Umbrella Coverage

Non-investing personal finance issues including insurance, credit, real estate, taxes, employment and legal issues such as trusts and wills.
User avatar
Topic Author
AnnetteLouisan
Posts: 7261
Joined: Sat Sep 18, 2021 10:16 pm
Location: New York, NY

Umbrella Coverage

Post by AnnetteLouisan »

I’m pretty well insured, but was advised by some accountants I net with that “umbrella coverage” would be good for me, to protect my life’s savings from lawsuits, whether frivolous or any other kind.

I have no car and own only a tiny apartment. I looked into umbrella coverage a little and it seems to relate to car, home, antiques and artworks (?)

I very much want protection from nuisance claims (such as employment claims) in this litigious environment, and will happily pay for it, but how does umbrella coverage fit an urban, low-possessions lifestyle?

Are any companies especially good or competitively priced in this space?

Thank you in advance.
Call_Me_Op
Posts: 9881
Joined: Mon Sep 07, 2009 2:57 pm
Location: Milky Way

Re: Umbrella Coverage

Post by Call_Me_Op »

AnnetteLouisan wrote: Fri Sep 24, 2021 1:43 pm I’m pretty well insured, but was advised by some accountants I net with that “umbrella coverage” would be good for me, to protect my life’s savings from lawsuits, whether frivolous or any other kind.

I have no car and own only a tiny apartment. I looked into umbrella coverage a little and it seems to relate to car, home, antiques and artworks (?)

I very much want protection from nuisance claims (such as employment claims) in this litigious environment, and will happily pay for it, but how does umbrella coverage fit an urban, low-possessions lifestyle?

Are any companies especially good or competitively priced in this space?

Thank you in advance.
I don't think umbrella covers employment-related claims. It sounds like you lead a very low-risk lifestyle but if you have significant assets you should probably consider umbrella insurance even though it's hard for me to imagine what negligence could conceivably be legitimately claimed. If you drove a car and owned a home, your risk would be much higher. Do you host wild parties that include alcohol in your apartment. :)
Best regards, -Op | | "In the middle of difficulty lies opportunity." Einstein
afan
Posts: 8193
Joined: Sun Jul 25, 2010 4:01 pm

Re: Umbrella Coverage

Post by afan »

Umbrella is liability insurance. Unless your artwork is dangerous, no one is going to sue you claiming injury from it.

The insurance covers you if you are accused of harming someone. By far the biggest risk is auto. Even if you don't own a car, if you ever drive you face exposure. There are non-owner auto policies that cover people who drive sometimes but do not have cars.

Another risk is at your home. Someone who is visiting slips and falls, for example. Or is injured by a pet.

You would have underlying liability protection on your auto and homeowners policies, with umbrella on top.

Should you get it? It is generally cheap. If you have little exposure- no car, no driving, do not own a house (some injuries at your rental being the responsibility of the building owner, not the tenant), no pets or pool, you can get your risk down low enough that you may not need it.

Some people say get enough umbrella to cover your exposed net worth. Some say that your net worth is not a good guide to how much you need. Generally the minimum coverage amount you can buy is $1,000,000. Compare that to your networth and exposure.
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
User avatar
TinyElvis
Posts: 324
Joined: Mon Jul 27, 2015 2:33 pm

Re: Umbrella Coverage

Post by TinyElvis »

"Give a cat a fish and it will eat for a day. Teach a cat to fish and it will just sit there waiting for you to give it a fish."
PVW
Posts: 807
Joined: Mon Dec 29, 2014 10:01 am

Re: Umbrella Coverage

Post by PVW »

In general, umbrella insurance covers you if you are liable for damages to another person or their property.

While many people buy umbrella insurance to protect their assets, you should also think about the other person. If you cause damage, you should be able to compensate the person for that damage.

It sounds like you don't have many things that typically results in liability claims, so coverage would probably be pretty cheap for you.
hachiko
Posts: 941
Joined: Fri Mar 17, 2017 1:56 pm

Re: Umbrella Coverage

Post by hachiko »

Do umbrella insurers even provide an attorney for your defense if the liability is covered under the underlying policy? I thought the attorney for your defense would be covered by homeowner's insurance?
Made money. Lost money. Learned to stop counting.
User avatar
Topic Author
AnnetteLouisan
Posts: 7261
Joined: Sat Sep 18, 2021 10:16 pm
Location: New York, NY

Re: Umbrella Coverage

Post by AnnetteLouisan »

Call_Me_Op wrote: Fri Sep 24, 2021 2:03 pm
AnnetteLouisan wrote: Fri Sep 24, 2021 1:43 pm I’m pretty well insured, but was advised by some accountants I net with that “umbrella coverage” would be good for me, to protect my life’s savings from lawsuits, whether frivolous or any other kind.

I have no car and own only a tiny apartment. I looked into umbrella coverage a little and it seems to relate to car, home, antiques and artworks (?)

I very much want protection from nuisance claims (such as employment claims) in this litigious environment, and will happily pay for it, but how does umbrella coverage fit an urban, low-possessions lifestyle?

Are any companies especially good or competitively priced in this space?

Thank you in advance.
I don't think umbrella covers employment-related claims. It sounds like you lead a very low-risk lifestyle but if you have significant assets you should probably consider umbrella insurance even though it's hard for me to imagine what negligence could conceivably be legitimately claimed. If you drove a car and owned a home, your risk would be much higher. Do you host wild parties that include alcohol in your apartment. :)
Ha ha - no.
Is “liability coverage” what I want? I want protection from malicious or frivolous unfounded claims.
Call_Me_Op
Posts: 9881
Joined: Mon Sep 07, 2009 2:57 pm
Location: Milky Way

Re: Umbrella Coverage

Post by Call_Me_Op »

hachiko wrote: Fri Sep 24, 2021 2:28 pm Do umbrella insurers even provide an attorney for your defense if the liability is covered under the underlying policy? I thought the attorney for your defense would be covered by homeowner's insurance?
Umbrella liability typically sits on top of homeowner's. Bottom line is the insurance company will defend you if their money is at risk - and that's one of the major benefits of both homeowner's and umbrella.
Best regards, -Op | | "In the middle of difficulty lies opportunity." Einstein
exodusNH
Posts: 10347
Joined: Wed Jan 06, 2021 7:21 pm

Re: Umbrella Coverage

Post by exodusNH »

AnnetteLouisan wrote: Fri Sep 24, 2021 3:25 pm
Call_Me_Op wrote: Fri Sep 24, 2021 2:03 pm
AnnetteLouisan wrote: Fri Sep 24, 2021 1:43 pm I’m pretty well insured, but was advised by some accountants I net with that “umbrella coverage” would be good for me, to protect my life’s savings from lawsuits, whether frivolous or any other kind.

I have no car and own only a tiny apartment. I looked into umbrella coverage a little and it seems to relate to car, home, antiques and artworks (?)

I very much want protection from nuisance claims (such as employment claims) in this litigious environment, and will happily pay for it, but how does umbrella coverage fit an urban, low-possessions lifestyle?

Are any companies especially good or competitively priced in this space?

Thank you in advance.
I don't think umbrella covers employment-related claims. It sounds like you lead a very low-risk lifestyle but if you have significant assets you should probably consider umbrella insurance even though it's hard for me to imagine what negligence could conceivably be legitimately claimed. If you drove a car and owned a home, your risk would be much higher. Do you host wild parties that include alcohol in your apartment. :)
Ha ha - no.
Is “liability coverage” what I want? I want protection from malicious or frivolous unfounded claims.
This provides a nice explanation:

https://www.geico.com/information/about ... /umbrella/

If most of your wealth is in a 401k, you have substantial protection there. IRA protection may be more limited, depending on what state you live in.

The umbrella would be for your exposed assets, including wage garnishment if you're relatively young (i.e. many years of earnings ahead of you) and you earn a good wage.
User avatar
Topic Author
AnnetteLouisan
Posts: 7261
Joined: Sat Sep 18, 2021 10:16 pm
Location: New York, NY

Re: Umbrella Coverage

Post by AnnetteLouisan »

TinyElvis wrote: Fri Sep 24, 2021 2:13 pm I have a policy through RLI:

https://www.rlicorp.com/personal-umbrella-policy
Yes - this is it exactly! You’re going along minding your business and someone runs in front or falls and accuses you of something. Thanks.
User avatar
Topic Author
AnnetteLouisan
Posts: 7261
Joined: Sat Sep 18, 2021 10:16 pm
Location: New York, NY

Re: Umbrella Coverage

Post by AnnetteLouisan »

PVW wrote: Fri Sep 24, 2021 2:24 pm In general, umbrella insurance covers you if you are liable for damages to another person or their property.

While many people buy umbrella insurance to protect their assets, you should also think about the other person. If you cause damage, you should be able to compensate the person for that damage.

It sounds like you don't have many things that typically results in liability claims, so coverage would probably be pretty cheap for you.
Good point - it’s not just about protecting me, its about providing for the other person to be compensated, just not with my savings. Thank you!
User avatar
Lee_WSP
Posts: 10401
Joined: Fri Apr 19, 2019 5:15 pm
Location: Arizona

Re: Umbrella Coverage

Post by Lee_WSP »

Umbrella as it's commonly used, requires an underlying auto policy as that is what typically generates claims. You may be able to get an excess personal liability policy to sit on top of your homeowners which excludes auto. I have not shopped for such a policy.

Another possibility is to find an insurer for home that has limits you like.
harrychan
Posts: 2047
Joined: Sun Nov 14, 2010 8:37 pm
Location: Pasadena

Re: Umbrella Coverage

Post by harrychan »

AnnetteLouisan wrote: Fri Sep 24, 2021 3:37 pm
TinyElvis wrote: Fri Sep 24, 2021 2:13 pm I have a policy through RLI:

https://www.rlicorp.com/personal-umbrella-policy
Yes - this is it exactly! You’re going along minding your business and someone runs in front or falls and accuses you of something. Thanks.
I've looked into this for the very same reason but if you read the fine print, umbrella only adds a supplement to home or auto insurance. I wanted it for my peace of mind when I cycle. I am not reckless but can imagine the possibility of someone jumping out in front of me or sue me for causing a car accident when I am on my bike. It wasn't clear that umbrella would cover such scenarios.
This is not legal or certified financial advice but you know that already.
informal guide
Posts: 464
Joined: Mon Aug 29, 2016 10:26 am

Re: Umbrella Coverage

Post by informal guide »

Although most umbrella claims are auto related, I have a young relative living in an apartment with an umbrella claim that had nothing to do with auto or home. This person was being stalked by the assigned Postal carrier (very creepy stuff but not physical). A complaint was filed; the Postal carrier was subsequently terminated. The carrier, in turn, sued my relative, for tortious interference (causing him to be fired). The legal defense costs were in excess of $20,000, even though the claim was ultimately thrown out by a judge. An umbrella policy usually protects one from the process and costs of defending this type of claim.
SnowBog
Posts: 4699
Joined: Fri Dec 21, 2018 10:21 pm

Re: Umbrella Coverage

Post by SnowBog »

harrychan wrote: Fri Sep 24, 2021 3:49 pm
AnnetteLouisan wrote: Fri Sep 24, 2021 3:37 pm
TinyElvis wrote: Fri Sep 24, 2021 2:13 pm I have a policy through RLI:

https://www.rlicorp.com/personal-umbrella-policy
Yes - this is it exactly! You’re going along minding your business and someone runs in front or falls and accuses you of something. Thanks.
I've looked into this for the very same reason but if you read the fine print, umbrella only adds a supplement to home or auto insurance. I wanted it for my peace of mind when I cycle. I am not reckless but can imagine the possibility of someone jumping out in front of me or sue me for causing a car accident when I am on my bike. It wasn't clear that umbrella would cover such scenarios.
IANAL, but found this: https://www.progressive.com/answers/bicycle-insurance/
User avatar
dodecahedron
Posts: 6607
Joined: Tue Nov 12, 2013 11:28 am

Re: Umbrella Coverage

Post by dodecahedron »

In another thread, OP has shared that her apartment is a coop, so she is a homeowner, not a renter. Coops are complicated beasts, but I definitely think an umbrella policy is indicated for any homeowner, whether single-family home, condo, coop, or townhouse.

Suppose there is a plumbing leak that appears to have originated in your unit that causes a huge flood in the unit below yours and perhaps water somehow gets into the electric lines and starts an electrical fire doing a lot of damage to several other units. Perhaps some neighbors are seriously injured or worse. Everybody is suing everybody. Lots of fingers are getting pointed. Perhaps the leak actually originated in the unit above yours.

An umbrella policy will not only pay off a judgment or settlement up to the policy limits, it will provide you with experienced and knowledgeable legal counsel that is motivated to defend your interests.

Umbrella policies are rarely needed, but when they are needed, they are worth their weight in gold. They are relatively inexpensive for the peace of mind they confer.
boglerdude
Posts: 928
Joined: Fri Jul 10, 2015 1:28 am

Re: Umbrella Coverage

Post by boglerdude »

Umbrella is excess liability and usually only covers what the underlying policies cover. Just max your underlying limits if you dont have an auto policy.
User avatar
Topic Author
AnnetteLouisan
Posts: 7261
Joined: Sat Sep 18, 2021 10:16 pm
Location: New York, NY

Re: Umbrella Coverage

Post by AnnetteLouisan »

informal guide wrote: Fri Sep 24, 2021 4:59 pm Although most umbrella claims are auto related, I have a young relative living in an apartment with an umbrella claim that had nothing to do with auto or home. This person was being stalked by the assigned Postal carrier (very creepy stuff but not physical). A complaint was filed; the Postal carrier was subsequently terminated. The carrier, in turn, sued my relative, for tortious interference (causing him to be fired). The legal defense costs were in excess of $20,000, even though the claim was ultimately thrown out by a judge. An umbrella policy usually protects one from the process and costs of defending this type of claim.
Exactly!! This sort of thing. Crazy world out there!
User avatar
Topic Author
AnnetteLouisan
Posts: 7261
Joined: Sat Sep 18, 2021 10:16 pm
Location: New York, NY

Re: Umbrella Coverage

Post by AnnetteLouisan »

dodecahedron wrote: Fri Sep 24, 2021 8:30 pm In another thread, OP has shared that her apartment is a coop, so she is a homeowner, not a renter. Coops are complicated beasts, but I definitely think an umbrella policy is indicated for any homeowner, whether single-family home, condo, coop, or townhouse.

Suppose there is a plumbing leak that appears to have originated in your unit that causes a huge flood in the unit below yours and perhaps water somehow gets into the electric lines and starts an electrical fire doing a lot of damage to several other units. Perhaps some neighbors are seriously injured or worse. Everybody is suing everybody. Lots of fingers are getting pointed. Perhaps the leak actually originated in the unit above yours.

An umbrella policy will not only pay off a judgment or settlement up to the policy limits, it will provide you with experienced and knowledgeable legal counsel that is motivated to defend your interests.

Umbrella policies are rarely needed, but when they are needed, they are worth their weight in gold. They are relatively inexpensive for the peace of mind they confer.
Exactly!! Thanks! I’d like to get one.
harrychan
Posts: 2047
Joined: Sun Nov 14, 2010 8:37 pm
Location: Pasadena

Re: Umbrella Coverage

Post by harrychan »

SnowBog wrote: Fri Sep 24, 2021 8:17 pm
harrychan wrote: Fri Sep 24, 2021 3:49 pm
AnnetteLouisan wrote: Fri Sep 24, 2021 3:37 pm
TinyElvis wrote: Fri Sep 24, 2021 2:13 pm I have a policy through RLI:

https://www.rlicorp.com/personal-umbrella-policy
Yes - this is it exactly! You’re going along minding your business and someone runs in front or falls and accuses you of something. Thanks.
I've looked into this for the very same reason but if you read the fine print, umbrella only adds a supplement to home or auto insurance. I wanted it for my peace of mind when I cycle. I am not reckless but can imagine the possibility of someone jumping out in front of me or sue me for causing a car accident when I am on my bike. It wasn't clear that umbrella would cover such scenarios.
IANAL, but found this: https://www.progressive.com/answers/bicycle-insurance/
Wow.. thanks. I may actually give it a try :)
This is not legal or certified financial advice but you know that already.
User avatar
orthros
Posts: 532
Joined: Fri Feb 23, 2007 6:56 pm
Contact:

Re: Umbrella Coverage

Post by orthros »

After reading about RLI in a couple places here, I decided to check them out.

I was paying $900 for umbrella insurance with GEICO. Materially similar policy was half that at RLI.

Even though I was 3 months into my GEICO policy, my refund is significantly more than I'll pay for the entire year at RLI so that's a few hundred bucks of savings.
User avatar
willthrill81
Posts: 32250
Joined: Thu Jan 26, 2017 2:17 pm
Location: USA
Contact:

Re: Umbrella Coverage

Post by willthrill81 »

Since all of our assets except a portion of our home equity, which is covered by our homeowner's insurance, are in tax-advantaged accounts that are protected from judgments by federal and/or state law, we have no need for umbrella coverage. But few seem to enjoy these protections.

Umbrella coverage is relatively cheap because it's very rarely needed. I personally doubt that it's worthwhile for most, but if it gives you peace of mind, go for it. Exceptionally few should get more than $1-2 million of coverage.
The Sensible Steward
PVW
Posts: 807
Joined: Mon Dec 29, 2014 10:01 am

Re: Umbrella Coverage

Post by PVW »

willthrill81 wrote: Tue Sep 28, 2021 2:55 pm Since all of our assets except a portion of our home equity, which is covered by our homeowner's insurance, are in tax-advantaged accounts that are protected from judgments by federal and/or state law, we have no need for umbrella coverage. But few seem to enjoy these protections.

Umbrella coverage is relatively cheap because it's very rarely needed. I personally doubt that it's worthwhile for most, but if it gives you peace of mind, go for it. Exceptionally few should get more than $1-2 million of coverage.
If you injure another person, that person might have a need for your umbrella insurance. But it's nice that you won't be out of pocket.
User avatar
Topic Author
AnnetteLouisan
Posts: 7261
Joined: Sat Sep 18, 2021 10:16 pm
Location: New York, NY

Re: Umbrella Coverage

Post by AnnetteLouisan »

Is it best to get it from your homeowners insurer? I have Travelers, are they good for umbrella coverage?
DarkHelmetII
Posts: 1441
Joined: Mon Jul 24, 2017 12:25 pm

Re: Umbrella Coverage

Post by DarkHelmetII »

AnnetteLouisan wrote: Fri Sep 24, 2021 1:43 pm I’m pretty well insured, but was advised by some accountants I net with that “umbrella coverage” would be good for me, to protect my life’s savings from lawsuits, whether frivolous or any other kind.

I have no car and own only a tiny apartment. I looked into umbrella coverage a little and it seems to relate to car, home, antiques and artworks (?)

I very much want protection from nuisance claims (such as employment claims) in this litigious environment, and will happily pay for it, but how does umbrella coverage fit an urban, low-possessions lifestyle?

Are any companies especially good or competitively priced in this space?

Thank you in advance.
Unless proven otherwise (there are always exceptions), Umbrella only expands the $$ covered and NOT the covered events.
User avatar
willthrill81
Posts: 32250
Joined: Thu Jan 26, 2017 2:17 pm
Location: USA
Contact:

Re: Umbrella Coverage

Post by willthrill81 »

AnnetteLouisan wrote: Tue Sep 28, 2021 3:09 pm Is it best to get it from your homeowners insurer? I have Travelers, are they good for umbrella coverage?
Your homeowner's and usually auto insurance have to be with the same insurer that you also get your umbrella policy through.
The Sensible Steward
User avatar
Topic Author
AnnetteLouisan
Posts: 7261
Joined: Sat Sep 18, 2021 10:16 pm
Location: New York, NY

Re: Umbrella Coverage

Post by AnnetteLouisan »

willthrill81 wrote: Tue Sep 28, 2021 3:12 pm
AnnetteLouisan wrote: Tue Sep 28, 2021 3:09 pm Is it best to get it from your homeowners insurer? I have Travelers, are they good for umbrella coverage?
Your homeowner's and usually auto insurance have to be with the same insurer that you also get your umbrella policy through.
Thanks! That is helpful.
afan
Posts: 8193
Joined: Sun Jul 25, 2010 4:01 pm

Re: Umbrella Coverage

Post by afan »

DarkHelmetII wrote: Tue Sep 28, 2021 3:11 pm
Unless proven otherwise (there are always exceptions), Umbrella only expands the $$ covered and NOT the covered events.
I am not sure that is generally correct. My umbrella policy, from a larger insurer, covers a number of things that are not under my auto or homeowners. It is the primary insurance for such claims. Of course, you have to read the policy, but they do cover issues beyond the underlying policies.
Since these other events are rare, one is unlikely to ever need the coverage, but it is available.
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
talzara
Posts: 4745
Joined: Thu Feb 12, 2009 6:40 pm

Re: Umbrella Coverage

Post by talzara »

willthrill81 wrote: Tue Sep 28, 2021 3:12 pm
AnnetteLouisan wrote: Tue Sep 28, 2021 3:09 pm Is it best to get it from your homeowners insurer? I have Travelers, are they good for umbrella coverage?
Your homeowner's and usually auto insurance have to be with the same insurer that you also get your umbrella policy through.
It depends on the company.

Multi-line insurers like State Farm and Allstate will require you to carry all underlying policies with them.

GEICO and Progressive only require you to carry their own auto insurance policy. GEICO doesn't write homeowners insurance and only sells policies written by other companies. Progressive does both, but it gives no advantage to its own homeowners policies.

The standalone umbrella insurers allow you to carry your underlying policies with any company that has a minimum credit rating at AM Best. Even USLI, a Berkshire Hathaway company, does not require you to carry a GEICO auto insurance policy. It can be from any carrier.
talzara
Posts: 4745
Joined: Thu Feb 12, 2009 6:40 pm

Re: Umbrella Coverage

Post by talzara »

afan wrote: Tue Sep 28, 2021 3:50 pm
DarkHelmetII wrote: Tue Sep 28, 2021 3:11 pm Unless proven otherwise (there are always exceptions), Umbrella only expands the $$ covered and NOT the covered events.
I am not sure that is generally correct. My umbrella policy, from a larger insurer, covers a number of things that are not under my auto or homeowners. It is the primary insurance for such claims. Of course, you have to read the policy, but they do cover issues beyond the underlying policies.
Since these other events are rare, one is unlikely to ever need the coverage, but it is available.
Umbrella policies do cover liability that is not covered by your primary policies, but it's rare. 85% of the umbrella risk is excess auto liability, 15% is excess homeowners liability, and dropdown coverage is rounding error.

Jack Hungelmann's chart is still the best summary of umbrella coverage: https://www.irmi.com/docs/default-sourc ... -chart.pdf

The chart is more than 10 years old, so the description of each policy may be inaccurate. Instead, look at the second column to see what kinds of risks are covered. If you have one of these risks, then you should confirm that you are covered for that risk. If you don't, then any umbrella policy will be good enough.

There are policies that are not true umbrellas. These would be straight excess liability policies that only increase the coverage limits on your underlying policies. They're rare and should not be sold as umbrella policies. A true umbrella will provide first-dollar coverage for something. Otherwise, it wouldn't be an umbrella.
DarkHelmetII
Posts: 1441
Joined: Mon Jul 24, 2017 12:25 pm

Re: Umbrella Coverage

Post by DarkHelmetII »

afan wrote: Tue Sep 28, 2021 3:50 pm
DarkHelmetII wrote: Tue Sep 28, 2021 3:11 pm
Unless proven otherwise (there are always exceptions), Umbrella only expands the $$ covered and NOT the covered events.
I am not sure that is generally correct. My umbrella policy, from a larger insurer, covers a number of things that are not under my auto or homeowners. It is the primary insurance for such claims. Of course, you have to read the policy, but they do cover issues beyond the underlying policies.
Since these other events are rare, one is unlikely to ever need the coverage, but it is available.
I stand corrected. This is what I remember one agent telling me. A quick search however reveals it is common for umbrella to expand the covered perils too. But regardless, prudent to understand exactly what is the "delta."
miket29
Posts: 1065
Joined: Tue Jun 20, 2017 9:07 pm

Re: Umbrella Coverage

Post by miket29 »

harrychan wrote: Fri Sep 24, 2021 3:49 pm I've looked into this for the very same reason but if you read the fine print, umbrella only adds a supplement to home or auto insurance. I wanted it for my peace of mind when I cycle. I am not reckless but can imagine the possibility of someone jumping out in front of me or sue me for causing a car accident when I am on my bike. It wasn't clear that umbrella would cover such scenarios.
My concern is the inverse, protecting me. I have an umbrella policy that also provides $1 million in uninsured/underinsured motorist coverage to me. My worry is I'm riding my bike and someone with just the CA minimum liability coverage of $15K runs into me. If I survive then just saying hello to the ER doc is going to hit $15K in charges and its up from there, not to mention other long-term costs for rehabilitation and the like. I like the protection against claims filed against me the umbrella policy provides and for that alone is worth buying umbrella policy, but my main concern was other drivers out there.
harrychan
Posts: 2047
Joined: Sun Nov 14, 2010 8:37 pm
Location: Pasadena

Re: Umbrella Coverage

Post by harrychan »

miket29 wrote: Tue Sep 28, 2021 6:08 pm
harrychan wrote: Fri Sep 24, 2021 3:49 pm I've looked into this for the very same reason but if you read the fine print, umbrella only adds a supplement to home or auto insurance. I wanted it for my peace of mind when I cycle. I am not reckless but can imagine the possibility of someone jumping out in front of me or sue me for causing a car accident when I am on my bike. It wasn't clear that umbrella would cover such scenarios.
My concern is the inverse, protecting me. I have an umbrella policy that also provides $1 million in uninsured/underinsured motorist coverage to me. My worry is I'm riding my bike and someone with just the CA minimum liability coverage of $15K runs into me. If I survive then just saying hello to the ER doc is going to hit $15K in charges and its up from there, not to mention other long-term costs for rehabilitation and the like. I like the protection against claims filed against me the umbrella policy provides and for that alone is worth buying umbrella policy, but my main concern was other drivers out there.
Good point. I suppose umbrella would work in that regards but I would count on my own health insurance to cover that as well.
This is not legal or certified financial advice but you know that already.
User avatar
willthrill81
Posts: 32250
Joined: Thu Jan 26, 2017 2:17 pm
Location: USA
Contact:

Re: Umbrella Coverage

Post by willthrill81 »

talzara wrote: Tue Sep 28, 2021 5:07 pm
willthrill81 wrote: Tue Sep 28, 2021 3:12 pm
AnnetteLouisan wrote: Tue Sep 28, 2021 3:09 pm Is it best to get it from your homeowners insurer? I have Travelers, are they good for umbrella coverage?
Your homeowner's and usually auto insurance have to be with the same insurer that you also get your umbrella policy through.
It depends on the company.

Multi-line insurers like State Farm and Allstate will require you to carry all underlying policies with them.

GEICO and Progressive only require you to carry their own auto insurance policy. GEICO doesn't write homeowners insurance and only sells policies written by other companies. Progressive does both, but it gives no advantage to its own homeowners policies.

The standalone umbrella insurers allow you to carry your underlying policies with any company that has a minimum credit rating at AM Best. Even USLI, a Berkshire Hathaway company, does not require you to carry a GEICO auto insurance policy. It can be from any carrier.
I haven't heard of that before. Thanks.
The Sensible Steward
Hogan773
Posts: 799
Joined: Thu May 07, 2015 11:14 am

Re: Umbrella Coverage

Post by Hogan773 »

Is there such a thing as having 2 umbrellas from 2 different companies? Like could I have $2,000,000 from my car insurance company, and then an additional $2,000,000 "layer" that would only kick in if the other $2,000,000 is exceeded (and thus that second policy would be a lot cheaper because it is less likely to be triggered?) Or perhaps this doesn't work and umbrella policy writers aren't willing to stipulate which one is "first loss" vs "next loss"
hachiko
Posts: 941
Joined: Fri Mar 17, 2017 1:56 pm

Re: Umbrella Coverage

Post by hachiko »

I've seen this happen with a single policy where one insurer lays off some of the risk on another insurer. I have no idea how it gets setup or what the benefit of that would be (whether it's cost, concern about ability to pay, etc.) but it can be done. In the 2 situations I've seen the policy limits were greater than $10m.
Made money. Lost money. Learned to stop counting.
talzara
Posts: 4745
Joined: Thu Feb 12, 2009 6:40 pm

Re: Umbrella Coverage

Post by talzara »

Hogan773 wrote: Thu Sep 30, 2021 1:59 pm Is there such a thing as having 2 umbrellas from 2 different companies? Like could I have $2,000,000 from my car insurance company, and then an additional $2,000,000 "layer" that would only kick in if the other $2,000,000 is exceeded (and thus that second policy would be a lot cheaper because it is less likely to be triggered?) Or perhaps this doesn't work and umbrella policy writers aren't willing to stipulate which one is "first loss" vs "next loss"
You can carry two umbrella policies from two different companies. However, you will probably pay more. Umbrella policies usually attach at $300k, which is the required underlying policy limit. There is usually a discount for selecting a higher attachment point of $500k, but not $2.3 million.

The umbrella policy will describe how it coordinates with other policies. For example, here are the coordination clauses for GEICO and USLI:
GEICO
This insurance is excess over, and shall not contribute with, any other insurance, whether primary, excess, contingent or on any other basis.
USLI
This policy is excess over any other valid and collectible insurance, except insurance written specifically as excess coverage over the POLICY LIMITS of this policy.
The GEICO umbrella sits on top of the USLI umbrella, which sits on top of the GEICO primary auto policy. In your example, there would be $4.3 million of total liability coverage. A $3 million claim payout would cost GEICO $1 million and USLI $2 million.
lws
Posts: 831
Joined: Tue Apr 25, 2017 6:12 pm

Re: Umbrella Coverage

Post by lws »

If it is pure personal liability insurance. What liabilities would it cover?
User avatar
Lee_WSP
Posts: 10401
Joined: Fri Apr 19, 2019 5:15 pm
Location: Arizona

Re: Umbrella Coverage

Post by Lee_WSP »

lws wrote: Fri Oct 01, 2021 6:26 pm If it is pure personal liability insurance. What liabilities would it cover?
The question you meant to ask are what liabilities are excluded. Auto, intentional torts, and boat/aircraft are typical exclusions.
lillycat
Posts: 260
Joined: Mon Aug 10, 2020 11:26 am

Re: Umbrella Coverage

Post by lillycat »

Great topic! And Question….

I have a few businesses that I run as a disregarded LLC. I have real estate investments in my 4 Roth IRA accounts
(Segregated for asset protection purposes).
We own our home, and have our cars insured through a local great insurer, Germania here in Texas.

I have resisted umbrellas, though wise, because I’ve not cracked the code of how many I need!
Between personal, and businesses, and IRA accounts, I could need 8!? Policies. And then, the cost adds up of course.
Does anyone else have this challenge? Has anyone addressed this issue? It could be expensive.

Many thanks!
User avatar
Lee_WSP
Posts: 10401
Joined: Fri Apr 19, 2019 5:15 pm
Location: Arizona

Re: Umbrella Coverage

Post by Lee_WSP »

lillycat wrote: Mon Oct 04, 2021 9:35 am Great topic! And Question….

I have a few businesses that I run as a disregarded LLC. I have real estate investments in my 4 Roth IRA accounts
(Segregated for asset protection purposes).
We own our home, and have our cars insured through a local great insurer, Germania here in Texas.

I have resisted umbrellas, though wise, because I’ve not cracked the code of how many I need!
Between personal, and businesses, and IRA accounts, I could need 8!? Policies. And then, the cost adds up of course.
Does anyone else have this challenge? Has anyone addressed this issue? It could be expensive.

Many thanks!
You only need one umbrella policy. Your business liability is separate from your personal liability. You’d just increase the limits on that policy.

I am confused as to what you mean by your IRA accounts. What liability exposure are you referring to there?
lillycat
Posts: 260
Joined: Mon Aug 10, 2020 11:26 am

Re: Umbrella Coverage

Post by lillycat »

Thank you! One of my ROTH IRA accounts was sued! for a bad act committed by a third party.
So I eventually settled for a small sum without admitting fault since I was not at fault.
But my attorney advised me that that that solution was the most cost effective choice.
I probably could have eventually fully prevailed after more stress, time and $$$.

I guess I was hoping for an UMBRELLA umbrella solution that would cover all of me -
all versions, even business, with one policy. Shucks!
User avatar
Lee_WSP
Posts: 10401
Joined: Fri Apr 19, 2019 5:15 pm
Location: Arizona

Re: Umbrella Coverage

Post by Lee_WSP »

lillycat wrote: Mon Oct 04, 2021 10:50 am Thank you! One of my ROTH IRA accounts was sued! for a bad act committed by a third party.
So I eventually settled for a small sum without admitting fault since I was not at fault.
But my attorney advised me that that that solution was the most cost effective choice.
I probably could have eventually fully prevailed after more stress, time and $$$.

I guess I was hoping for an UMBRELLA umbrella solution that would cover all of me -
all versions, even business, with one policy. Shucks!
You cannot sue an account, it is not a person. You can sue the trustee, but you have nothing to do with the trustee. The Roth is tied to you, so you would have been sued. Your personal liability policy should have kicked in and provided a defense if it was a covered tort.
lillycat
Posts: 260
Joined: Mon Aug 10, 2020 11:26 am

Re: Umbrella Coverage

Post by lillycat »

LEE-WSP, I so wish your statement was correct.

However, I was sued personally, as was the "Custodian's Name Roth Account for the Benefit of Jane Doe Account #99999"
here in the state of Texas. Many of my colleagues and others believe that retirement accounts are wholly exempt, and protected.
If only...

So, here's an extreme example. I buy a rental home in my ROTH. I KNOW it has dangerous mold in it, do not abate it, and
rent it our anyway. Someone rents it, gets extremely sick, can't work, and incurs high medical costs to cure. Can I say, "Too bad. My Roth is not liable to pay you since it cannot be sued, and my ROTH's assets are thereby exempt. Plus, I have NO! assets outside of that account so even if you sue me, you will get nothing."

Of course not. In this extreme example, both the ROTH account, and I are "sueable." as should be. My specific case involved a third
parties bad acts, However, I was drug in anyway, and paid to extricate myself from a protracted headache. The other parties ended
up paying the bulk of the alleged damages incurred.

Finally, I paid a board certified attorney to defend me in this matter. IF the suit against the ROTH could have been dismissed via a summary judgment saying that my ROTH could not be legally sued. I assure you, we would have taken that route.
User avatar
Lee_WSP
Posts: 10401
Joined: Fri Apr 19, 2019 5:15 pm
Location: Arizona

Re: Umbrella Coverage

Post by Lee_WSP »

lillycat wrote: Mon Oct 04, 2021 11:28 am LEE-WSP, I so wish your statement was correct.

However, I was sued personally, as was the "Custodian's Name Roth Account for the Benefit of Jane Doe Account #99999"
here in the state of Texas. Many of my colleagues and others believe that retirement accounts are wholly exempt, and protected.
If only...

So, here's an extreme example. I buy a rental home in my ROTH. I KNOW it has dangerous mold in it, do not abate it, and
rent it our anyway. Someone rents it, gets extremely sick, can't work, and incurs high medical costs to cure. Can I say, "Too bad. My Roth is not liable to pay you since it cannot be sued, and my ROTH's assets are thereby exempt. Plus, I have NO! assets outside of that account so even if you sue me, you will get nothing."

Of course not. In this extreme example, both the ROTH account, and I are "sueable." as should be. My specific case involved a third
parties bad acts, However, I was drug in anyway, and paid to extricate myself from a protracted headache. The other parties ended
up paying the bulk of the alleged damages incurred.

Finally, I paid a board certified attorney to defend me in this matter. IF the suit against the ROTH could have been dismissed via a summary judgment saying that my ROTH could not be legally sued. I assure you, we would have taken that route.
Yes, I think you aren't understanding quite how it works.

They tried to *attach* your Roth account, but sued you personally. The account itself is not sued. The custodian may be sued, but the account itself is a non living thing (frankly it's pretty much just a bunch of 0's and 1's right now (but that's besides the point)). As such, it cannot cause any damages to anyone and you don't buy liability insurance for it.

You purchase liability insurance for yourself. Liability insurance covers damages *you* are responsible for to a third party. That's what umbrella insurance covers. It does not make you whole for damages you personally suffer.
lillycat
Posts: 260
Joined: Mon Aug 10, 2020 11:26 am

Re: Umbrella Coverage

Post by lillycat »

No, the IRA custodian was not sued. If this was possible, we would have no IRA custodians.
And yes, my ROTH account was sued. Thank you for trying to clarify, but I think we have to agree to disagree.
afan
Posts: 8193
Joined: Sun Jul 25, 2010 4:01 pm

Re: Umbrella Coverage

Post by afan »

In this case, someone exposed the Roth by having it own something that could give rise to a suit. If all the Roth owned were some mutual funds, then there would be nothing to sue about.
Had the owner of the Roth had the Roth invested in things that could not themselves give rise to a suit, the owner could still be sued for things having nothing to do with the Roth. Then the Roth would be protected.
However, if the Roth owned a piece of toxic real estate, then the Roth would not be safe. Not a good thing to put into a Roth.
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
User avatar
Lee_WSP
Posts: 10401
Joined: Fri Apr 19, 2019 5:15 pm
Location: Arizona

Re: Umbrella Coverage

Post by Lee_WSP »

lillycat wrote: Mon Oct 04, 2021 1:14 pm No, the IRA custodian was not sued. If this was possible, we would have no IRA custodians.
And yes, my ROTH account was sued. Thank you for trying to clarify, but I think we have to agree to disagree.
Your Roth as an account was attached. Not sued. The custodian as trustee was sued so as to attach your Roth. The Roth as trust was sued in so far as it's the entity with legal ownership, but we're getting into the legal weeds here.

That's fine, but if you're unwilling to learn about the legal system, we can't help you.
Last edited by Lee_WSP on Mon Oct 04, 2021 1:31 pm, edited 1 time in total.
lillycat
Posts: 260
Joined: Mon Aug 10, 2020 11:26 am

Re: Umbrella Coverage

Post by lillycat »

Thanks again for trying to clarify this. But my IRA account was a defendant in all proceedings. It was not named via a writ of attachment. Huge difference!
User avatar
Lee_WSP
Posts: 10401
Joined: Fri Apr 19, 2019 5:15 pm
Location: Arizona

Re: Umbrella Coverage

Post by Lee_WSP »

lillycat wrote: Mon Oct 04, 2021 1:30 pm Thanks again for trying to clarify this. But my IRA account was a defendant in all proceedings. It was not named via a writ of attachment. Huge difference!
edit: This is getting further into the weeds than you probably wanted, but here's a summary of trusts, retirement accounts, and who/what is technically sued.

A Roth is a trust created under the us code. See my above clarifying edits. The trust via the trustee can be sued for incidences arising out of ownership over the assets.

They probably put in the trust name because they didn't know who to actually sue yet. Happens all the time.

So I suppose yes, in theory any name can be put on a complaint and then filed. However, you can't serve a bank account.

The takeaway is to not own assets which can incur a liability simply for owning them in retirement accounts. Although, oddly enough, the damages would probably be limited to what's in the trust unless there is some odd state law in effect which extends the liability to the retiree.
Last edited by Lee_WSP on Mon Oct 04, 2021 2:13 pm, edited 3 times in total.
Post Reply