Do we need umbrella insurance?

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Topic Author
ChrisTraeger
Posts: 20
Joined: Sun Jan 16, 2022 9:15 pm

Do we need umbrella insurance?

Post by ChrisTraeger »

Our net worth has been gradually increasing over the years. My wife and I are trying to determine when, if ever, we need to get umbrella insurance. Any help or advice would be appreciated. Here is a synopsis of our current situation. Sorry for the long post, I just want to be as detailed as possible.

Debt: No debt
Tax Filing Status: Married Filing Jointly
Tax Rate: 22% Federal, 4.8% State
State of Residence: Utah

Age: Him 42, her 38

Income: $130k per year

Net worth:

Taxable
Emergency Fund: $25k in HYSA
His and Her Brokerage: $33k

Retirement Accounts
His and her traditional IRAs: $220k
His and her Roth IRAs: $375k
His Pension: $45k cash value
His 401k: $120k

Property
House: $700k, no mortgage
Vehicles: 2 vehicles worth roughly $30k total

Total net worth: $1.548 million

Additional Info:

My wife is considered self employed because she is a 1099 employee. All her work is entirely online from home and no clients visit the home. We have 3 children, all under the age of 10. We don't have a pool, trampoline, etc, so risk of injury in the yard is limited, but we do have a lot of kids on our street and there are often kids coming into and going out of our home/yard on a regular basis after school and in the summer while they are playing.

Here is our current insurance coverage:

Auto
Bodily Injury (BI) 100,000 / 300,000
Property Damage (PD) 100,000
Personal Injury Protection (PIP) 3,000
Uninsured Motorist Bodily Injury (UM) 100,000 / 300,000
Underinsured Motorist Bodily Injury (UIM) 100,000 / 300,000

Homeowners Liability coverage:
Personal Liability, Each Occurrence (Bodily Injury and Property Damage)500,000
Medical Payments to Others 3,000 / 25,000

In order to qualify for umbrella insurance with our current insurance provider through an independent agent, our auto insurance limits would need to increase to $250,000/$500,000. This would cost an additional $110 per year. A $1 million umbrella insurance policy would cost an additional $140 per year.

Do we need umbrella insurance? Should we just increase the liability limits on the auto insurance and call it good? Or leave everything the way it is?

Thank you in advance.
Last edited by ChrisTraeger on Fri Jun 02, 2023 8:30 pm, edited 1 time in total.
backpacker61
Posts: 1613
Joined: Wed May 20, 2020 6:36 am

Re: Do we need umbrella insurance?

Post by backpacker61 »

ChrisTraeger wrote: Fri Jun 02, 2023 6:53 pm Do we need umbrella insurance? Should we just increase the liability limits on the auto insurance and call it good? Or leave everything the way it is?
I don't think you need umbrella insurance at this point. Utah apparently has reasonable protection for IRA's from creditor claims.

https://assetprotectionplanners.com/pla ... -by-state/

You could increase the liability limits on the automobile policy; that would be my first step.

If the investment options in your employer's 401(K) plan are good, you could see if you can roll your traditional IRA balance into the plan to hold them under ERISA protections, which are consistent across the country.
“Now shall I walk or shall I ride? | 'Ride,' Pleasure said; | 'Walk,' Joy replied.” | | ― W.H. Davies
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mhc
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Location: NoCo

Re: Do we need umbrella insurance?

Post by mhc »

Even if someone can't go after your retirement accounts, they can go after your other assets and garnish your wages.

Most people do not have umbrella insurance. You have to decide if you need it. I have it because it is inexpensive insurance against a catastrophic event. It is inexpensive insurance because the odds are I will never need it. If you do get it, you may want more than a million.
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Lastrun
Posts: 1512
Joined: Wed May 03, 2017 6:46 pm

Re: Do we need umbrella insurance?

Post by Lastrun »

Respectfully disagree, even though you may have a state or federal protected or exempt asset, a tenacious creditor can still reek havoc on your life, think costs of defense, wage garnishment, etc. While an umbrella policy is not a “be-all/end-all” is something to consider as under a cost benefit analysis it typically pretty good.

Take a look at some old threads in the Wiki. https://www.bogleheads.org/wiki/Umbrella_insurance

And this from Fidelity

https://www.fidelity.com/viewpoints/we ... -insurance
gavinsiu
Posts: 4543
Joined: Sun Nov 14, 2021 11:42 am

Re: Do we need umbrella insurance?

Post by gavinsiu »

It might be a good idea to get umbrella mostly because it is so cheap. A $1m policy is typically around $300. I paid way that much for the same amount in life insurance.
Running Bum
Posts: 358
Joined: Sun Feb 10, 2013 1:00 pm

Re: Do we need umbrella insurance?

Post by Running Bum »

I have one so I don't have to think about all the ways I might need it and whether they are covered by another policy. An easy one for me is skiing.
HENRYGRUGER
Posts: 148
Joined: Mon Oct 12, 2020 11:32 pm

Re: Do we need umbrella insurance?

Post by HENRYGRUGER »

ChrisTraeger wrote: Fri Jun 02, 2023 6:53 pm Our net worth has been gradually increasing over the years. My wife and I are trying to determine when, if ever, we need to get umbrella insurance. Any help or advice would be appreciated. Here is a synopsis of our current situation. Sorry for the long post, I just want to be as detailed as possible.

Debt: No debt
Tax Filing Status: Married Filing Jointly
Tax Rate: 22% Federal, 4.8% State
State of Residence: Utah

Age: Him 42, her 38

Net worth:

Taxable
Emergency Fund: $25k in HYSA
His and Her Brokerage: $33k

Retirement Accounts
His and her traditional IRAs: $220k
His and her Roth IRAs: $375k
His Pension: $45k cash value
His 401k: $120k

Property
House: $700k, no mortgage
Vehicles: 2 vehicles worth roughly $30k total

Total net worth: $1.548 million

Additional Info:

My wife is considered self employed because she is a 1099 employee. All her work is entirely online from home and no clients visit the home. We have 3 children, all under the age of 10. We don't have a pool, trampoline, etc, so risk of injury in the yard is limited, but we do have a lot of kids on our street and there are often kids coming into and going out of our home/yard on a regular basis after school and in the summer while they are playing.

Here is our current insurance coverage:

Auto
Bodily Injury (BI) 100,000 / 300,000
Property Damage (PD) 100,000
Personal Injury Protection (PIP) 3,000
Uninsured Motorist Bodily Injury (UM) 100,000 / 300,000
Underinsured Motorist Bodily Injury (UIM) 100,000 / 300,000

Homeowners Liability coverage:
Personal Liability, Each Occurrence (Bodily Injury and Property Damage)500,000
Medical Payments to Others 3,000 / 25,000

In order to qualify for umbrella insurance with our current insurance provider through an independent agent, our auto insurance limits would need to increase to $250,000/$500,000. This would cost an additional $110 per year. A $1 million umbrella insurance policy would cost an additional $140 per year.

Do we need umbrella insurance? Should we just increase the liability limits on the auto insurance and call it good? Or leave everything the way it is?

Thank you in advance.
FULL DISCLOSURE...I was Nationwide Insurance and Financial Services Agency Owner in a "prior life."

Have you ever heard the old expression, "Penny wise and pound foolish?"

Based on your self identified Net Worth, you need $2M in Umbrella Liability Insurance. Unless you live in a BLUE STATE, like IL, NY, CA, your cost would be in the $250-$400 range.

The question is "WHY do you not already own a Liability Umbrella Policy?"

If your P&C Agent hasn't been recommending this to you on every call to his/her office, get a new agent.

You mentioned what you don't have...pool, trampoline, other attractive nuisance items, BUT you identified things you do have, which is more important...Children, a Home, Automobiles, investment portfolio.

Either you do not understand risk, or you are trying to save dollars in the wrong area.

Please call your agent back...get your Auto Policy Liability Increased to $250/$500/$100...make sure your home is insured for REPLACEMENT VALUE, (if an HO-5 is available in your state, get one, based on the value of your home. Chances are you have an HO-3) and has $500K in Liability coverage, and buy your Umbrella Policy.

FYI...These are the same coverages I have myself.

Last thought...Remember...it doesn't really matter what others think...what matters is how much coverage would you will wish you had, when you need it.
hachiko
Posts: 941
Joined: Fri Mar 17, 2017 1:56 pm

Re: Do we need umbrella insurance?

Post by hachiko »

Did I miss it or did you not share your income? That may be even more important than your net worth in the evaluation, especially if a lot of your net worth is protected from creditors.
Made money. Lost money. Learned to stop counting.
Topic Author
ChrisTraeger
Posts: 20
Joined: Sun Jan 16, 2022 9:15 pm

Re: Do we need umbrella insurance?

Post by ChrisTraeger »

hachiko wrote: Fri Jun 02, 2023 8:27 pm Did I miss it or did you not share your income? That may be even more important than your net worth in the evaluation, especially if a lot of your net worth is protected from creditors.
Sorry, I just edited the original post. It is $130k per year.
Topic Author
ChrisTraeger
Posts: 20
Joined: Sun Jan 16, 2022 9:15 pm

Re: Do we need umbrella insurance?

Post by ChrisTraeger »

backpacker61 wrote: Fri Jun 02, 2023 7:32 pm
ChrisTraeger wrote: Fri Jun 02, 2023 6:53 pm Do we need umbrella insurance? Should we just increase the liability limits on the auto insurance and call it good? Or leave everything the way it is?
I don't think you need umbrella insurance at this point. Utah apparently has reasonable protection for IRA's from creditor claims.

https://assetprotectionplanners.com/pla ... -by-state/

You could increase the liability limits on the automobile policy; that would be my first step.

If the investment options in your employer's 401(K) plan are good, you could see if you can roll your traditional IRA balance into the plan to hold them under ERISA protections, which are consistent across the country.
Thanks for the response and for the link. It's very helpful to know what assets are protected.
Topic Author
ChrisTraeger
Posts: 20
Joined: Sun Jan 16, 2022 9:15 pm

Re: Do we need umbrella insurance?

Post by ChrisTraeger »

mhc wrote: Fri Jun 02, 2023 7:47 pm Even if someone can't go after your retirement accounts, they can go after your other assets and garnish your wages.

Most people do not have umbrella insurance. You have to decide if you need it. I have it because it is inexpensive insurance against a catastrophic event. It is inexpensive insurance because the odds are I will never need it. If you do get it, you may want more than a million.
Thank you for your insights. Very helpful.
Topic Author
ChrisTraeger
Posts: 20
Joined: Sun Jan 16, 2022 9:15 pm

Re: Do we need umbrella insurance?

Post by ChrisTraeger »

Lastrun wrote: Fri Jun 02, 2023 7:49 pm Respectfully disagree, even though you may have a state or federal protected or exempt asset, a tenacious creditor can still reek havoc on your life, think costs of defense, wage garnishment, etc. While an umbrella policy is not a “be-all/end-all” is something to consider as under a cost benefit analysis it typically pretty good.

Take a look at some old threads in the Wiki. https://www.bogleheads.org/wiki/Umbrella_insurance

And this from Fidelity

https://www.fidelity.com/viewpoints/we ... -insurance
Thank you for your response for the links. I appreciate it.
Topic Author
ChrisTraeger
Posts: 20
Joined: Sun Jan 16, 2022 9:15 pm

Re: Do we need umbrella insurance?

Post by ChrisTraeger »

gavinsiu wrote: Fri Jun 02, 2023 7:57 pm It might be a good idea to get umbrella mostly because it is so cheap. A $1m policy is typically around $300. I paid way that much for the same amount in life insurance.
Thank you!
Topic Author
ChrisTraeger
Posts: 20
Joined: Sun Jan 16, 2022 9:15 pm

Re: Do we need umbrella insurance?

Post by ChrisTraeger »

HENRYGRUGER wrote: Fri Jun 02, 2023 8:17 pm
ChrisTraeger wrote: Fri Jun 02, 2023 6:53 pm Our net worth has been gradually increasing over the years. My wife and I are trying to determine when, if ever, we need to get umbrella insurance. Any help or advice would be appreciated. Here is a synopsis of our current situation. Sorry for the long post, I just want to be as detailed as possible.

Debt: No debt
Tax Filing Status: Married Filing Jointly
Tax Rate: 22% Federal, 4.8% State
State of Residence: Utah

Age: Him 42, her 38

Net worth:

Taxable
Emergency Fund: $25k in HYSA
His and Her Brokerage: $33k

Retirement Accounts
His and her traditional IRAs: $220k
His and her Roth IRAs: $375k
His Pension: $45k cash value
His 401k: $120k

Property
House: $700k, no mortgage
Vehicles: 2 vehicles worth roughly $30k total

Total net worth: $1.548 million

Additional Info:

My wife is considered self employed because she is a 1099 employee. All her work is entirely online from home and no clients visit the home. We have 3 children, all under the age of 10. We don't have a pool, trampoline, etc, so risk of injury in the yard is limited, but we do have a lot of kids on our street and there are often kids coming into and going out of our home/yard on a regular basis after school and in the summer while they are playing.

Here is our current insurance coverage:

Auto
Bodily Injury (BI) 100,000 / 300,000
Property Damage (PD) 100,000
Personal Injury Protection (PIP) 3,000
Uninsured Motorist Bodily Injury (UM) 100,000 / 300,000
Underinsured Motorist Bodily Injury (UIM) 100,000 / 300,000

Homeowners Liability coverage:
Personal Liability, Each Occurrence (Bodily Injury and Property Damage)500,000
Medical Payments to Others 3,000 / 25,000

In order to qualify for umbrella insurance with our current insurance provider through an independent agent, our auto insurance limits would need to increase to $250,000/$500,000. This would cost an additional $110 per year. A $1 million umbrella insurance policy would cost an additional $140 per year.

Do we need umbrella insurance? Should we just increase the liability limits on the auto insurance and call it good? Or leave everything the way it is?

Thank you in advance.
FULL DISCLOSURE...I was Nationwide Insurance and Financial Services Agency Owner in a "prior life."

Have you ever heard the old expression, "Penny wise and pound foolish?"

Based on your self identified Net Worth, you need $2M in Umbrella Liability Insurance. Unless you live in a BLUE STATE, like IL, NY, CA, your cost would be in the $250-$400 range.

The question is "WHY do you not already own a Liability Umbrella Policy?"

If your P&C Agent hasn't been recommending this to you on every call to his/her office, get a new agent.

You mentioned what you don't have...pool, trampoline, other attractive nuisance items, BUT you identified things you do have, which is more important...Children, a Home, Automobiles, investment portfolio.

Either you do not understand risk, or you are trying to save dollars in the wrong area.

Please call your agent back...get your Auto Policy Liability Increased to $250/$500/$100...make sure your home is insured for REPLACEMENT VALUE, (if an HO-5 is available in your state, get one, based on the value of your home. Chances are you have an HO-3) and has $500K in Liability coverage, and buy your Umbrella Policy.

FYI...These are the same coverages I have myself.

Last thought...Remember...it doesn't really matter what others think...what matters is how much coverage would you will wish you had, when you need it.
Thank you for your expertise and recommendations. I agree that my insurance agent has not been particularly helpful in providing recommendations. It may be time to look at different agents. I confirmed that I do have an HO-5 on my current coverage so that is a plus.
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cchrissyy
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Location: SF bay area

Re: Do we need umbrella insurance?

Post by cchrissyy »

i did not worry about this or consider the expense worth it, until i had teenagers learning to drive.
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miket29
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Re: Do we need umbrella insurance?

Post by miket29 »

Given your youth ;-) let me bring up an orthogonal topic and suggest a big motivation for getting an umbrella policy is so you can add uninsured/underinsured motorist coverage rider to the umbrella policy, sitting on top of the UM/UIM from your auto insurance. It certainly was for me. I've always carried an umbrella policy that provides $1 million in uninsured/underinsured motorist coverage on top coverage 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 (rare as we hope they are).
Last edited by miket29 on Fri Jun 02, 2023 10:57 pm, edited 2 times in total.
miket29
Posts: 1067
Joined: Tue Jun 20, 2017 9:07 pm

Re: Do we need umbrella insurance?

Post by miket29 »

Do we need umbrella insurance? Should we just increase the liability limits on the auto insurance and call it good? Or leave everything the way it is?'
To address a different angle, umbrella insurance covers liability for more than just your driving.

I'll make up a story because the base of it just happened down the block from us. Many people have automatic garage door openers; they have a powerful central spring to help lifting the door. The house down the block, the spring somehow snapped and literally tore apart the garage door that is made of aluminum. With a sledgehammer you could make dents but this door had several actual tears. So much power is stored in the spring! So imagine your kids are getting their bikes out of the garage, go into the house to hit the opener and their little friend standing outside waiting for it to open is hit by the spring or the debris. You have liability protection from your homeowners policy but if the kid (or kids) are seriously injured or disabled that amount will easily be exceeded.
Last edited by miket29 on Fri Jun 02, 2023 10:30 pm, edited 2 times in total.
student
Posts: 10764
Joined: Fri Apr 03, 2015 6:58 am

Re: Do we need umbrella insurance?

Post by student »

When I was in a similar situation, I started buying an umbrella insurance.
BernardShakey
Posts: 1148
Joined: Tue Jun 25, 2019 10:52 pm

Re: Do we need umbrella insurance?

Post by BernardShakey »

HENRYGRUGER wrote: Fri Jun 02, 2023 8:17 pm
ChrisTraeger wrote: Fri Jun 02, 2023 6:53 pm Our net worth has been gradually increasing over the years. My wife and I are trying to determine when, if ever, we need to get umbrella insurance. Any help or advice would be appreciated. Here is a synopsis of our current situation. Sorry for the long post, I just want to be as detailed as possible.

Debt: No debt
Tax Filing Status: Married Filing Jointly
Tax Rate: 22% Federal, 4.8% State
State of Residence: Utah

Age: Him 42, her 38

Net worth:

Taxable
Emergency Fund: $25k in HYSA
His and Her Brokerage: $33k

Retirement Accounts
His and her traditional IRAs: $220k
His and her Roth IRAs: $375k
His Pension: $45k cash value
His 401k: $120k

Property
House: $700k, no mortgage
Vehicles: 2 vehicles worth roughly $30k total

Total net worth: $1.548 million

Additional Info:

My wife is considered self employed because she is a 1099 employee. All her work is entirely online from home and no clients visit the home. We have 3 children, all under the age of 10. We don't have a pool, trampoline, etc, so risk of injury in the yard is limited, but we do have a lot of kids on our street and there are often kids coming into and going out of our home/yard on a regular basis after school and in the summer while they are playing.

Here is our current insurance coverage:

Auto
Bodily Injury (BI) 100,000 / 300,000
Property Damage (PD) 100,000
Personal Injury Protection (PIP) 3,000
Uninsured Motorist Bodily Injury (UM) 100,000 / 300,000
Underinsured Motorist Bodily Injury (UIM) 100,000 / 300,000

Homeowners Liability coverage:
Personal Liability, Each Occurrence (Bodily Injury and Property Damage)500,000
Medical Payments to Others 3,000 / 25,000

In order to qualify for umbrella insurance with our current insurance provider through an independent agent, our auto insurance limits would need to increase to $250,000/$500,000. This would cost an additional $110 per year. A $1 million umbrella insurance policy would cost an additional $140 per year.

Do we need umbrella insurance? Should we just increase the liability limits on the auto insurance and call it good? Or leave everything the way it is?

Thank you in advance.
FULL DISCLOSURE...I was Nationwide Insurance and Financial Services Agency Owner in a "prior life."

Have you ever heard the old expression, "Penny wise and pound foolish?"

Based on your self identified Net Worth, you need $2M in Umbrella Liability Insurance. Unless you live in a BLUE STATE, like IL, NY, CA, your cost would be in the $250-$400 range.

The question is "WHY do you not already own a Liability Umbrella Policy?"

If your P&C Agent hasn't been recommending this to you on every call to his/her office, get a new agent.

You mentioned what you don't have...pool, trampoline, other attractive nuisance items, BUT you identified things you do have, which is more important...Children, a Home, Automobiles, investment portfolio.

Either you do not understand risk, or you are trying to save dollars in the wrong area.

Please call your agent back...get your Auto Policy Liability Increased to $250/$500/$100...make sure your home is insured for REPLACEMENT VALUE, (if an HO-5 is available in your state, get one, based on the value of your home. Chances are you have an HO-3) and has $500K in Liability coverage, and buy your Umbrella Policy.

FYI...These are the same coverages I have myself.

Last thought...Remember...it doesn't really matter what others think...what matters is how much coverage would you will wish you had, when you need it.
Eh, it's more important once the kids are driving. What's the liability coverage on your homeowners policy ? Conservative approach would be to up the auto and get $1M umbrella. The costs you quote seem nominal enough.

The best reason to get it might be as shared above for the situation where an underinsured driver hits you plows and you suffer permanent injury. You can't work again. I'm not as alarmed as you are but it makes sense to purchase given the nominal cost.
An important key to investing is having a well-calibrated sense of your future regret.
WoostaGal
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Re: Do we need umbrella insurance?

Post by WoostaGal »

Posting to follow.
Outer Marker
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Re: Do we need umbrella insurance?

Post by Outer Marker »

Umbrella is very cheap for the protection and peace of mind it provides. I'd buy it without hesitation in your situation.
valleyrock
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Re: Do we need umbrella insurance?

Post by valleyrock »

One way I've heard it expressed is that, if something happens and a person is sued, a big umbrella policy results in their insurance company bringing out a bevy of attorneys. Or maybe just one or two who have the weight of a bevy. Such could be necessary even if there's no real merit in a lawsuit, but they're coming after you, anyway. The idea is that the insurance company will have a lot to lose, so they'll put appropriate resources into the effort. Not that one should be thinking of shirking responsibility. From that standpoint, an umbrella policy helps one be more responsibile, as well.
User avatar
ClevrChico
Posts: 3259
Joined: Tue Apr 03, 2012 8:24 pm

Re: Do we need umbrella insurance?

Post by ClevrChico »

I have it and sometimes think it's a waste, until there's been a new miss on the road.

Last week someone passed me in a 25 mph residential zone, right in front of an oncoming truck. The car had to cut me off to avoid the crash. I can only imagine how the driver would have tried to twist things to avoid blame. I sleep well with the policy.
bltn
Posts: 1844
Joined: Mon Feb 20, 2017 8:32 pm

Re: Do we need umbrella insurance?

Post by bltn »

I would go ahead and get the million dollar umbrella now for that small cost. You can always add to it later if desired.
Lastrun
Posts: 1512
Joined: Wed May 03, 2017 6:46 pm

Re: Do we need umbrella insurance?

Post by Lastrun »

It seems to me that based on a sort of "selection bias" most BHs are good candidates for umbrella policies. BHs are not the Dave Ramsey call-in types with zero savings and heavy credit card and car debt that are one incident removed from bankruptcy.

Accumulating BH's typically have good salaries and growing assets (think of planned contributions) where a creditor would mess with the spreadsheets and impact retirement plans.

Withdrawing BH's may have significant taxable assets, a paid off house, and a "creditor attachable" revenue stream. A creditor could impact a well-planned retirement.

Add to this a BH serving on a non-profit or local organization, having a pool or second home, or just leading an active and involved life (whether before or during retirement), and all of these increase risk, even if just a little.
Pencilskirt
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Joined: Thu Mar 26, 2020 9:44 pm

Re: Do we need umbrella insurance?

Post by Pencilskirt »

We have reasonably priced umbrella insurance from Erie. Coverage is 1M, annual cost $137. It covers us wherever we go in the world. For instance, if we cause a horrible accident traveling abroad, it is covered.

https://www.erieinsurance.com/personal-umbrella
coffeeblack
Posts: 770
Joined: Wed Jun 19, 2019 10:20 am

Re: Do we need umbrella insurance?

Post by coffeeblack »

In my opinion you should follow HENRYGRUGER post.
Perhaps 2 million in umbrella since your net worth is 1.58 million.
hachiko
Posts: 941
Joined: Fri Mar 17, 2017 1:56 pm

Re: Do we need umbrella insurance?

Post by hachiko »

coffeeblack wrote: Sat Jun 03, 2023 9:23 am In my opinion you should follow HENRYGRUGER post.
Perhaps 2 million in umbrella since your net worth is 1.58 million.
Just to clarify for OP in case they aren't aware, as I wasn't when I first started looking into umbrella policies, net worth and umbrella limits are not exactly comparable. I think people use net worth as a rule of thumb because maybe it's an OK way to estimate how much coverage you need.

But it's not as if having a $2M umbrella "protects" your net worth up to $2M. If there's a $3M judgment, they can still come after you for the $1M. Or a $5M judgment could force bankruptcy. I think there's enough threads on this topic already so we don't really have to go into it again, but just wanted to point this out to OP as it confused me a lot initially when people were saying the umbrella limit should match net worth.
Made money. Lost money. Learned to stop counting.
coffeeblack
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Re: Do we need umbrella insurance?

Post by coffeeblack »

hachiko wrote: Sat Jun 03, 2023 9:57 am
coffeeblack wrote: Sat Jun 03, 2023 9:23 am In my opinion you should follow HENRYGRUGER post.
Perhaps 2 million in umbrella since your net worth is 1.58 million.
Just to clarify for OP in case they aren't aware, as I wasn't when I first started looking into umbrella policies, net worth and umbrella limits are not exactly comparable. I think people use net worth as a rule of thumb because maybe it's an OK way to estimate how much coverage you need.

But it's not as if having a $2M umbrella "protects" your net worth up to $2M. If there's a $3M judgment, they can still come after you for the $1M. Or a $5M judgment could force bankruptcy. I think there's enough threads on this topic already so we don't really have to go into it again, but just wanted to point this out to OP as it confused me a lot initially when people were saying the umbrella limit should match net worth.
I agree. It's just that there has to be a reasonable number to pick. 2 million covers his net worth and also makes it hard for the insurance company not to want to defend. Perhaps the attorneys in here can chime in.
Outer Marker
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Re: Do we need umbrella insurance?

Post by Outer Marker »

I carry $2M. It's not really a function of net worth. It's being able to settle any likely claim under the umbrella. $1M isn't what it used to be. A plaintiff's attorney knows they can likely get the policy limit with a strong claim - but it is going to be a huge litigation effort to go beyond that. Most would advise settlement.
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nedsaid
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Re: Do we need umbrella insurance?

Post by nedsaid »

HENRYGRUGER wrote: Fri Jun 02, 2023 8:17 pm
FULL DISCLOSURE...I was Nationwide Insurance and Financial Services Agency Owner in a "prior life."

Have you ever heard the old expression, "Penny wise and pound foolish?"

Based on your self identified Net Worth, you need $2M in Umbrella Liability Insurance. Unless you live in a BLUE STATE, like IL, NY, CA, your cost would be in the $250-$400 range.

The question is "WHY do you not already own a Liability Umbrella Policy?"

If your P&C Agent hasn't been recommending this to you on every call to his/her office, get a new agent.

You mentioned what you don't have...pool, trampoline, other attractive nuisance items, BUT you identified things you do have, which is more important...Children, a Home, Automobiles, investment portfolio.

Either you do not understand risk, or you are trying to save dollars in the wrong area.

Please call your agent back...get your Auto Policy Liability Increased to $250/$500/$100...make sure your home is insured for REPLACEMENT VALUE, (if an HO-5 is available in your state, get one, based on the value of your home. Chances are you have an HO-3) and has $500K in Liability coverage, and buy your Umbrella Policy.

FYI...These are the same coverages I have myself.

Last thought...Remember...it doesn't really matter what others think...what matters is how much coverage would you will wish you had, when you need it.
I agree 100% here. In fact, I recently upped my umbrella insurance to $2 million.

In my area, lots and lots of pedestrians everywhere. One reason being, many of the poor can no longer afford cars. Also a growing homeless population. Couple that with the fact that many pedestrians are careless, there are local news reports of several that get killed every year. People often walk carelessly across busy streets at night wearing dark clothing with the assumption that drivers will see them. Bad assumption. Hence pedestrians get killed.

Gave this a lot of thought and increasing my limits was a no-brainer. Also increased the property damage limits on my '
auto policy.
A fool and his money are good for business.
HENRYGRUGER
Posts: 148
Joined: Mon Oct 12, 2020 11:32 pm

Re: Do we need umbrella insurance?

Post by HENRYGRUGER »

[/quote]
Eh, it's more important once the kids are driving. What's the liability coverage on your homeowners policy ? Conservative approach would be to up the auto and get $1M umbrella. The costs you quote seem nominal enough.

The best reason to get it might be as shared above for the situation where an underinsured driver hits you plows and you suffer permanent injury. You can't work again. I'm not as alarmed as you are but it makes sense to purchase given the nominal cost.
[/quote]

ESPECIALLY IMPORTANT with Teenage Drivers.

However, be careful not to confuse Liability coverage (Auto/Home/Umbrella) with Underinsured/Uninsured Motorist coverage. (UM/UM)

If you are injured or suffer property damage from an uninsured or underinsured driver, your liability coverage will do nothing for you. Liability Insurance is what protects others from damage you cause.(You will be covered by Med Pay or in some state PIP coverage.)

UM/UM is a separate coverage, not required by state statue, that is a very valuable coverage. If you are damaged (property or bodily) by an uninsured or underinsured driver, you policy will cover the loss, up to your UM/UM Limit. In addition, regardless of your standard deduction for Collision or Comprehensive losses, the UM/UM coverage will lower your deductible to $250.00. And the $250 will be refunded if the company recovers money from another carrier.

Like Umbrella Liability Coverage, UM/UM is very inexpensive. As I use to tell my clients, "Why are you willing to carry $250/$500/$100 to protect others from you, but not cover your family for the same limits?"

Talk to your P&C Agent folks.
Topic Author
ChrisTraeger
Posts: 20
Joined: Sun Jan 16, 2022 9:15 pm

Re: Do we need umbrella insurance?

Post by ChrisTraeger »

Thank you, all, for your replies, expertise and insights. I will be calling my agent first thing on Monday to review all of my current coverage and to add umbrella insurance. I appreciate all of your help!
Outer Marker
Posts: 4382
Joined: Sun Mar 08, 2009 8:01 am

Re: Do we need umbrella insurance?

Post by Outer Marker »

ChrisTraeger wrote: Sat Jun 03, 2023 1:52 pm Thank you, all, for your replies, expertise and insights. I will be calling my agent first thing on Monday to review all of my current coverage and to add umbrella insurance. I appreciate all of your help!
I'd get a quote for $2M as well. The extra mil wasn't much - then you know you're set.
Topic Author
ChrisTraeger
Posts: 20
Joined: Sun Jan 16, 2022 9:15 pm

Re: Do we need umbrella insurance?

Post by ChrisTraeger »

Outer Marker wrote: Sat Jun 03, 2023 1:58 pm
ChrisTraeger wrote: Sat Jun 03, 2023 1:52 pm Thank you, all, for your replies, expertise and insights. I will be calling my agent first thing on Monday to review all of my current coverage and to add umbrella insurance. I appreciate all of your help!
I'd get a quote for $2M as well. The extra mil wasn't much - then you know you're set.
Will do. Thanks!
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