets) vehicle was involved?

Given it was a voluntary, negotiated solution ("settlement") the defendant was clearly not bankrupted by the case.
There is not a lot of context because I was not privy to all the details. What I would add (in addition to what I posted above) was that I was told the driver of the vehicle was not the owner of the vehicle (but was the boyfriend or fiance of the owner or daughter of the vehicle owner). I was told the owner of the vehicle was quite wealthy and that the driver was not at all wealthy. I assume the $5M may have come from an umbrella policy, but it is just an assumption. I really don't know.

Additionally, I would add that the woman killed was a "retired" professor. Her husband was also a "retired" professor. There were no small children involved. No one was relying on the income stream of the woman who died to make ends meet. Yet, the settlement was $5M.

Imagine what the settlement might be if you killed someone in a car accident who was a young professional in a high (or very high) wage earning position, with possibly a stay at home wife and several young children relying on the deceased's earnings. It is not hard to imagine quite a large settlement in a situation like that.

The takeaway for me is to get the largest umbrella one can reasonably afford to purchase. As someone else rightly said, it is the cheapest type of insurance you can buy.
"quite wealthy" = at least $5 million umbrella policy, assuming their accountant/lawyer were competent advisors.

it also implies the owner's wealth was reachable by creditors, which is very difficult when investments are held in tax-deferred (or Roth) accounts, as I suspect is the case with most Bogleheads.

Still, I keep an umbrella policy after seeing a friend have their vehicle borrowed by someone whose careless driving crippled a young mother. Given my friend was still in graduate school I doubt they carried much more than the minimum coverage.

So I want sufficient funds to be available to an injured party should anyone in my family accidentally cause the above.
This is also one of my reasons to get umbrella insurance.

SlowMovingInvestor
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Re: Stand Alone Umbrella Insurance

Post by SlowMovingInvestor » Tue Jan 09, 2018 10:20 am

boglerdude wrote:
Tue Jan 09, 2018 7:48 am
> Imagine what the settlement might be if you killed someone in a car accident who was a young professional

There are 0 examples of a $1M umbrella being refused, a trial, then a judgement over 1M.

Because a trial fought tooth-and-nail takes years and could cost $1M+. If plaintiff loses he pays the legal bills and gets no settlement. Who's to say the young professional killed wasn't planning an early retirement. Would be among many mitigating theories suggested to a jury.

Agreed, buy as much insurance as you can afford. Just explaining why more than 2M starts to become unreasonable
My feeling is that there is a lot of adverse selection for umbrella at higher levels, beyond $1M, and even more as you go beyond $2M. The people who buy umbrella at those levels may include those who are at higher risk, and that means that providers have to price accordingly.

Ultimately, umbrella guards against the proverbial meteor strike -- but a real question is if in focusing on umbrella, one is ignoring other events with similar meteor strike probabilities.

Katietsu
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Re: Stand Alone Umbrella Insurance

Post by Katietsu » Tue Jan 09, 2018 10:30 am

SlowMovingInvestor wrote:
Sun Jan 07, 2018 6:24 pm
talzara wrote:
Sun Jan 07, 2018 6:05 pm

You will probably pay more than you're already paying at GEICO, though. 20% is a very reasonable increase for a second car. You may not drive more, but people who buy a second car apparently drive 20% more on average. That's why the insurance company charges 20% more.
In my case, it's a 3rd car, with only 2 people in the household (long story). And umbrella covers excess homeowners and other types of liability too (which would remain the same even with an additional car). So an extra 20% definitely seems like a mis-pricing. Possibly GEICO's background in auto insurance makes it more sensitive to vehicle coverage changes.
Consider whether or not you can save on auto if you are comfortable with one of the companies that monitors your driving.

bgf
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Re: Stand Alone Umbrella Insurance

Post by bgf » Tue Jan 09, 2018 10:52 am

boglerdude wrote:
Mon Jan 08, 2018 6:15 am
> Aunt of my brother-in-law (retired college professor, married with one grown adult son) was killed in an automobile accident. The family sued the driver of the SUV who hit them. Case was settled for $5M

Interesting, that's the largest settlement I've heard of. It's likely they wouldve settled for the insurance limit even if it had only been $1M. Unless the SUV driver's behavior was egregious enough to easily sway a jury. And in addition the SUV driver would need millions in assets to make the expense and risk of a trial worth it.
for wrongful death, $5m is not particularly large. at least, not so much to make me think twice about it. jury verdicts these days can be absurdly high.
Last edited by bgf on Tue Jan 09, 2018 11:19 am, edited 1 time in total.
“TE OCCIDERE POSSUNT SED TE EDERE NON POSSUNT NEFAS EST"

SlowMovingInvestor
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Re: Stand Alone Umbrella Insurance

Post by SlowMovingInvestor » Tue Jan 09, 2018 11:04 am

bgf wrote:
Tue Jan 09, 2018 10:52 am
boglerdude wrote:
Mon Jan 08, 2018 6:15 am
> Aunt of my brother-in-law (retired college professor, married with one grown adult son) was killed in an automobile accident. The family sued the driver of the SUV who hit them. Case was settled for $5M

Interesting, that's the largest settlement I've heard of. It's likely they wouldve settled for the insurance limit even if it had only been $1M. Unless the SUV driver's behavior was egregious enough to easily sway a jury. And in addition the SUV driver would need millions in assets to make the expense and risk of a trial worth it.
for wrongful death, $5m is not particularly large. at least, not so much to make me thing twice about it. jury verdicts these days can be absurdly high.
What does wrongful death mean in practical terms ? I know there are legal terms such as negligence, gross negligence etc., but I am not sure what they mean in terms of real world accidents. I can see how DUI would count as wrongful death, but less egregious circumstances ?

bgf
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Re: Stand Alone Umbrella Insurance

Post by bgf » Tue Jan 09, 2018 11:24 am

SlowMovingInvestor wrote:
Tue Jan 09, 2018 11:04 am
bgf wrote:
Tue Jan 09, 2018 10:52 am
boglerdude wrote:
Mon Jan 08, 2018 6:15 am
> Aunt of my brother-in-law (retired college professor, married with one grown adult son) was killed in an automobile accident. The family sued the driver of the SUV who hit them. Case was settled for $5M

Interesting, that's the largest settlement I've heard of. It's likely they wouldve settled for the insurance limit even if it had only been $1M. Unless the SUV driver's behavior was egregious enough to easily sway a jury. And in addition the SUV driver would need millions in assets to make the expense and risk of a trial worth it.
for wrongful death, $5m is not particularly large. at least, not so much to make me thing twice about it. jury verdicts these days can be absurdly high.
What does wrongful death mean in practical terms ? I know there are legal terms such as negligence, gross negligence etc., but I am not sure what they mean in terms of real world accidents. I can see how DUI would count as wrongful death, but less egregious circumstances ?
wrongful death is when the injured party dies from their injuries sustained in the accident/incident. negligence is sufficient. DUI would almost certainly bring punitive damages into play.

there are a few problems nowadays:

1) medical expenses are absurdly high. in my state, the plaintiff can recover every penny of their 'bills' regardless of how much they actually had to pay.
2) everyone knows everyone else has insurance, so jurors are less likely to arrive at an amount that is fair to both the plaintiff and the defendant. they see the defendant as the stand in for 'big insurance co'
3) pain and suffering is very difficult to calculate, so many attorneys use the medical bills as the 'anchor' and request some multiple of the medical bills for pain and suffering. not uncommon for them to ask the jury for 10x. this has essentially an exponential effect on the total verdict.

eg. plaintiff gets into a car accident. defendant was negligent but not DUI or texting. just a normal accident. plaintiff has ER visit, MRIs, pain injections, Rx and ultimately a cervical fusion. bills total $80,000.

plaintiff's attorney asks for the $80,000 in bills plus $800,000 in pain and suffering...

jury awards god only knows.

not saying its right or wrong and certainly the plaintiff would rather never have been hit, undergo surgery, etc... just an illustration that you can hit that $500k auto limit pretty quick these days.
“TE OCCIDERE POSSUNT SED TE EDERE NON POSSUNT NEFAS EST"

MikeG62
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Re: Stand Alone Umbrella Insurance

Post by MikeG62 » Tue Jan 09, 2018 12:27 pm

ncbill wrote:
Tue Jan 09, 2018 8:40 am

..."quite wealthy" = at least $5 million umbrella policy, assuming their accountant/lawyer were competent advisors.

...it also implies the owner's wealth was reachable by creditors...
My assumption as well.
ncbill wrote:
Tue Jan 09, 2018 8:40 am

Still, I keep an umbrella policy after seeing a friend have their vehicle borrowed by someone whose careless driving crippled a young mother. Given my friend was still in graduate school I doubt they carried much more than the minimum coverage.

So I want sufficient funds to be available to an injured party should anyone in my family accidentally cause the above.
Me too!
Real Knowledge Comes Only From Experience

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mclovin
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Re: Stand Alone Umbrella Insurance

Post by mclovin » Tue Jan 09, 2018 5:20 pm

snackdog wrote:
Tue Jan 09, 2018 9:32 am
mclovin wrote:
Mon Jan 08, 2018 3:36 pm
I had a stand along policy with RLI when I was outside of the country and my normal carrier would not offer coverage.

It was more expensive than bundling it with my homeowner's and auto policies by a few hundred dollars per year, but the peace of mind was still worth it.
How did you contract it? As I understand it you need to work through an independent agent who purchases the coverage via RLI.

Thanks
I did go through an independent agent. I called around to the agents in town explaining the situation and found one that was able to help.

Iridium
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Re: Stand Alone Umbrella Insurance

Post by Iridium » Tue Jan 09, 2018 9:58 pm

MikeG62 wrote:
Tue Jan 09, 2018 12:27 pm
ncbill wrote:
Tue Jan 09, 2018 8:40 am

..."quite wealthy" = at least $5 million umbrella policy, assuming their accountant/lawyer were competent advisors.

...it also implies the owner's wealth was reachable by creditors...
My assumption as well.
<Snip>
The fact that there was a $5 MM settlement means that most likely, the driver and the owner's umbrella policies added up to at least $5MM. I do not think you can read too much more into it, as evidenced by the multitude of folks on this board with $5MM umbrella policies who do not have close to $5MM of assets, much less have that much 'reachable by creditors'. Umbrellas up to $5MM are cheap and easy to get. I wouldn't read too much into the existence of such a policy.

matt fe2o3
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Re: Stand Alone Umbrella Insurance

Post by matt fe2o3 » Tue Jan 09, 2018 10:14 pm

I have Safeco for umbrella.

pretty sure they will write stand alone - however you need to ensure your current insurance limits match the umbrella deductible.

I do have car and home with Safeco - but keep the motorcycle insurance with Progressive and have the bike added on the Safeco umbrella.

The issue I have is I cannot raise my UI/UIM under the umbrella to more than 1m. I can raise the umbrella to more - but the UI/UIM limit they will underwrite is 1m.

njdealguy
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Re: Stand Alone Umbrella Insurance

Post by njdealguy » Wed Jan 24, 2018 2:53 pm

I was quoted approximately $650 a year for $1MM Umbrella insurance from Liberty Mutual (live in NJ, age 34, net worth approx 900k) and this seems high compared to figures I see posted here. Both my auto and homeowners insurance policies are also with same company.

I'm suspecting if the higher umbrella insurance quote may be partly due to having just a 100/300k auto liability limit and if upping it to 250k/500k may help (which I was told would cost approx another $180 annually). My homeowners liability coverage is at $1MM. We have 3 cars in total, 4 drivers (none under age 24 or over age 70), no recent accidents and 3 minor traffic tickets in the last 3 years (2 from myself and 1 from another driver). Also have a single family home worth approx 800k and 1 child born recently.

Any suggestions on another good company to look at for stand alone umbrella insurance to talk to?

2015
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Re: Stand Alone Umbrella Insurance

Post by 2015 » Wed Jan 24, 2018 3:49 pm

I've been with the same insurance broker, had the same umbrella/homeowners bundled with one carrier, and been with a different carrier for auto, all for over 20 years. Despite having no claims, my bundled umbrella/homeowners premiums have risen by almost 50% in the last 5 years. Thanks to a thread here, with a corresponding link to an article stating loyalty discounts fail to offset premium increases (while also stating insurers directly target longstanding customers with increases knowing those customers won't leave!), I shopped this past December. Lo and behold, my broker was able to find me standalone umbrella and homeowners insurances which will save me $50 this year after factoring in broker fees, and $250 every year hereafter. I now intend to have my broker shop my auto insurance when it comes due in May.

Lesson: it pays to shop, loyalty may not pay, and standalone policies can be cheaper.

boglerdude
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Re: Stand Alone Umbrella Insurance

Post by boglerdude » Thu Jan 25, 2018 1:17 am

njdealguy wrote:
Wed Jan 24, 2018 2:53 pm
I was quoted approximately $650 a year for $1MM Umbrella insurance from Liberty Mutual

I'm suspecting if the higher umbrella insurance quote may be partly due to having just a 100/300k auto liability limit and if upping it to 250k/500k may help (which I was told would cost approx another $180 annually).
$650/year might not be bad considering 4 drivers and citations.

Increasing the underlying limits wont change the umbrella rate, but increasing your auto to 1M and dropping the umbrella might be less expensive. If any of those drivers are reckless get 5M umbrella.

Liberty Mutual/Safeco is usually cheapest, along with Geico.

2015
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Re: Stand Alone Umbrella Insurance

Post by 2015 » Thu Jan 25, 2018 12:27 pm

njdealguy wrote:
Wed Jan 24, 2018 2:53 pm
...

I'm suspecting if the higher umbrella insurance quote may be partly due to having just a 100/300k auto liability limit and if upping it to 250k/500k may help (which I was told would cost approx another $180 annually). ...
Exactly. My new umbrella carrier wouldn't even write to 100/300 underlying limits. OTOH, my auto carrier is only charging me an additional $60 annually to up my limits to 250/500K.

I suggest going through an insurance broker as it's a too much work to shop on your own, and you won't have access to all carriers. My broker really came through for me. As I stated above, even after factoring in $100 broker fee for shopping the new umbrella policy and $75 for shopping the new homeowners, I'm still ahead by $50 this year over my old carrier which bundled those policies, even after factoring in the additional $60 for upping underlying auto limits. Next year and every year thereafter I'll save $260 as there will be no broker fees. My new rates will be back down to where they were 5 years ago

As I said above, as a result of this positive experience, and because I've been with my auto carrier for over 20 years now, I'm going to have the broker shop my auto policy when it comes due in a few months.

Iridium
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Re: Stand Alone Umbrella Insurance

Post by Iridium » Thu Jan 25, 2018 2:30 pm

2015 wrote:
Thu Jan 25, 2018 12:27 pm
I suggest going through an insurance broker as it's a too much work to shop on your own, and you won't have access to all carriers. My broker really came through for me. As I stated above, even after factoring in $100 broker fee for shopping the new umbrella policy and $75 for shopping the new homeowners, I'm still ahead by $50 this year over my old carrier which bundled those policies, even after factoring in the additional $60 for upping underlying auto limits. Next year and every year thereafter I'll save $260 as there will be no broker fees. My new rates will be back down to where they were 5 years ago
I am curious about this. Normally, insurance brokers get a commission from the insurance companies and do not charge the policy holder directly. While it does not have quite the same problems as a life insurance agent or financial advisor, I would love to be able to pay a few hundred bucks for a fiduciary 'insurance advisor' who would shop all available companies without regard to commission structure. Have you found one, or is your broker just charging you a fee on top of his/her commission?

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BrandonBogle
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Re: Stand Alone Umbrella Insurance

Post by BrandonBogle » Thu Jan 25, 2018 2:41 pm

While not technically a standalone umbrella policy, I wanted to share that sometimes you can get umbrella away from your auto carrier.

I have Travelers for my home + umbrella and Progressive for my auto. I used to have all three at Travelers but my premium went up significantly w/o any tickets or accidents a couple years back such that Progressive for my auto was 40% of what I was paying travels (thus 60% off). While my homeowners went up slightly for losing the multi-line ($60), it was FAR made up by Progressive's cheaper auto rate.

2015
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Re: Stand Alone Umbrella Insurance

Post by 2015 » Thu Jan 25, 2018 4:16 pm

Iridium wrote:
Thu Jan 25, 2018 2:30 pm
2015 wrote:
Thu Jan 25, 2018 12:27 pm
I suggest going through an insurance broker as it's a too much work to shop on your own, and you won't have access to all carriers. My broker really came through for me. As I stated above, even after factoring in $100 broker fee for shopping the new umbrella policy and $75 for shopping the new homeowners, I'm still ahead by $50 this year over my old carrier which bundled those policies, even after factoring in the additional $60 for upping underlying auto limits. Next year and every year thereafter I'll save $260 as there will be no broker fees. My new rates will be back down to where they were 5 years ago
I am curious about this. Normally, insurance brokers get a commission from the insurance companies and do not charge the policy holder directly. While it does not have quite the same problems as a life insurance agent or financial advisor, I would love to be able to pay a few hundred bucks for a fiduciary 'insurance advisor' who would shop all available companies without regard to commission structure. Have you found one, or is your broker just charging you a fee on top of his/her commission?
No, it's not quoted as a commission but as a straight broker fee. I don't know how it's structured, but I'm certainly pleased with it, and especially pleased it's a one-time fee. I also don't have to pay to have them shop, only if I want to go ahead with the new policy. I vaguely recall when I first found this broker 20 years ago paying a broker fee to them to find my current umbrella/homeowners bundle. I also recall having them shop in the past couple years but they were unable to beat my umbrella/homeowners bundle and standalone auto insurance; I paid no fee at that time.

What I didn't state in my earlier post was the article attached to another thread stated insurance companies have something like algorithms or a database or something (IDR which) containing names of those who've remained with their carrier for several years and target them for increases. It's for this reason I've decided it's time to shop the auto policy which so far no one has been able to beat, but who knows?

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