Joined: 15 Nov 2009
Posts: 404
Location: New York
 Posted: Tue Aug 02, 2011 12:58 pm?? ?Post subject: How much umbrella insurance is enough? |  |
| I'd be interested to know what other Bogleheads have purchased. I had a 5MM policy until recently. I'm now shopping for another and am trying to figure out if I want 5 or 10.
Since I know many here have substantial assets and earnings to protect, I'd love to hear what others have others done. Can we have a survey? I'd love to hear people's reasoning behind the amounts as well. In my case, I feel that $5MM might be on the low side living in NYC. There are plenty of people making 250k+ here, if (heaven forbid) I were to incapacitate one in an auto accident, that could be a high seven figure bill easily. | |
  | ? | '); //--> |
Joined: 03 Jan 2011
Posts: 808
| Posted: Tue Aug 02, 2011 1:06 pm?? ?Post subject: | |
| Love to hear others opinions especially from any personal injury lawyers out there?
I would be surprised if lawyers went for amounts about your total assets. Good luck. | |
| | ? | '); //--> |
Joined: 08 Mar 2010
Posts: 55
| | ? | '); //--> |
Joined: 18 Jun 2010
Posts: 888
| | ? | '); //--> |
Joined: 30 Jun 2010
Posts: 149
| Posted: Tue Aug 02, 2011 2:12 pm?? ?Post subject: | |
| I agree with OP that umbrella insurance is very important especially in areas with high net worth individuals.
Also, do you have teenage drivers in the family? Another recent problem is the HOA? If you buy a home with a Home Owners Association, I would strongly recommend you protect yourself because the board members are not necessarily looking out for your interests. Do your kids have a trampoline that friends use? I believe there are many good reasons for an umbrella policy. | |
| | ? | '); //--> |
Joined: 25 Apr 2010
Posts: 320
| | ? | '); //--> |
Joined: 20 Feb 2007
Posts: 1399
| Posted: Tue Aug 02, 2011 2:42 pm?? ?Post subject: | |
| I equate coverage to net worth, but not to earnings.
I would add more coverage to net worth for: high risk activities (e.g. teenagers in the family, reckless driving habits, entertain frequently with alcohol, etc., etc.) highly appreciating assets in net worth (e.g. net worth is 100% micro stock portfolio, which appreciates 30% in one year, appreciation leaves your coverage lower than net worth until renewal). | |
| | ? | '); //--> |
Joined: 26 May 2008
Posts: 631
Location: In the sense of physical presence?
| Posted: Tue Aug 02, 2011 3:59 pm?? ?Post subject: | |
| When the boy went away to college, we got an umbrella policy in the amount equal to our net worth. Very naively (sp?), we hoped along with the auto insurance that number would be equal to some figure where a jury would begin say - hey, wait a minute. you want how much? for what?
Fortunately, we never had to find out if we guessed right. Additionally, we don't live in a high income area such as NYC. The upside was that the umbrella policy had a clause that prevented my wife from being on the board of directors of a local community pool. She quit on the spot and still thinks it was the best investment we ever made. | |
| | ? | '); //--> |
Joined: 18 Jun 2010
Posts: 888
| | ? | '); //--> |
Joined: 07 Apr 2010
Posts: 79
| | ? | '); //--> |
Joined: 05 Apr 2007
Posts: 986
| | ? | '); //--> |
Joined: 16 May 2011
Posts: 477
Location: Prescott, AZ
| Posted: Tue Aug 02, 2011 8:12 pm?? ?Post subject: | |
| As long as there is significant net worth held in a form without creditor protection, the exposure can never be totally eliminated.
For example, if you have 5mm in unprotected net worth, a 5mm Umbrella plus primary limits will still leave the 5mm vulnerable if the potential damages exceed the insurance limit. Higher Umbrella limits just phase out more and more abnormally high losses, so your assets are more likely to be secure. It is just a matter of odds. If the damages are from gross negligence and a jury trial occurs, you just never know. But at some point you just have to accept the fact that there is no unconditional security and you have decreased your exposure sufficiently. | |
| | ? | '); //--> |
Joined: 15 Nov 2009
Posts: 404
Location: New York
| Posted: Tue Aug 02, 2011 8:44 pm?? ?Post subject: | |
| I was hoping to get some people to chime in as to what they have purchased.
Re the rules of thumb that relate to your assets - that seems like poor reasoning. If you have a million dollars in cash in the bank, and a million dollar policy, if you get successfully sued for 2 million you are still broke. It seems to me that you need to judge what you might get sued for and insure for that. One could imagine incapacitating a breadwinner that earns in the six figures, if they have two or three decades left in their working life suddenly you're on the hook for 5MM+. That's why I'm thinking 5 to 10. Interestingly, GEICO spreads the 'have enough insurance to cover your assets' fallacy on their website. http://www.geico.com/informati....la-policy/ I chided them about this today when I was getting a quote. | |
| | ? | '); //--> |
Joined: 20 Feb 2007
Posts: 3457
Location: SF CA USA
| Posted: Tue Aug 02, 2011 9:18 pm?? ?Post subject: | |
| For me, this insurance isn't worth the cost, comforting as the name is (great marketing, insurance industry!)
The only time I have a realistic chance of incurring the kind of liability that would require this insurance is while driving, and I have $500K liability policy. Nick | |
Joined: 09 Jun 2011
Posts: 141
| Posted: Tue Aug 02, 2011 9:30 pm?? ?Post subject: | | ||
I think divorce lawyers do, they even go after future earnings. | |||
| | ? | '); //--> |
Joined: 05 Apr 2011
Posts: 166
| Posted: Tue Aug 02, 2011 9:32 pm?? ?Post subject: | | ||
You gave the example of NYC where lots of people make over $250k. As a real life example, a Microsoft executive earning about $300k was in a car accident that resulted in her becoming a quadriplegic. The judge awarded her forty-five million. Now, if you're paranoid, then imagine a worst case, although not outlandish scenario, where her neurosurgeon husband and two kids were in the car and seriously injured. Let's not even try to calculate the problems with say a bus or a multiple vehicle accident. It's easy to make up a scenario with 75 million in damages. Yes, it is possible to go bankrupt with one million in umbrella insurance, but the same could be said of people with five million or even ten million in insurance. Even if 1-3x your net worth may be somewhat arbitrary, it seems like a good rule of thumb for most people. Where do you draw the line and why? | |||
| | ? | '); //--> |
Joined: 03 May 2007
Posts: 967
| Posted: Tue Aug 02, 2011 9:46 pm?? ?Post subject: | |
| http://findarticles.com/p/arti...._n8821921/
(discussion of some umbrella policy claim examples, with the caveat that coverage can vary substantially from company to company) http://www.mymoneyblog.com/rea....olicy.html (rationale for buying an umbrella, with a few more claim examples) Buying at least a $1 million umbrella seems an easy decision because the cost is negligible and the insurer will provide defense for you in the event of a lawsuit. The desirability of having defense costs for a large lawsuit covered by insurance is perhaps easy to overlook. Maybe it would be necessary to use more than one company to get enough limits to satisfy your sleep-at-night quotient. I don't have an answer for how to calculate a reasonable amount of umbrella liability. $1 million is a lot better than not having an umbrella at all. It's pretty inexpensive. John Robert Quillen, journalist and cartoonist (1887-1948) | |
| | ? | '); //--> |
Joined: 01 Mar 2007
Posts: 1192
Location: Fairbury, Illinois
| Posted: Tue Aug 02, 2011 10:00 pm?? ?Post subject: | | ||
A few months ago I read the example claims linked above, and it opened my eyes to how litigious how U.S. society has become. The case of the wife suing the husband is a prime example. I carry a $2M umbrella policy. | |||
Joined: 03 Mar 2007
Posts: 240
| | ? | '); //--> |
Source: http://www.bogleheads.org/forum/viewtopic.php?t=79550&start=0&mrr=1312315506
mlb all star game final fantasy 7 final fantasy 7 viasat pearl jam weather radar matthew bellamy
No comments:
Post a Comment
Note: Only a member of this blog may post a comment.