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Asset protection step wise approach, Umbrella Insurance Equation

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  • Asset protection step wise approach, Umbrella Insurance Equation

    Hello everyone,

    I searched the forum for this but couldn't find quite what I'm looking for. I've been a member of this forum for about 2 months and I feel like I've learned so much about investing/saving etc. A lot of this is due to readings what previous people have posted and other answering my questions directly so thank you all in advance. From the few months I've been browsing this forum I've focused mostly on retirement accounts. I've learned about the general "order" that you should be investing in the accounts....

    (i.e 401k up to match--> paying off high interest debt --> HSA ---> IRA/backdoor IRA --> Finish 401k to limit --> 457b / NRAT --> Mega Back Door Roth --> Taxable accounts) *I know there might be some debate about some the order but you get the general rule.

    My question(s):

    1. Is there a similar asset protection / liability reduction step wise approach as well that I can follow to start protecting my assets? Maybe there is a good website or link someone can post that can walk me through the steps.


    2. Was thinking of purchasing umbrella insurance, is there an equation that I should keep in mind with regards to how much coverage I should purchase?


    Thanks in advance!











    Last edited by Badxmojo; Yesterday, 05:58 PM.

  • #2
    Endless arguments about how much umbrella insurance to get. Some say it should equal your networth. Or that portion of your net worth that is not protected against creditors. Others say it should depend on your exposure. Higher for a family with teen drivers in a litigious high cost of living area, less if the exposure is less. Some say the most important part is the lowest amount, since that buys you an insurance company that knows the legal landscape picking and paying for lawyers who know what they are doing. All are interesting ideas. I have not heard an actuary who works in this part of the business weigh in.

    Umbrella is probably cheap unless you have high risk elements in your situation. Several hundred dollars would buy a lot of coverage.

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    • #3
      Get umbrella. Start with 1MM. It's like 200-300......

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      • #4
        2 million umbrella 250 dollars.

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        • #5
          You need as much personal liability insurance as the payout after appeal. If you don't know how much that is (and if you're like most of us, that is the case) then just buy a lot because it's cheap. $1-5M.
          Helping those who wear the white coat get a fair shake on Wall Street since 2011

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          • #6
            1MM cost me $260 yearly. Actually less because it is discounted for having multiple policies. but that was the sticker price.
            I will likely increase it over the next few years as my worth grows and my kids cause more trouble.

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            • #7
              Based on your situation 1M is a reasonable starting place for umbrella liability coverage and is the starting point for coverage. It will be reasonably inexpensive. You have to add it on to an auto policy or a renters policy, so start by checking with the company that provides that coverage for you. Do you have a car with insurance? A renters policy?

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              • #8
                Originally posted by White.Beard.Doc View Post
                Based on your situation 1M is a reasonable starting place for umbrella liability coverage and is the starting point for coverage. It will be reasonably inexpensive. You have to add it on to an auto policy or a renters policy, so start by checking with the company that provides that coverage for you. Do you have a car with insurance? A renters policy?
                - I do have a car with auto insurance and rental insurance which is required by my apartment building.


                To your point regarding starting by checking with the company the provides these coverage for me, i was thinking that. However I read an article somewhere saying you should use different companies, because this will increase the number of lawyers on your side. Thoughts?


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                • #9
                  Originally posted by Badxmojo View Post

                  - I do have a car with auto insurance and rental insurance which is required by my apartment building.


                  To your point regarding starting by checking with the company the provides these coverage for me, i was thinking that. However I read an article somewhere saying you should use different companies, because this will increase the number of lawyers on your side. Thoughts?

                  that makes no sense.
                  also you usually have to show you have renters, and you can sometimes get a discount.
                  so just call your current provider, ask these things, and get a quote.

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                  • #10
                    Originally posted by Hatton View Post
                    2 million umbrella 250 dollars.
                    This is pretty good. I have $3M for $600 per year, but it covers liability for two additional properties and I am in a high cost urban area (Washington DC).

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                    • #11
                      Originally posted by Badxmojo View Post

                      - I do have a car with auto insurance and rental insurance which is required by my apartment building.


                      To your point regarding starting by checking with the company the provides these coverage for me, i was thinking that. However I read an article somewhere saying you should use different companies, because this will increase the number of lawyers on your side. Thoughts?

                      I disagree with that advice.

                      Yes, if you have coverage for an incident with two different insurance companies, then you would have 2 lawyers representing you. But this just complicates things. If it is a smaller value claim, then the umbrella company might be pressing the primary company to settle, even if the case should be defended. Both sides are not always aligned on liability and financial considerations. Double coverage can complicate matters.

                      In your shoes, I would keep it simple and carry all of the coverage with one company.

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                      • #12
                        Originally posted by White.Beard.Doc View Post

                        I disagree with that advice.

                        Yes, if you have coverage for an incident with two different insurance companies, then you would have 2 lawyers representing you. But this just complicates things. If it is a smaller value claim, then the umbrella company might be pressing the primary company to settle, even if the case should be defended. Both sides are not always aligned on liability and financial considerations. Double coverage can complicate matters.

                        In your shoes, I would keep it simple and carry all of the coverage with one company.
                        Thank you!

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