Umbrella coverage amount
Umbrella coverage amount
We at in the early 60s and have umbrella coverage for 1M and assets about 10M. Our lifestyle is low risk but, of course, one doesn’t control accidents. Should we be increasing our umbrella coverage amount? If so, what’s a number we should be looking for?
This came to my mind as I am seriously contemplating moving my 401K to an IRA with Vanguard. The 401K provider brought up the ERISA protection for 401K over IRA. That got me thinking as we don’t really have any creditors and like to keep it that way. And, the main risk is from liability arising from a judgment against us.
I’d really appreciate advice on this matter.
This came to my mind as I am seriously contemplating moving my 401K to an IRA with Vanguard. The 401K provider brought up the ERISA protection for 401K over IRA. That got me thinking as we don’t really have any creditors and like to keep it that way. And, the main risk is from liability arising from a judgment against us.
I’d really appreciate advice on this matter.
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Re: Umbrella coverage amount
If you drive, which I assume you do, I think your coverage is much too low. I would bump it to $5 mil.
Look at it this way. If you cause a major accident that really disables someone or worse, what makes you think the plaintiff's attorney will be happy with a $1 million payout when he learns there is closer to $10 million he has a chance to get?
Look at it this way. If you cause a major accident that really disables someone or worse, what makes you think the plaintiff's attorney will be happy with a $1 million payout when he learns there is closer to $10 million he has a chance to get?
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- TomatoTomahto
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Re: Umbrella coverage amount
I usually object to these threads because many people propose having umbrella to cover their vulnerable assets, when I think they should also consider the issue of rightful compensation for a third party’s injury or death.
OP, I would increase your coverage. Our situation is not unlike yours, and we have $5M coverage.
OP, I would increase your coverage. Our situation is not unlike yours, and we have $5M coverage.
I get the FI part but not the RE part of FIRE.
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Re: Umbrella coverage amount
I think a million is too low. Our assets aren’t what yours are and we have a 2 million dollar policy. We’re a 50+\- year old couple living an active lifestyle, which includes a lot of miles on the road.
The cost is so inexpensive I don’t know why anyone who could actually benefit from umbrella coverage would have a million dollar policy.
The cost is so inexpensive I don’t know why anyone who could actually benefit from umbrella coverage would have a million dollar policy.
Being wrong compounds forever.
Re: Umbrella coverage amount
From what I understand, up to $2M usually is covered without having to file any additional paperwork. That's no reason to not get the proper coverage, but getting coverage up to that limit (whatever it may be by state or ins company) is a no-brainer. I'd at least start there.
Re: Umbrella coverage amount
Thank you so much for your responses! I will call our insurance company later today to find out about increasing it to 5M.
Many thanks!
Many thanks!
Re: Umbrella coverage amount
Since you are looking at changes to your umbrella policy let me bring up an orthogonal topic and suggest adding a rider to the policy with uninsured/underinsured motorist coverage that sits on top of your auto insurance. I've always carried an umbrella policy that provides $1 million in uninsured/underinsured motorist coverage on top of that in my auto policy. And I wish I could get more (State Farm used to have $2 million but my agent says they don't offer that anymore). These riders are inexpensive, although sometimes it is included in the umbrella policy already.
A scenario where you'd need this much is if some driver with hardly any insurance plows into you and you suffer permanent injury. You can't work again, or not at the job you used to hold. Term life (which you should also carry) would pay if you were killed, but what if you live? How are you going to continue to pay the mortgage, send the kids to college, remodel the house for your wheelchair? Accidents like this do happen, and IMO opinion insurance is for catastrophes like this.
A scenario where you'd need this much is if some driver with hardly any insurance plows into you and you suffer permanent injury. You can't work again, or not at the job you used to hold. Term life (which you should also carry) would pay if you were killed, but what if you live? How are you going to continue to pay the mortgage, send the kids to college, remodel the house for your wheelchair? Accidents like this do happen, and IMO opinion insurance is for catastrophes like this.
Re: Umbrella coverage amount
Thank you! Our focus is mainly on the liability / injury lawsuit. For ourselves, we have a LTC insurance (1.6M max per person) and have sufficient assets to cover our own needs. Close to retirement, the ability to work isn't a big need - as we could retire right now and be fine...
I spoke with our insurance company after the early response on the thread. They offer coverage up to 4M - (2M for $346; 3M for $482; 4M for $619 per year). Beyond that - we'd have to go to a different provider. I presume that doing that will require us to switch auto policy as well - so prefer to avoid that.
So, is 4M an adequate umbrella cover?
I spoke with our insurance company after the early response on the thread. They offer coverage up to 4M - (2M for $346; 3M for $482; 4M for $619 per year). Beyond that - we'd have to go to a different provider. I presume that doing that will require us to switch auto policy as well - so prefer to avoid that.
So, is 4M an adequate umbrella cover?
Re: Umbrella coverage amount
I also bring this up when I see these umbrella threads. On my $1 RLI stand alone umbrella policy, it's like an extra $120 or something for the $1M UM/UIM add-on ($300 something for the liability umbrella).miket29 wrote: ↑Tue May 30, 2023 11:31 am Since you are looking at changes to your umbrella policy let me bring up an orthogonal topic and suggest adding a rider to the policy with uninsured/underinsured motorist coverage that sits on top of your auto insurance. I've always carried an umbrella policy that provides $1 million in uninsured/underinsured motorist coverage on top of that in my auto policy. And I wish I could get more (State Farm used to have $2 million but my agent says they don't offer that anymore). These riders are inexpensive, although sometimes it is included in the umbrella policy already.
A scenario where you'd need this much is if some driver with hardly any insurance plows into you and you suffer permanent injury. You can't work again, or not at the job you used to hold. Term life (which you should also carry) would pay if you were killed, but what if you live? How are you going to continue to pay the mortgage, send the kids to college, remodel the house for your wheelchair? Accidents like this do happen, and IMO opinion insurance is for catastrophes like this.
In addition, the UM/UIM covers pain and suffering and certain other expenses that are not covered by health insurance.
Re: Umbrella coverage amount
5 Million. That should get the insurance company's attention and their best effort to defend a claim.
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Re: Umbrella coverage amount
I would get $4M and not deal with the hassle of switching.kavm wrote: ↑Tue May 30, 2023 12:13 pm Thank you! Our focus is mainly on the liability / injury lawsuit. For ourselves, we have a LTC insurance (1.6M max per person) and have sufficient assets to cover our own needs. Close to retirement, the ability to work isn't a big need - as we could retire right now and be fine...
I spoke with our insurance company after the early response on the thread. They offer coverage up to 4M - (2M for $346; 3M for $482; 4M for $619 per year). Beyond that - we'd have to go to a different provider. I presume that doing that will require us to switch auto policy as well - so prefer to avoid that.
So, is 4M an adequate umbrella cover?
I get the FI part but not the RE part of FIRE.
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Re: Umbrella coverage amount
I've wondered about this, not being an attorney. Does the plaintiff's attorney have access to the defendants net worth, or is it simply an estimate based on your lifestyle, job or past jobs etc?Call_Me_Op wrote: ↑Tue May 30, 2023 6:37 am If you drive, which I assume you do, I think your coverage is much too low. I would bump it to $5 mil.
Look at it this way. If you cause a major accident that really disables someone or worse, what makes you think the plaintiff's attorney will be happy with a $1 million payout when he learns there is closer to $10 million he has a chance to get?
Re: Umbrella coverage amount
Those are some good rates. I was just quoted $2000 for a 4 mil and $2400 for a 5 mil.
Re: Umbrella coverage amount
Here is a recent quote from State Farm in Southern California.
$1,000,000 for $521 per year.
$2,000,000 $912 per year
$3,000,000 $1329 per year
$4,000,000 $1641 per year
$5,000,000 $1917 per year
$1,000,000 for $521 per year.
$2,000,000 $912 per year
$3,000,000 $1329 per year
$4,000,000 $1641 per year
$5,000,000 $1917 per year
Re: Umbrella coverage amount
That is a big concern in some states, such as California.kavm wrote: ↑Tue May 30, 2023 6:27 am We at in the early 60s and have umbrella coverage for 1M and assets about 10M. Our lifestyle is low risk but, of course, one doesn’t control accidents. Should we be increasing our umbrella coverage amount? If so, what’s a number we should be looking for?
This came to my mind as I am seriously contemplating moving my 401K to an IRA with Vanguard. The 401K provider brought up the ERISA protection for 401K over IRA. That got me thinking as we don’t really have any creditors and like to keep it that way. And, the main risk is from liability arising from a judgment against us.
I’d really appreciate advice on this matter.
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Re: Umbrella coverage amount
Do you have auto insurance with them? They quoted me $390 for a $1mil umbrella policy in NYC.
Re: Umbrella coverage amount
Comparing rates for liability coverage is a fool’s errand. So many factors go into it. Kids, drivers, toys, pool, etc etc etcFreeadvice wrote: ↑Tue May 30, 2023 6:48 pmDo you have auto insurance with them? They quoted me $390 for a $1mil umbrella policy in NYC.
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Re: Umbrella coverage amount
Thank you! I will get the 4M coverage...
Our insurance company (Amica) is very good - and we have been with it for 30 some years for home, auto, liability. So, it has some history on us.
Our insurance company (Amica) is very good - and we have been with it for 30 some years for home, auto, liability. So, it has some history on us.
Re: Umbrella coverage amount
Don't forget umbrella stacks with your auto policy. We have $1m liability coverage with USAA auto and $1m umbrella, for a total of $2m if an auto claim.
Re: Umbrella coverage amount
My wife was in a major accident 7 years ago while driving her parents, in her parents car. The law suits went on for over 2 years. We were a nervous wreck just due to the legal shenanigans, but the one thing that brought peace of mind is that we had an umbrella policy. It turned out that the settlement was covered by the combination of her parents policy (their car) and our policy. But we were nervous, and very very thankful that we had purchased umbrella coverage.
This came up during the process. As explained to us (California law), no, at the beginning of the process the other side didn't have access to our net worth or the fact that we had an umbrella policy. But our insurance lawyer pointed out that, as it progressed, all the above would come out in discovery. She suggested that it was better to appear very forthcoming, rather than withhold information until disclosure was required. So yes, they were provided with all that information from the beginning.Mitchell777 wrote: ↑Tue May 30, 2023 5:58 pm I've wondered about this, not being an attorney. Does the plaintiff's attorney have access to the defendants net worth, or is it simply an estimate based on your lifestyle, job or past jobs etc?
Re: Umbrella coverage amount
Thank you for pointing it out. I will look into that as well. Perhaps we can increase the auto-liability to 1M. I will ask... Our main concern is auto accident. Not much else...
Re: Umbrella coverage amount
Thanks for sharing that. To clarify, are you saying the umbrella insurance was actually used. (I do understand it provided peace of mind--which is huge!)BluesH wrote: ↑Tue May 30, 2023 7:05 pm My wife was in a major accident 7 years ago while driving her parents, in her parents car. The law suits went on for over 2 years. We were a nervous wreck just due to the legal shenanigans, but the one thing that brought peace of mind is that we had an umbrella policy. It turned out that the settlement was covered by the combination of her parents policy (their car) and our policy. But we were nervous, and very very thankful that we had purchased umbrella coverage.
This came up during the process. As explained to us (California law), no, at the beginning of the process the other side didn't have access to our net worth or the fact that we had an umbrella policy. But our insurance lawyer pointed out that, as it progressed, all the above would come out in discovery. She suggested that it was better to appear very forthcoming, rather than withhold information until disclosure was required. So yes, they were provided with all that information from the beginning.Mitchell777 wrote: ↑Tue May 30, 2023 5:58 pm I've wondered about this, not being an attorney. Does the plaintiff's attorney have access to the defendants net worth, or is it simply an estimate based on your lifestyle, job or past jobs etc?
Re: Umbrella coverage amount
My understanding of things is that unless someone makes some gross errors, the plaintiff will not have access to your net worth or umbrella coverage numbers. BUT, I suspect most of us would be surprised with the estimate a random private investigator would come up with for both numbers. If a jury finds that you are liable for 10x what you are actually worth, you can pretty easily prove that you simply cannot pay that amount. But if a jury finds you liable for $5M and you're worth $10M, well, that's a different story entirely.Mitchell777 wrote: ↑Tue May 30, 2023 5:58 pmI've wondered about this, not being an attorney. Does the plaintiff's attorney have access to the defendants net worth, or is it simply an estimate based on your lifestyle, job or past jobs etc?Call_Me_Op wrote: ↑Tue May 30, 2023 6:37 am If you drive, which I assume you do, I think your coverage is much too low. I would bump it to $5 mil.
Look at it this way. If you cause a major accident that really disables someone or worse, what makes you think the plaintiff's attorney will be happy with a $1 million payout when he learns there is closer to $10 million he has a chance to get?
As someone else said, bumping it to $4M gets the insurance company to mount a defense at an appropriate level. But be aware that a $4M umbrella policy does NOT mean that after a settlement you'll have at least $4M in assets. It means that if you are found liable, the insurance company is on the hook for the first $4M.
That said, settlements follow power law distributions, there are fewer $25M settlements than there are $1M or $150k settlements. And for all that people have the impression that this kind of settlement is ruining everything, in reality most settlements are modest, the web thinks the average California car accident settlement is $21k. That's why umbrella liability coverage is relatively inexpensive.
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Re: Umbrella coverage amount
A reminder that Umbrella insurance stacks on top of your other liability coverage.
Therefore, if for example you have $500K auto liability and $2M umbrella, your total liablity coverage is $2.5M in the case of a serious auto accident.
Therefore, if for example you have $500K auto liability and $2M umbrella, your total liablity coverage is $2.5M in the case of a serious auto accident.
Re: Umbrella coverage amount
Yes. I have all my autos and homeowners with SF, and SF services my earthquake poilcy.Freeadvice wrote: ↑Tue May 30, 2023 6:48 pmDo you have auto insurance with them? They quoted me $390 for a $1mil umbrella policy in NYC.
Re: Umbrella coverage amount
Have you seen the news? Maybe the rates are so absurd because they no longer want your business.Jeepergeo wrote: ↑Tue May 30, 2023 8:19 pmYes. I have all my autos and homeowners with SF, and SF services my earthquake poilcy.Freeadvice wrote: ↑Tue May 30, 2023 6:48 pmDo you have auto insurance with them? They quoted me $390 for a $1mil umbrella policy in NYC.
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Re: Umbrella coverage amount
Not trying to get this thread locked, what is currently in the news that is related to this?pizzy wrote: ↑Tue May 30, 2023 8:25 pmHave you seen the news? Maybe the rates are so absurd because they no longer want your business.Jeepergeo wrote: ↑Tue May 30, 2023 8:19 pmYes. I have all my autos and homeowners with SF, and SF services my earthquake poilcy.Freeadvice wrote: ↑Tue May 30, 2023 6:48 pmDo you have auto insurance with them? They quoted me $390 for a $1mil umbrella policy in NYC.
Re: Umbrella coverage amount
Check the stand alone RLI umbrella to compare your current quote. You can get a free quote but just answering the questions and putting in your zip. Don't even have to give them your personal info unless you buy the policy.
https://myportal.rlicorp.com/content/rl ... quote.html
https://myportal.rlicorp.com/content/rl ... quote.html
Re: Umbrella coverage amount
I have 50% coverage. So 2 mil on 4.
I’m thinking the bigger the target the more incentive to proceed.
Also very few decisions ultimately come to cost the plaintiff anything. The insurance company will be motivated to protect the insured and themselves.
I’m not an attorney.
I’m thinking the bigger the target the more incentive to proceed.
Also very few decisions ultimately come to cost the plaintiff anything. The insurance company will be motivated to protect the insured and themselves.
I’m not an attorney.
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Re: Umbrella coverage amount
My understanding is that as long as the 401k assets are not commingled with IRA contributions, so that the assets may be traced to the 401k, the ERISA protections follow the assets from the 401k to the IRA.kavm wrote: ↑Tue May 30, 2023 6:27 am We at in the early 60s and have umbrella coverage for 1M and assets about 10M. Our lifestyle is low risk but, of course, one doesn’t control accidents. Should we be increasing our umbrella coverage amount? If so, what’s a number we should be looking for?
This came to my mind as I am seriously contemplating moving my 401K to an IRA with Vanguard. The 401K provider brought up the ERISA protection for 401K over IRA. That got me thinking as we don’t really have any creditors and like to keep it that way. And, the main risk is from liability arising from a judgment against us.
I’d really appreciate advice on this matter.
See page 13 of this document.
But I am neither an attorney, nor have I confirmed my understanding with an attorney specializing in pension law.
Re: Umbrella coverage amount
Get the $4 million to stay with the same insurer but also try to get $1 million UM/UIM coverage added as well.kavm wrote: ↑Tue May 30, 2023 12:13 pm Thank you! Our focus is mainly on the liability / injury lawsuit. For ourselves, we have a LTC insurance (1.6M max per person) and have sufficient assets to cover our own needs. Close to retirement, the ability to work isn't a big need - as we could retire right now and be fine...
I spoke with our insurance company after the early response on the thread. They offer coverage up to 4M - (2M for $346; 3M for $482; 4M for $619 per year). Beyond that - we'd have to go to a different provider. I presume that doing that will require us to switch auto policy as well - so prefer to avoid that.
So, is 4M an adequate umbrella cover?
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Re: Umbrella coverage amount
THISpizzy wrote: ↑Tue May 30, 2023 6:50 pmComparing rates for liability coverage is a fool’s errand. So many factors go into it. Kids, drivers, toys, pool, etc etc etcFreeadvice wrote: ↑Tue May 30, 2023 6:48 pmDo you have auto insurance with them? They quoted me $390 for a $1mil umbrella policy in NYC.
I went and looked at how my $1m umbrella yearly premium was created-- over 50% was tied to 2 "inexperienced" drivers (age 20 and 24) -- then $50-60 per car (4 of them) and $25 for the pool.
Don't let your outflow exceed your income or your upkeep will be your downfall.
Re: Umbrella coverage amount
Thank you! I will try for that.ncbill wrote: ↑Wed May 31, 2023 3:29 pmGet the $4 million to stay with the same insurer but also try to get $1 million UM/UIM coverage added as well.kavm wrote: ↑Tue May 30, 2023 12:13 pm Thank you! Our focus is mainly on the liability / injury lawsuit. For ourselves, we have a LTC insurance (1.6M max per person) and have sufficient assets to cover our own needs. Close to retirement, the ability to work isn't a big need - as we could retire right now and be fine...
I spoke with our insurance company after the early response on the thread. They offer coverage up to 4M - (2M for $346; 3M for $482; 4M for $619 per year). Beyond that - we'd have to go to a different provider. I presume that doing that will require us to switch auto policy as well - so prefer to avoid that.
So, is 4M an adequate umbrella cover?
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Re: Umbrella coverage amount
RLI is among the few (if not the only) umbrella insurers still offering UM extension coverage. It appears they go up to $5M on umbrella policy limits. You would not have to move your auto/home coverage elsewhere. They are probably not the cheapest among umbrella policies.
Re: Umbrella coverage amount
I think you re fine with 4 million. The insurance company will try as hard to defend 4 million dollars as 5 million dollars.kavm wrote: ↑Tue May 30, 2023 12:13 pm Thank you! Our focus is mainly on the liability / injury lawsuit. For ourselves, we have a LTC insurance (1.6M max per person) and have sufficient assets to cover our own needs. Close to retirement, the ability to work isn't a big need - as we could retire right now and be fine...
I spoke with our insurance company after the early response on the thread. They offer coverage up to 4M - (2M for $346; 3M for $482; 4M for $619 per year). Beyond that - we'd have to go to a different provider. I presume that doing that will require us to switch auto policy as well - so prefer to avoid that.
So, is 4M an adequate umbrella cover?
The reason 4 million dollars of insurance coverage is so cheap is because the risk of a payout is so low.
Re: Umbrella coverage amount
My long time State Farm agent, who owns 60-70 rental homes and several apartment buildings, all without mortgages, personally carries a 2 million dollar umbrella policy. Interesting.
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Re: Umbrella coverage amount
State Farm won't cover more than 4 rental units on a personal umbrella policy. Your agent probably has a separate commercial umbrella policy (that may also cover cars and home) for the rental property. The personal umbrella may just be additional coverage.
Re: Umbrella coverage amount
Re: Umbrella coverage amount
Interesting information about the personal umbrella. I imagine he has company umbrella coverage for his real estate business.Northern Flicker wrote: ↑Wed May 31, 2023 11:39 pmState Farm won't cover more than 4 rental units on a personal umbrella policy. Your agent probably has a separate commercial umbrella policy (that may also cover cars and home) for the rental property. The personal umbrella may just be additional coverage.
I ll ask him next time we get together.
Re: Umbrella coverage amount
+1TomatoTomahto wrote: ↑Tue May 30, 2023 4:21 pmI would get $4M and not deal with the hassle of switching.kavm wrote: ↑Tue May 30, 2023 12:13 pm Thank you! Our focus is mainly on the liability / injury lawsuit. For ourselves, we have a LTC insurance (1.6M max per person) and have sufficient assets to cover our own needs. Close to retirement, the ability to work isn't a big need - as we could retire right now and be fine...
I spoke with our insurance company after the early response on the thread. They offer coverage up to 4M - (2M for $346; 3M for $482; 4M for $619 per year). Beyond that - we'd have to go to a different provider. I presume that doing that will require us to switch auto policy as well - so prefer to avoid that.
So, is 4M an adequate umbrella cover?
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Re: Umbrella coverage amount
Just a quick note to report our progress -
- We were able to increase the auto-insurance liability and Uninsured Motorist coverage amounts from 500K to 2M. That's easier to process and the agent was able do it without delay.
- Speaking to a different agent, my wife got the response that they can do 5M Umbrella liability. She put in the request and responded to the first set of questions. She was warned that it will need to go through underwriting and might take one or two months to finalize and we might need to respond to more as that increase goes through the underwriting process. So fingers crossed, this should move forward.
- Having engaged in this discussion and thinking more about the liability implications, I have pulled back on my plans to rollover my 403b accounts with TIAA into an IRA due to the additional ERISA protections associated with those accounts. With that - my wife and I have above 4M in funds that are otherwise protected under ERISA - leaving very small part of our net worth that is unprotected by the liability. But, it might grow and the cost of the protection seems to be modest. So, we are happy with this outcome - contingent on the Insurance company successfully completing the underwriting.
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Re: Umbrella coverage amount
Did they specify what they will be doing in the underwriting process? Did not realize it could take a month or two.
Re: Umbrella coverage amount
To determine the protection of a rollover IRA, you need to check with an attorney who is expert in this area and knows the laws of your state. Depending on where you live, your rollover IRA may be as protected in non-bankruptcy circumstances as is the 403b. Or not.
Of course if you are happy with the 403b costs and options, then there may be no reason to do a rollover.
If you have not shopped your auto, home and umbrella policies for a few years, it may now be worth your while to do so. It is a competitive market and the only way to know whether you are getting the best deal is to shop.
Of course if you are happy with the 403b costs and options, then there may be no reason to do a rollover.
If you have not shopped your auto, home and umbrella policies for a few years, it may now be worth your while to do so. It is a competitive market and the only way to know whether you are getting the best deal is to shop.
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Re: Umbrella coverage amount
I wasn't on the call with the insurance company. This is the impression my wife communicated. I suspect they were simply doing expectation management.Mitchell777 wrote: ↑Fri Jun 02, 2023 7:13 am Did they specify what they will be doing in the underwriting process? Did not realize it could take a month or two.
Re: Umbrella coverage amount
Thank you! That's good advice. We will look into the Utah laws in this area. Internet search suggests that the IRA funds are protected from creditors. The questions I have are:afan wrote: ↑Fri Jun 02, 2023 9:32 am To determine the protection of a rollover IRA, you need to check with an attorney who is expert in this area and knows the laws of your state. Depending on where you live, your rollover IRA may be as protected in non-bankruptcy circumstances as is the 403b. Or not.
Of course if you are happy with the 403b costs and options, then there may be no reason to do a rollover.
If you have not shopped your auto, home and umbrella policies for a few years, it may now be worth your while to do so. It is a competitive market and the only way to know whether you are getting the best deal is to shop.
- Our main scenario for the need for the umbrella insurance is liability in case of a driving accident. And, we take camping vacations with a camper. So, what if we have an accident in a state which does not have protection for the rollover IRAs. A judgment against us in such a state could make us liable and may be the (lack of) protection for the rollover IRAs in that state comes into play.
- We are not rooted in the state of Utah and might move to a different state when we retire or at a later stage of retirement.