Umbrella Policy; Anyone actually made a claim?

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afan
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Re: Umbrella Policy; Anyone actually made a claim?

Post by afan »

neilpilot wrote: Mon Mar 15, 2021 8:53 am
I'm happy if that's true in your case. Have you confirmed that with your agent(s)?

I can definitely say it was NOT the case when I discussed it with my agent. He made it clear that any auto or home liability coverage above the limits set by the umbrella policy was not additive to the excess liability's policy limits. In other words, if I kept my auto coverage at $1M (if only $300k was required), then my auto & $1M umbrella would not equate to $2M of total coverage.
Same for me with policies from two different major companies. Buying excess underlying insurance did not increase the coverage. Thus, every penny of extra premium was wasted.
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Call_Me_Op
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Re: Umbrella Policy; Anyone actually made a claim?

Post by Call_Me_Op »

knightrider wrote: Fri Feb 26, 2021 10:11 am
quantAndHold wrote: Tue Feb 23, 2021 3:09 pm I have the opposite. Multimillionaire friend who didn’t have umbrella, who got into a car accident and got sued for $2m. Car insurance company was perfectly willing to go to court and risk the entire $2m, because they were only on the hook for $100k. Friend had to hire and pay their own lawyer $20k and spend a year getting the insurance company and plaintiff to negotiate a settlement that was within the limits of the car policy.
This example kind of proves why you don't need umbrella insurance. Over your lifetime you may pay close to 20k in premiums for your umbrella policy. That is close to the same amount as hiring a lawyer to negotiate a settlement that is within the limits of the car policy.

So why pick 100% chance of paying 20k/lifetime in premiums over 0.0001% chance of paying 20k via hiring a lawyer?
Ever hear of Pascal's wager? The reason you would elect to pay the $20k in lifetime insurance premiums is to prevent the possibility of a catastrophic loss. That is what insurance is for. You cite the 0.0001% chance of paying 20k to a lawyer, but not the comparable chance of losing everything.
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hirlaw
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Re: Umbrella Policy; Anyone actually made a claim?

Post by hirlaw »

chance of paying 20k to a lawyer
FYI: You would be paying a lot more than $20,000 in legal fees.
talzara
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Re: Umbrella Policy; Anyone actually made a claim?

Post by talzara »

tj wrote: Sun Mar 14, 2021 11:46 pm My USAA only requires $300k on the underlying, but I have $1M on the underlying for each. I think my umbrella is cheaper because of it, but I really don't know.
In most states, USAA offers a 20% discount on the first $1 million of umbrella if your underlying policy has a $500k limit instead of a $300k limit.
talzara
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Re: Umbrella Policy; Anyone actually made a claim?

Post by talzara »

neilpilot wrote: Mon Mar 15, 2021 8:53 am I can definitely say it was NOT the case when I discussed it with my agent. He made it clear that any auto or home liability coverage above the limits set by the umbrella policy was not additive to the excess liability's policy limits. In other words, if I kept my auto coverage at $1M (if only $300k was required), then my auto & $1M umbrella would not equate to $2M of total coverage.
afan wrote: Mon Mar 15, 2021 12:53 pm Same for me with policies from two different major companies. Buying excess underlying insurance did not increase the coverage. Thus, every penny of extra premium was wasted.
Most insurance companies write their umbrella policies to sit on top of the actual underlying policy, not on top of the required limits on the underlying policy. $1 million of primary auto liability plus $1 million of umbrella would add up to $2 million of total coverage for automobile liability.

Your policy may be different, but don't rely on what the agent tells you. The agent is a salesman, not an expert on the policy language. Read the policy to see where the coverage begins and ends.

For example, the State Farm umbrella policy sits on top of the actual underlying policy:
14. “retained limit” means the sum of:
a. the amount paid or payable by any other insurance policy for the loss;
...

If a claim is made or suit is brought against an insured for damages because of a loss for which the insured is legally liable and to which this policy applies, we will pay on behalf of the insured, the damages that exceed the retained limit. The most we will pay for such loss is the Coverage L Limit of Liability, ...
oldfort
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Re: Umbrella Policy; Anyone actually made a claim?

Post by oldfort »

Call_Me_Op wrote: Mon Mar 15, 2021 1:05 pm You cite the 0.0001% chance of paying 20k to a lawyer, but not the comparable chance of losing everything.
Many people aren't at risk of losing everything. In the worst case of having to file Chapter 7 in MA, you would get to keep your 401k or equivalent, IRAs up to $1.36 million, and with proper planning up to $500k in home equity.
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Re: Umbrella Policy; Anyone actually made a claim?

Post by Call_Me_Op »

oldfort wrote: Mon Mar 15, 2021 6:16 pm
Call_Me_Op wrote: Mon Mar 15, 2021 1:05 pm You cite the 0.0001% chance of paying 20k to a lawyer, but not the comparable chance of losing everything.
Many people aren't at risk of losing everything. In the worst case of having to file Chapter 7 in MA, you would get to keep your 401k or equivalent, IRAs up to $1.36 million, and with proper planning up to $500k in home equity.
OK, I can refine the statement to replace "everything" with "all unprotected assets, including future income." Doesn't change the point.
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FIREchief
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Re: Umbrella Policy; Anyone actually made a claim?

Post by FIREchief »

Call_Me_Op wrote: Tue Mar 16, 2021 7:42 am
oldfort wrote: Mon Mar 15, 2021 6:16 pm
Call_Me_Op wrote: Mon Mar 15, 2021 1:05 pm You cite the 0.0001% chance of paying 20k to a lawyer, but not the comparable chance of losing everything.
Many people aren't at risk of losing everything. In the worst case of having to file Chapter 7 in MA, you would get to keep your 401k or equivalent, IRAs up to $1.36 million, and with proper planning up to $500k in home equity.
OK, I can refine the statement to replace "everything" with "all unprotected assets, including future income." Doesn't change the point.
Yep. Most of us don't want to lose our unprotected assets, which makes umbrella insurance a great investment. 8-)
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oldfort
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Re: Umbrella Policy; Anyone actually made a claim?

Post by oldfort »

Call_Me_Op wrote: Tue Mar 16, 2021 7:42 am
oldfort wrote: Mon Mar 15, 2021 6:16 pm
Call_Me_Op wrote: Mon Mar 15, 2021 1:05 pm You cite the 0.0001% chance of paying 20k to a lawyer, but not the comparable chance of losing everything.
Many people aren't at risk of losing everything. In the worst case of having to file Chapter 7 in MA, you would get to keep your 401k or equivalent, IRAs up to $1.36 million, and with proper planning up to $500k in home equity.
OK, I can refine the statement to replace "everything" with "all unprotected assets, including future income." Doesn't change the point.
All future income in Chapter 7 can be thought as exempt or protected with a few exceptions for non-dischargeable debts: ex. driving under the influence of drugs or alcohol.
knightrider
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Re: Umbrella Policy; Anyone actually made a claim?

Post by knightrider »

Call_Me_Op wrote: Mon Mar 15, 2021 1:05 pm Ever hear of Pascal's wager? The reason you would elect to pay the $20k in lifetime insurance premiums is to prevent the possibility of a catastrophic loss. That is what insurance is for. You cite the 0.0001% chance of paying 20k to a lawyer, but not the comparable chance of losing everything.
The 20k lawyer is going to ensure you don't lose everything. The 20k lawyer will also make sure you don't even lose your unprotected assets at least in the example described earlier..
Last edited by knightrider on Wed Mar 17, 2021 10:39 am, edited 1 time in total.
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Lee_WSP
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Re: Umbrella Policy; Anyone actually made a claim?

Post by Lee_WSP »

tj wrote: Mon Mar 15, 2021 8:40 am
neilpilot wrote: Mon Mar 15, 2021 7:27 am
tj wrote: Sun Mar 14, 2021 11:46 pm

My USAA only requires $300k on the underlying, but I have $1M on the underlying for each. I think my umbrella is cheaper because of it, but I really don't know.
Obviously I don’t know your policy details. When I first purchased umbrella coverage decades ago my agent explained that excess liability limits in the underlying policies was simply a waste of money. It didn’t buy me additional coverage or reduce my umbrella premium. Maybe your umbrella is cheaper as a result but you should check. I suspect you are simply paying more than you could for your homeowners and auto.
Of course it buys you more coverage. Having a $1M umbrella does not increase your coverage from 300k, it adds an additional $1M, meaning of your underlying is $1M you have $2M of coverage instead of 1.3M.
That is not how these policies are written. They will indemnify you up to the 1 million limit in excess of any payouts of the primary policy. You do not get an excess 1 million dollars, you get 1 million in secondary liability insurance, which means they will pay out any damages in excess of the underlying up to 1 million dollars.

Here's Allstate's readable condensed explanation with infographics:
https://www.allstate.com/resources/alls ... simple.pdf
talzara
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Re: Umbrella Policy; Anyone actually made a claim?

Post by talzara »

Lee_WSP wrote: Wed Mar 17, 2021 10:38 am
tj wrote: Mon Mar 15, 2021 8:40 am Of course it buys you more coverage. Having a $1M umbrella does not increase your coverage from 300k, it adds an additional $1M, meaning of your underlying is $1M you have $2M of coverage instead of 1.3M.
That is not how these policies are written. They will indemnify you up to the 1 million limit in excess of any payouts of the primary policy. You do not get an excess 1 million dollars, you get 1 million in secondary liability insurance, which means they will pay out any damages in excess of the underlying up to 1 million dollars.

Here's Allstate's readable condensed explanation with infographics:
https://www.allstate.com/resources/alls ... simple.pdf
That is exactly what the post said. $1 million of primary liability (underlying policy) + $1 million of excess liability (umbrella) = $2 million of total liability insurance.

"Excess" means secondary, and "underlying" means primary.
Aggieland
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Re: Umbrella Policy; Anyone actually made a claim?

Post by Aggieland »

quantAndHold wrote: Tue Feb 23, 2021 3:09 pm
scoreboard wrote: Tue Feb 23, 2021 1:35 pm
The bottom line is most people never need to use their umbrella policy, but the consequences of not having an umbrella policy are potentially life changing.
Are there any other policies/ actions that may fall into the bucket of “ i wish i had subscription to…xyz” after the fact?

Life changing items Medical, life, umbrella, auto, home insurance. Any less obvious ones that give peace of mind?
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willthrill81
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Re: Umbrella Policy; Anyone actually made a claim?

Post by willthrill81 »

Aggieland wrote: Sat Jan 01, 2022 10:32 am
quantAndHold wrote: Tue Feb 23, 2021 3:09 pm
scoreboard wrote: Tue Feb 23, 2021 1:35 pm
The bottom line is most people never need to use their umbrella policy, but the consequences of not having an umbrella policy are potentially life changing.
Are there any other policies/ actions that may fall into the bucket of “ i wish i had subscription to…xyz” after the fact?

Life changing items Medical, life, umbrella, auto, home insurance. Any less obvious ones that give peace of mind?
Disability and flood insurance come to mind.
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Stinky
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Re: Umbrella Policy; Anyone actually made a claim?

Post by Stinky »

willthrill81 wrote: Sat Jan 01, 2022 10:46 am
Aggieland wrote: Sat Jan 01, 2022 10:32 am
quantAndHold wrote: Tue Feb 23, 2021 3:09 pm
scoreboard wrote: Tue Feb 23, 2021 1:35 pm
The bottom line is most people never need to use their umbrella policy, but the consequences of not having an umbrella policy are potentially life changing.
Are there any other policies/ actions that may fall into the bucket of “ i wish i had subscription to…xyz” after the fact?

Life changing items Medical, life, umbrella, auto, home insurance. Any less obvious ones that give peace of mind?
Disability and flood insurance come to mind.
Also earthquake insurance, depending on where you live.
Retired life insurance company financial executive who sincerely believes that ”It’s a GREAT day to be alive!”
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