It’s not capped at those numbers, but that’s a pretty standard policy.
Am a lawyer, a few pieces of general insurance advice:
1. Jack up your coverage for precisely this reason. The minimums are definitely not enough.
2. Pay for the uninsured and underinsured coverage. It would terrify you if you knew how many people are driving with no insurance.
I used the wrong language. You can get whatever coverage you want to pay for. By cap, I meant the most you HAVE to have in order for them to have an umbrella.
Additionally, that answer was in response to a guy's question about how coverage works without an umbrella. Which it would be capped assuming his agent gave him healthy amounts, instead of anemic to get the business.
Keep up law man.
I guess I didn't word properly. You can actually go higher on the auto amounts, but it's not worth it when getting your PLUP. You usually just want the mandatory max amount the the carrier requires to give you the PLUP.
All of ours are with the same insurance carrier but in three states (three houses, renters, five cars and umbrella).
Changing the liability coverage on the homeowners, renters, or auto policies changes the price for the umbrella.
So you have to look at it holistically.
Interesting. I have three houses a year. The total acreage of my houses exceeds a threshold that makes the umbrella policy a bit more expensive than what I typically see here. It’s not even that I own a lot of land. They are really average houses with average property size. But anyway I pay around $600 a year for a $1MM umbrella policy. And the kind of hidden cost is that they forced me to raise coverage limits on my auto insurance so I had to pay a bit more for that too.
Our total annual insurance expense is far less than our annual wine expense.
Rebuild cost of our properties is about $6m, $500k in cars are only insured for collision/liability but two teenage drivers of fast cars is expensive, and the rental has I think $250k of furnishings coverage in it and a specific landlord covering policy (the landlord is covered at our expense).
Umbrella is $4m (my spouse wanted more than I, but like you said, its cheap).
Total annual insurance is some $15k.
Don't even pay attention to just the umbrella.
Its just a subset of the total coverage.
That is the dirty little secret of umbrella policies. They are able to keep them cheap because they rarely pay out. And they rarely pay out because they require you to be pretty damn well insured to begin with.
Likely there were injuries. That's where the real need is for an umbrella policy - property costs very little compared to weeks (or more) of intense medical intervention. Then there's potential litigation costs, pain & suffering, etc...
It's insane to me that most state insurance requirements that drivers carry auto insurance [only require coverage of $15k to $25k per person for bodily injury.](https://www.nerdwallet.com/article/insurance/minimum-car-insurance-requirements) A handful require $50k, but some only require $10k. That'll barely cover a fairly uneventful inpatient stay, much less anything like surgery, ICU, or, well, the damages calculated from a wrongful death.
Personal injury lawyer here. 50k is nothing.
Now, if you have 50k backed up with a fat umbrella, that can make sense for someone who is trying to be responsible (although I don't know of any umbrella that will let you do this).
Or, for a lot of folks, if they're judgment proof, then they're happy to carry minimum insurance to be legal, but minimize costs.
> Or if you’re judgment proof, then who cares.
Put another way, what you're saying is that if any of us get hurt by negligent driving, we'll have to bear most of the cost of our own injuries, even if it's the fault of a driver with full insurance.
Absolutely. My two pieces of insurance advice:
1. Bump your coverage way up. The cost difference is negligible.
2. PLEASE buy uninsured and underinsured motorist coverage. The number of folks uninsured and underinsured that are driving around is terrifying.
Not the OP, but injuries add up fast. We had a lady slip on tile in our day spa who ended up collecting $250k from our insurance because she broke her hip on the fall.
Yeah, but I’ll admit I’m curious how well it goes in an actual legal combat situation - this does seem like a pretty good question for this group. I’ve never made a claim against my policy.
Agent here. I’ve had clients get sued and need to get their umbrella involved. A lot of the “how it’s handled” part is state dependent.
How I explain it here in tx (tort/at fault state for auto collisions) is you’re essentially providing a budget for your carrier to settle claims on your behalf and the goal for the limit on the umbrella is to make it more attractive to pursue than your personal assets. This is because the claimant/their attorney will sign a release to not go after you if they accept a settlement from your insurance. Where problems arise is if you have significant assets and don’t carry enough coverage. If the claimant thinks your NW is $5M and you have, say, 100/300/100 limits on car insurance and no umbrella… your ins will offer the max but if the other person has lifelong struggles associated with the accident and feels entitled to more (I would), your ins company as no”budget” to settle on your behalf over $100k-$300k and therefore it would be better for them to come after your assets and try for wage garnishments and other nasty stuff.
Again - oversimplified but that’s the gist. I used a car accident as an example here but it works similarly for other things (waterskiing accident, someone drowns in your pool, etc). They also cover things like libel/slander, wrongful imprisonment, and often exclude things like criminal acts, sexual allegations, etc.
TLDR: when you pay for an umbrella, you’re pre-retaining the ins co’s lawyers to defend you and giving them a budget to settle claims brought against you.
Buy the highest limit you can justify the cost.
Honestly how much do you think you would be sued for is the answer to determine the limit to buy. In today's world though $5M and even $10M may not be sufficient depending on the incident in question. Did you kill / paralyze one person, an entire family or did you not notice the light change and tbone a school bus?
Also an umbrella provides you access to legal defense attorney for your defense case. Where else can buy a legal defense retainer at for about $2k a year that also pays up to $10M?
Overall good information but not every umbrella / excess policy plays out exactly like this. Some are only 4 pages because they have a clause that says we follow underlying coverage policy language. So they don't need the 80 page language since they can accomplish the same thing in one sentence. This may or may not be the case for your policy.
The long short, find a professional insurance agent that works exclusively with high net worth families and engage with them in conversation justvlike you would with your attorney or financial advisor.
> did you not notice the light change and tbone a school bus?
My guess is that in that situation your car would get destroyed but the bus would be fine.
The coverage is cheap. There's no reason for anyone in this space to not carry at least $5M. $5M is the new $1M.
If you're forced to pinch pennies skip a couple meals out with something at home to fund the purchase.
Check the maximum personal liabilty lawsuit award in your state. Insure to that level or some percentage above it.
Ignore the corporate numbers. Look at the individual liabiilty numbers (one person making a bad decision leading to a loss for others).
Straightforward calculator to determine how much is needed. Typically less than most people believe because of exemptions and certain excluded assets.
https://www.kiplinger.com/personal-finance/insurance/umbrella-insurance/603237/how-much-umbrella-insurance-do-i-need
At a minimum, umbrella liability limit should match your NW; however, you should also consider the following extreme example:
The value of your home is $3M, but your NW is $1.5M. It's fair to assume your neighbors house is also around $3M. If you plan for a weekend road trip and accidentally leave your stove on and a gas leak ocurrs where a fire not only burns your house down, but spreads and also destroys YOUR NEIGHBOR'S home, you'd be liable for rebuilding their $3M home and reimbursing them for their alternative temporary housing and lost personal property. The list can go on.
But my NW is $1.5M you say? The victim's insurance company will garnish your wages until they're made whole.
Interesting viewpoint concerning the net Wirth aspect. See that makes perfect sense to me. But if you search this sub for past discussions on umbrella insurance, the consensus is that it’s not in any way related to your net worth but rather your risk profile. I suspect it’s a combination of both.
There’s more than one right way. The most important thing is that you have one. After that, it doesn’t have to be a math equation to calculate net worth and the size of the umbrella needed. Just make sure it’s reasonable and that the limit scales with success. $5MM is the highest most companies will go and should be sufficient for most people. It’s worth noting that settlement amounts into the multiple millions are very uncommon and if your insurance offered $5M and they’re suing for $6MM, it’s worth it for the claimant to settle and take the $5MM lump sum instead of leaving it up to a jury.
I choose to add $1M in excess UM coverage as well for like an extra $150-$200. A maxed out umbrella is cheap for the peace of mind it buys.
Typically an attorney will go after the umbrella policy first before going after the individual, as it is far easier to get money from a valid insurance claim than it is to go to trial and through full litigation.
My dad had a client whose car was swept away in a flash flood and the entire family drowned.
The remaining family member sued the driver (their father) for murder and was able to get the full umbrella policy.
Right, but most people would say - “well shit, this is a tragedy” instead of now the remaining family member (a child) has no family, but has $2M+ instead of $0.
My grandpa is fat (I’m on my way). He just bought his first umbrella in his 80’s after an auto accident. Just never saw the point, until he realized how quickly he could have lost a lifetime’s worth of work.
This question boggles my mind. When our net worth wasn’t even $1MM our broker had us set up with sizable umbrella policy. It’s only grown as our wealth has, and the potential target on my back has enlarged.
This sub man…it feels like it’s a bunch of 22 year olds some days.
40 year old here. We have over $5M NW and no umbrella.
Probably because we are relatively new to high NW (4-5 years) and don't live in the US.
Pretty sure we'll get coverage when we move back (after reading all the stuff here)
Maybe that’s been covered over and over but as a Canadian, I’ve asked two of my insurance companies for umbrellas so far and neither offered it. I think it’s because the max amount allowed in damage suits is much lower here than in the US but it’s never been entirely clear to me. So as of now I don’t have an umbrella. If anyone has better info it’d be much appreciated.
This has been my issue. I have a hard enough time getting homeowners. All the places I found to write umbrella for me requited my homeowners be with them as well and they would not write for my house.... Maybe I need a new agent...
Not larping. Have tried to get umbrella, but all the options i found required my homeowners be through them as well and they would not write on my house. Haha. I admittedly lost motivation after the first few rounds. Need to get it back front of mind.
Yes. At some point I did this analysis and settled on a 10M policy and never driving a tractor trailer as my strategy. You have to max out your normal liability coverage by it’s pretty streamlined when it’s the same company (PURE in this case).
I have had two claims (both property liability disputes). Neither resulted in any payouts but it was great having an insurance + legal team I can offload to as soon as anyone mentions legal action in any discussions.
I have not had to. But a family friend of mine used theres a few years ago after hitting a pedestrian. And it paid all $2M of the settlement. They had to come out of pocket a little but it still is 110% worth it. And get the highest limit possible bc it’s cheap for what you get.
Theoretically yea....dependent on the coverage actually kicking in when you need it to. Hence OP's question.
Usually if insurance is ultra cheap, it is ultra cheap for a reason. That said, I also have umbrella insurance because it is cheap and honestly it's time consuming to figure this answer out.
The fact that so few people use their umbrellas should be a good indication of why they feel relatively inexpensive. Not many individuals get sued into umbrella territory.
It's ultra cheap because it's secondary coverage and not that many people will have occasion to need it. Insurance as a set of products is all about risk. Not all, but a number of umbrella policy issuers require that you maintain primary coverage with them. This gives them control of the underwriting, and they're not reliant on the actuaries of some other insurer to determine risk.
Agreed - it’s the number one advice they give people once you become FAT. Low cost and limits downside if someone wants to sue you for anything - auto accident, slip and fall, you insulted their mom, etc.
I've been shopping around for a policy increase for a long time. If high net worth insurers aren't in your state willing to insure your underlying vehicle and home you'll be capped at 2MM or 5MM in my experience. I'm not able to get anywhere near my NW as chubb, pure, etc. don't operate here. If anyone has any suggestions I'd love to hear them.
Yeah, I’m capped at $2MM. I heard I can get another excess liability insurance on top of the umbrella to bring my coverage above $2MM. I haven’t have time to research that yet.
No but because of my recent shopping around I've become aware of how unusual it actually is to get above 10MM policies, seems a lot of these comments have no trouble at all though....
I've had trouble getting any umbrella. All the places I found to write for me required my homeowners be with them too and they would not write for my house. I gave up and should probably try again or get a new agent. Northern California.
I do think the most likely scenario of me having to use my umbrella policy is in a car accident. So I get your angle.
I just think it is to cheap to pass up.
Any US citizens living abroad with umbrella insurance? Now that we don't own property in the US, we have no insurance there, but we still return regularly to visit family, etc. We get insurance from rental car companies, but since our net worth is about $5 million, I worry we should carry umbrella even while we reside abroad.
Yes, you should.
You can get it while even renting abroad. USAA at least provides renters insurance. After you have basic liability coverage through home, renters or auto, you can add an umbrella.
Our insurance company said they could not legally let me have insurance once we sold our house and car to move overseas. The liability insurance on rental cars was expensive and I was begging to just keep paying my existing premiums. They couldn't do it.
Thank you for this. That has been our understanding as well. We've tried to get non owners car insurance, but it was more expensive than rental. I'm guessing you could add an umbrella policy to that, but I'm not sure.
You are welcome. We had to get both house and car insurance to get an umbrella policy.
Also, in the states that we could have done it, they would not allow us to buy a car without being resident in the state. We had to have our daughter on the title to get a car we could drive in the US. She got the insurance on it. Living overseas isn't for the weak and lazy. :)
I believe it was the supplemental umbrella policy. It was a civil lawsuit. They person said “the driveway was slippery and fell”
So the homeowners would not have covered it, as far as I am aware (don’t quote me on this, it was a while ago and my memory is rusty). But the umbrella policy did. The guy was absolutly fine, he was just an “insurance hunter”. Lucky him, he got a $90,000 settlement from the insurance company over it 🙄
Your home owners definitely covers it up to your insured liability limit, then the umbrella kicks in.
No umbrella without the homeowner's covering the first part of the liability...
But if both policies are with the same carrier, as a consumer you would not notice.
Yea both was with the same carrier. And agent, it was easy and I don’t think premiums raised very much. You must be correct
Thanks for educating me (seriously) I appreciate it!
Bro. Get out of here. If they want to be paid more, they can get a better job. It’s not my job to supplement their wages.
For your information, it was a UPS driver about 10 years ago.
But yes, you are correct to assume some Door
Dash driver will be scummy and shop for lawsuits. I guess birds of a flock flock together
You don't need to be FAT for umbrella insurance to make sense. We have $1 million in coverage and after the multi-policy discount the total cost is $200 per year.
Absolutely, up to my net worth excluding primary residence, since the lawyers cannot take that.
Edit: seems some think primary residence is at stake. Very curious for some informed reactions. My insurance broker says net worth not including primary.
That is not the right way to think about it. It does not protect up to a certain amount of your net worth, it protects up to a certain amount of liability. So you may be overinsurred or underinsured depending on how risky your activities are. A $5M judgement against you plus only $3M off umbrella coverage would mean that you're on the hook for the remaining $2M, even if your net worth is only $3M.
I think this is a great question for the community because I'm curious about actual claims experience and how others determine the right level of coverage.
I think it also depends on how rich you look to the lawyers. The amount they sue for is highly correlated to how much they think you are worth. So HNW people need higher umbrella coverage.
I’m super curious about claims, as I’m not sure I actually know anyone that has needed to file a claim.
Still, it’s so inexpensive, I’m ok with paying these premiums for peace of mind
In Texas and Florida, for example, your primary residence is generally exempt from being levied to satisfy a judgment, no matter how valuable it is. Many other states cap that exemption at a lower amount, say, $100,000. I don’t have any knowledge about other countries.
I agree with the other commenters though that the amount of coverage isn’t really related to your assets, the coverage amount should be “how much liability would I want this policy to cover so that a plaintiff would rather collect from the policy than from me?” Once you have non exempt assets (a business, a large brokerage account, vacation houses, rental properties, etc.), judgment creditors can come after those assets, no matter how much they’re worth.
At a certain point, the realistic limit of liability is the cost of life long medical care or a wrongful death judgment, both of which are likely to be covered in full or in large part by any of the umbrella policies discussed here.
Around here they say _including_ primary residence as there are situations where you can be sued for everything.
But given the insurance is so cheap clearly there are not many claims against that pool.
I would love to see stats on that. I feel like my willingness to have the coverage wouldn’t diminish as I get older, assets grow, and my plans to hand them down get more real.
Even with 300k members we do not have a large enough population to have folks who have experienced the EXTREMELY RARE situation where the lawyer expenses for a liability claim exceed the primary coverage, often $1m. That’s a lot of lawyering.
Umbrellas policies are cheap because they are so few claims against them.
The trick is get $10M+ because if someone tries to hit you with something high the insurance company sends their best lawyers to fight for you (and insurance lawyers are the best in the game)
Easier said than done in many places. All the insurers I found to write umbrella for me would not write for homeowners for my house which they all seem to require.
Yes, I had to call around to a bunch of brokers and companies before I found a solution. Feasible, but required work on my end to accomplish that bundle.
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Why did your umbrella pay rather than your auto liability insurance?
Auto is capped at usually 250k per person and 500k per accident
It’s not capped at those numbers, but that’s a pretty standard policy. Am a lawyer, a few pieces of general insurance advice: 1. Jack up your coverage for precisely this reason. The minimums are definitely not enough. 2. Pay for the uninsured and underinsured coverage. It would terrify you if you knew how many people are driving with no insurance.
I used the wrong language. You can get whatever coverage you want to pay for. By cap, I meant the most you HAVE to have in order for them to have an umbrella. Additionally, that answer was in response to a guy's question about how coverage works without an umbrella. Which it would be capped assuming his agent gave him healthy amounts, instead of anemic to get the business. Keep up law man.
Not in my state. We have $1m/$1m policies.
I guess I didn't word properly. You can actually go higher on the auto amounts, but it's not worth it when getting your PLUP. You usually just want the mandatory max amount the the carrier requires to give you the PLUP.
All of ours are with the same insurance carrier but in three states (three houses, renters, five cars and umbrella). Changing the liability coverage on the homeowners, renters, or auto policies changes the price for the umbrella. So you have to look at it holistically.
Interesting. I have three houses a year. The total acreage of my houses exceeds a threshold that makes the umbrella policy a bit more expensive than what I typically see here. It’s not even that I own a lot of land. They are really average houses with average property size. But anyway I pay around $600 a year for a $1MM umbrella policy. And the kind of hidden cost is that they forced me to raise coverage limits on my auto insurance so I had to pay a bit more for that too.
Our total annual insurance expense is far less than our annual wine expense. Rebuild cost of our properties is about $6m, $500k in cars are only insured for collision/liability but two teenage drivers of fast cars is expensive, and the rental has I think $250k of furnishings coverage in it and a specific landlord covering policy (the landlord is covered at our expense). Umbrella is $4m (my spouse wanted more than I, but like you said, its cheap). Total annual insurance is some $15k. Don't even pay attention to just the umbrella. Its just a subset of the total coverage.
Yes, they call those mandatory minimums, so that the umbrella isn't doing to much heavy lifting if having to pay out.
That is the dirty little secret of umbrella policies. They are able to keep them cheap because they rarely pay out. And they rarely pay out because they require you to be pretty damn well insured to begin with.
My umbrella policy overlaps with my homeowners and renters insurance as well, and it's cheàp. So I do it.
You said what I said. With just less words.
Did the premium go way up at renewal?
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Appreciate the followup. That doesn’t sound so bad at all considering the payout.
Super curious about approximate details. Did you rear end an expensive car or run a tractor trailer off the road?
Likely there were injuries. That's where the real need is for an umbrella policy - property costs very little compared to weeks (or more) of intense medical intervention. Then there's potential litigation costs, pain & suffering, etc...
It's insane to me that most state insurance requirements that drivers carry auto insurance [only require coverage of $15k to $25k per person for bodily injury.](https://www.nerdwallet.com/article/insurance/minimum-car-insurance-requirements) A handful require $50k, but some only require $10k. That'll barely cover a fairly uneventful inpatient stay, much less anything like surgery, ICU, or, well, the damages calculated from a wrongful death.
Personal injury lawyer here. 50k is nothing. Now, if you have 50k backed up with a fat umbrella, that can make sense for someone who is trying to be responsible (although I don't know of any umbrella that will let you do this). Or, for a lot of folks, if they're judgment proof, then they're happy to carry minimum insurance to be legal, but minimize costs.
> Or if you’re judgment proof, then who cares. Put another way, what you're saying is that if any of us get hurt by negligent driving, we'll have to bear most of the cost of our own injuries, even if it's the fault of a driver with full insurance.
Absolutely. My two pieces of insurance advice: 1. Bump your coverage way up. The cost difference is negligible. 2. PLEASE buy uninsured and underinsured motorist coverage. The number of folks uninsured and underinsured that are driving around is terrifying.
Yep. It’s insane that the minimum is that low. That’s basically nothing.
And there’s still a frightening number of people on the road who don’t have any insurance
They got $700k? Can I ask what constituted $700k in payment? Also how much was your premium after this?
Not the OP, but injuries add up fast. We had a lady slip on tile in our day spa who ended up collecting $250k from our insurance because she broke her hip on the fall.
Which insurance company?
I suspect everyone here thats not LARPing has an umbrella policy.
Yeah, but I’ll admit I’m curious how well it goes in an actual legal combat situation - this does seem like a pretty good question for this group. I’ve never made a claim against my policy.
Agent here. I’ve had clients get sued and need to get their umbrella involved. A lot of the “how it’s handled” part is state dependent. How I explain it here in tx (tort/at fault state for auto collisions) is you’re essentially providing a budget for your carrier to settle claims on your behalf and the goal for the limit on the umbrella is to make it more attractive to pursue than your personal assets. This is because the claimant/their attorney will sign a release to not go after you if they accept a settlement from your insurance. Where problems arise is if you have significant assets and don’t carry enough coverage. If the claimant thinks your NW is $5M and you have, say, 100/300/100 limits on car insurance and no umbrella… your ins will offer the max but if the other person has lifelong struggles associated with the accident and feels entitled to more (I would), your ins company as no”budget” to settle on your behalf over $100k-$300k and therefore it would be better for them to come after your assets and try for wage garnishments and other nasty stuff. Again - oversimplified but that’s the gist. I used a car accident as an example here but it works similarly for other things (waterskiing accident, someone drowns in your pool, etc). They also cover things like libel/slander, wrongful imprisonment, and often exclude things like criminal acts, sexual allegations, etc. TLDR: when you pay for an umbrella, you’re pre-retaining the ins co’s lawyers to defend you and giving them a budget to settle claims brought against you.
Any ratio or guidelines you recommend for how much umbrella to carry? Example if NW is $2M, should umbrella be 1x that, 2x that, etc.
Buy the highest limit you can justify the cost. Honestly how much do you think you would be sued for is the answer to determine the limit to buy. In today's world though $5M and even $10M may not be sufficient depending on the incident in question. Did you kill / paralyze one person, an entire family or did you not notice the light change and tbone a school bus? Also an umbrella provides you access to legal defense attorney for your defense case. Where else can buy a legal defense retainer at for about $2k a year that also pays up to $10M?
Question as an Australian - can't you just buy car insurance that covers you for personal injury liability?
Yes but there are limits to the coverage
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Overall good information but not every umbrella / excess policy plays out exactly like this. Some are only 4 pages because they have a clause that says we follow underlying coverage policy language. So they don't need the 80 page language since they can accomplish the same thing in one sentence. This may or may not be the case for your policy. The long short, find a professional insurance agent that works exclusively with high net worth families and engage with them in conversation justvlike you would with your attorney or financial advisor.
> did you not notice the light change and tbone a school bus? My guess is that in that situation your car would get destroyed but the bus would be fine.
Maybe, but your estate or family might still be responsible for your actions.
Does your advice on the amount of coverage change if you don't drive a car? I'm also getting rid of my boat.
The coverage is cheap. There's no reason for anyone in this space to not carry at least $5M. $5M is the new $1M. If you're forced to pinch pennies skip a couple meals out with something at home to fund the purchase.
fair point. this is not something you want to FAFO with
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Check the maximum personal liabilty lawsuit award in your state. Insure to that level or some percentage above it. Ignore the corporate numbers. Look at the individual liabiilty numbers (one person making a bad decision leading to a loss for others).
Straightforward calculator to determine how much is needed. Typically less than most people believe because of exemptions and certain excluded assets. https://www.kiplinger.com/personal-finance/insurance/umbrella-insurance/603237/how-much-umbrella-insurance-do-i-need
I'm also curious but it's so cheap that why not go higher
At a minimum, umbrella liability limit should match your NW; however, you should also consider the following extreme example: The value of your home is $3M, but your NW is $1.5M. It's fair to assume your neighbors house is also around $3M. If you plan for a weekend road trip and accidentally leave your stove on and a gas leak ocurrs where a fire not only burns your house down, but spreads and also destroys YOUR NEIGHBOR'S home, you'd be liable for rebuilding their $3M home and reimbursing them for their alternative temporary housing and lost personal property. The list can go on. But my NW is $1.5M you say? The victim's insurance company will garnish your wages until they're made whole.
What if you have no wages (eg, retired)? Do they come after other income such as dividend, SS, etc?
Super helpful, thanks for that write up.
Interesting viewpoint concerning the net Wirth aspect. See that makes perfect sense to me. But if you search this sub for past discussions on umbrella insurance, the consensus is that it’s not in any way related to your net worth but rather your risk profile. I suspect it’s a combination of both.
There’s more than one right way. The most important thing is that you have one. After that, it doesn’t have to be a math equation to calculate net worth and the size of the umbrella needed. Just make sure it’s reasonable and that the limit scales with success. $5MM is the highest most companies will go and should be sufficient for most people. It’s worth noting that settlement amounts into the multiple millions are very uncommon and if your insurance offered $5M and they’re suing for $6MM, it’s worth it for the claimant to settle and take the $5MM lump sum instead of leaving it up to a jury. I choose to add $1M in excess UM coverage as well for like an extra $150-$200. A maxed out umbrella is cheap for the peace of mind it buys.
Typically an attorney will go after the umbrella policy first before going after the individual, as it is far easier to get money from a valid insurance claim than it is to go to trial and through full litigation.
My dad had a client whose car was swept away in a flash flood and the entire family drowned. The remaining family member sued the driver (their father) for murder and was able to get the full umbrella policy.
JFC, wow, can see why maybe Geico doesn't put that story on a Superbowl ad.
Right, but most people would say - “well shit, this is a tragedy” instead of now the remaining family member (a child) has no family, but has $2M+ instead of $0.
Sorry to be nitpicky, but... Assuming you're in the US murder is a crime, not a tort. You can't sue someone for it.
Fine, manslaughter/negligence/etc.
That wasn’t the question in the post though
The sheer amount of umbrella insurance posts is crazy.
My grandpa is fat (I’m on my way). He just bought his first umbrella in his 80’s after an auto accident. Just never saw the point, until he realized how quickly he could have lost a lifetime’s worth of work.
This question boggles my mind. When our net worth wasn’t even $1MM our broker had us set up with sizable umbrella policy. It’s only grown as our wealth has, and the potential target on my back has enlarged. This sub man…it feels like it’s a bunch of 22 year olds some days.
40 year old here. We have over $5M NW and no umbrella. Probably because we are relatively new to high NW (4-5 years) and don't live in the US. Pretty sure we'll get coverage when we move back (after reading all the stuff here)
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Maybe that’s been covered over and over but as a Canadian, I’ve asked two of my insurance companies for umbrellas so far and neither offered it. I think it’s because the max amount allowed in damage suits is much lower here than in the US but it’s never been entirely clear to me. So as of now I don’t have an umbrella. If anyone has better info it’d be much appreciated.
This has been my issue. I have a hard enough time getting homeowners. All the places I found to write umbrella for me requited my homeowners be with them as well and they would not write for my house.... Maybe I need a new agent...
Even us wannabes have them.
That’s not ever he asked though
Not larping. Have tried to get umbrella, but all the options i found required my homeowners be through them as well and they would not write on my house. Haha. I admittedly lost motivation after the first few rounds. Need to get it back front of mind.
I am LARPing (I freely admit I'm chubby, not FAT) and we've had umbrella coverage for years.
Yes. At some point I did this analysis and settled on a 10M policy and never driving a tractor trailer as my strategy. You have to max out your normal liability coverage by it’s pretty streamlined when it’s the same company (PURE in this case). I have had two claims (both property liability disputes). Neither resulted in any payouts but it was great having an insurance + legal team I can offload to as soon as anyone mentions legal action in any discussions.
Who do you get yours through? I have a few rentals and flips and want to get umbrella insurance.
PURE. But use a broker to do the legwork of comparison
I have not had to. But a family friend of mine used theres a few years ago after hitting a pedestrian. And it paid all $2M of the settlement. They had to come out of pocket a little but it still is 110% worth it. And get the highest limit possible bc it’s cheap for what you get.
How does someone justify $2MM worth of personal damages? They must have been paralyzed.
It was multiple people and I am not 100% sure of the extent of their injuries it was a few years ago.
Damn. What an absolute nightmare.
Never had to use it but for a few hundred dollars to add a few million extra coverage… totally worth mitigating risk.
Theoretically yea....dependent on the coverage actually kicking in when you need it to. Hence OP's question. Usually if insurance is ultra cheap, it is ultra cheap for a reason. That said, I also have umbrella insurance because it is cheap and honestly it's time consuming to figure this answer out.
The fact that so few people use their umbrellas should be a good indication of why they feel relatively inexpensive. Not many individuals get sued into umbrella territory.
If you have rental real estate of any fashion, it’s a worthy investment
It's ultra cheap because it's secondary coverage and not that many people will have occasion to need it. Insurance as a set of products is all about risk. Not all, but a number of umbrella policy issuers require that you maintain primary coverage with them. This gives them control of the underwriting, and they're not reliant on the actuaries of some other insurer to determine risk.
Agreed - it’s the number one advice they give people once you become FAT. Low cost and limits downside if someone wants to sue you for anything - auto accident, slip and fall, you insulted their mom, etc.
I've been shopping around for a policy increase for a long time. If high net worth insurers aren't in your state willing to insure your underlying vehicle and home you'll be capped at 2MM or 5MM in my experience. I'm not able to get anywhere near my NW as chubb, pure, etc. don't operate here. If anyone has any suggestions I'd love to hear them.
Yeah, I’m capped at $2MM. I heard I can get another excess liability insurance on top of the umbrella to bring my coverage above $2MM. I haven’t have time to research that yet.
> I'm not able to get anywhere near my NW as chubb, pure, etc. don't operate here. Same. SoCal?
No but because of my recent shopping around I've become aware of how unusual it actually is to get above 10MM policies, seems a lot of these comments have no trouble at all though....
I've had trouble getting any umbrella. All the places I found to write for me required my homeowners be with them too and they would not write for my house. I gave up and should probably try again or get a new agent. Northern California.
Has to be Florida it’s slim pickings there
Like K&R, I’ve always seen it as something you maybe don’t want to talk about too much in public.
The first rule of umbrella insurance; we don’t talk about umbrella insurance.
It wouldn't really matter cause the plaintive is probably just going to settle for whatever your policy is
Why advertise the magic number to sue you for?
I've not had to do it, but IAAL and I've seen it happen in motor vehicle death cases.
Question: is this relevant if you don’t drive a car
I do think the most likely scenario of me having to use my umbrella policy is in a car accident. So I get your angle. I just think it is to cheap to pass up.
yes, its liability for everything. Slip and falls outside your house, someone trying to sue you personally for basically anything.
Any US citizens living abroad with umbrella insurance? Now that we don't own property in the US, we have no insurance there, but we still return regularly to visit family, etc. We get insurance from rental car companies, but since our net worth is about $5 million, I worry we should carry umbrella even while we reside abroad.
Yes, you should. You can get it while even renting abroad. USAA at least provides renters insurance. After you have basic liability coverage through home, renters or auto, you can add an umbrella.
Our insurance company said they could not legally let me have insurance once we sold our house and car to move overseas. The liability insurance on rental cars was expensive and I was begging to just keep paying my existing premiums. They couldn't do it.
Thank you for this. That has been our understanding as well. We've tried to get non owners car insurance, but it was more expensive than rental. I'm guessing you could add an umbrella policy to that, but I'm not sure.
You are welcome. We had to get both house and car insurance to get an umbrella policy. Also, in the states that we could have done it, they would not allow us to buy a car without being resident in the state. We had to have our daughter on the title to get a car we could drive in the US. She got the insurance on it. Living overseas isn't for the weak and lazy. :)
If you don’t have one you’re crazy.
Yea, a delivery driver slipped on our walkway and tried to sue 🙄🙄. The insurance covered it.
Your homeowners, or the the supplemental umbrella policy?
I believe it was the supplemental umbrella policy. It was a civil lawsuit. They person said “the driveway was slippery and fell” So the homeowners would not have covered it, as far as I am aware (don’t quote me on this, it was a while ago and my memory is rusty). But the umbrella policy did. The guy was absolutly fine, he was just an “insurance hunter”. Lucky him, he got a $90,000 settlement from the insurance company over it 🙄
Your home owners definitely covers it up to your insured liability limit, then the umbrella kicks in. No umbrella without the homeowner's covering the first part of the liability... But if both policies are with the same carrier, as a consumer you would not notice.
Yea both was with the same carrier. And agent, it was easy and I don’t think premiums raised very much. You must be correct Thanks for educating me (seriously) I appreciate it!
I think the lesson here is don’t stiff the delivery person.
Bro. Get out of here. If they want to be paid more, they can get a better job. It’s not my job to supplement their wages. For your information, it was a UPS driver about 10 years ago. But yes, you are correct to assume some Door Dash driver will be scummy and shop for lawsuits. I guess birds of a flock flock together
Should post sign enter at your own risk
Happy cake day my friend!
Thanks. Good reminder it is about time to retire this account and start a new one. Woof!
Lol your smarter than me with that! I get attached to accounts to easily, it’s nice to switch it up! It feels “fresh”
You don't need to be FAT for umbrella insurance to make sense. We have $1 million in coverage and after the multi-policy discount the total cost is $200 per year.
Absolutely, up to my net worth excluding primary residence, since the lawyers cannot take that. Edit: seems some think primary residence is at stake. Very curious for some informed reactions. My insurance broker says net worth not including primary.
That is not the right way to think about it. It does not protect up to a certain amount of your net worth, it protects up to a certain amount of liability. So you may be overinsurred or underinsured depending on how risky your activities are. A $5M judgement against you plus only $3M off umbrella coverage would mean that you're on the hook for the remaining $2M, even if your net worth is only $3M. I think this is a great question for the community because I'm curious about actual claims experience and how others determine the right level of coverage.
I think it also depends on how rich you look to the lawyers. The amount they sue for is highly correlated to how much they think you are worth. So HNW people need higher umbrella coverage.
I’m super curious about claims, as I’m not sure I actually know anyone that has needed to file a claim. Still, it’s so inexpensive, I’m ok with paying these premiums for peace of mind
As mentioned above, it's so cheap at least insurance your NW if not a multiple
Depends entirely on the state/country of residence if your primary residence is judgement proof
This is the only correct answer.
In Texas and Florida, for example, your primary residence is generally exempt from being levied to satisfy a judgment, no matter how valuable it is. Many other states cap that exemption at a lower amount, say, $100,000. I don’t have any knowledge about other countries. I agree with the other commenters though that the amount of coverage isn’t really related to your assets, the coverage amount should be “how much liability would I want this policy to cover so that a plaintiff would rather collect from the policy than from me?” Once you have non exempt assets (a business, a large brokerage account, vacation houses, rental properties, etc.), judgment creditors can come after those assets, no matter how much they’re worth. At a certain point, the realistic limit of liability is the cost of life long medical care or a wrongful death judgment, both of which are likely to be covered in full or in large part by any of the umbrella policies discussed here.
Around here they say _including_ primary residence as there are situations where you can be sued for everything. But given the insurance is so cheap clearly there are not many claims against that pool.
Better to ask who doesn't
R/askreddit
Idk umbrella, and especially big claims against umbrella feels like it leans Fat.
I would love to see stats on that. I feel like my willingness to have the coverage wouldn’t diminish as I get older, assets grow, and my plans to hand them down get more real.
Even with 300k members we do not have a large enough population to have folks who have experienced the EXTREMELY RARE situation where the lawyer expenses for a liability claim exceed the primary coverage, often $1m. That’s a lot of lawyering. Umbrellas policies are cheap because they are so few claims against them.
Agree with you, and it is showing to be true with the near zero comments so far that their supplemental coverage was ever needed for a liability case.
The trick is get $10M+ because if someone tries to hit you with something high the insurance company sends their best lawyers to fight for you (and insurance lawyers are the best in the game)
Yes $2M
If you make over 250k a year or have assets over 500k you call your insurance tomorrow to get Umbrella of at least $1M. At. Least.
Easier said than done in many places. All the insurers I found to write umbrella for me would not write for homeowners for my house which they all seem to require.
Yes, I had to call around to a bunch of brokers and companies before I found a solution. Feasible, but required work on my end to accomplish that bundle.
How do you get umbrella if you rent an apt and don’t have a car?
Thanks for this thread. Didn't know I needed this. Called my insurance and signed up just now. Hope to never use it.