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should I raise our umbrella insurance?

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  • Avatar bean1970 
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    i’m just looking for some thoughts from the peanut gallery here… I am more interesting in people’s reasoning on this subject rather than we are merely talking 200 bucks.

    1) we have an umbrella policy we purchased in 1997 for one million dollars (the was the year we got married and did all our coverages).   It was cheap. It was far more than our net worth at the time.

    2) We have same policy. moved to different state and rate went way up (because we live in FL and FL is one of the highest rated states because of high litigation).

    3) Then our kid started to drive (he’s prob the biggest liability we have though he doesn’t have a car at college now).  Rate is now tripled basically from when we started.

    4) The 1 million policy which is over 20 years old with no claims on it (or the underlying home or auto) cost just under $700/year.  it is only a fraction of our net worth.

     

    i was toying with raising it to 2 million. Annual premium of $900.   I have all our automobile deductibles to 1000K (three cars) and saved $200 on our auto policy annually (ugh i was hoping it would have been better savings…it’s the dang high FL rates).  so it’s kind of a wash to just apply the auto savings to the umbrella for 2 million.

    The only reason I drag is though FL is crazy crazy state for litigation…it is also a great state for asset protection.  All our retirement accounts are protected, Home is 100%, our joint accounts are tenants by entirely.  I have sovereign immunity at work for malpractice.   They could go after I guess our car with 80K miles on it??? a savings account with $2500?

    I know it seems maybe rather silly to ask, but does it make sense to raise the umbrella or given what protections our state provides or just keep everything status quo. (we have no life/disability at this point and the lowest coverage I can on our home without dropping it altogether)….

    This is my coffee money we are talking…the county I work in (not live in thankfully) raised the sales tax so now my coffee fund needs to be larger. lol. Priorities……

     

     

     

    #180267 Reply
    CordMcNally CordMcNally 
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    I probably would. If it’s on your mind, it’s something you’ve been worrying about. There are a lot of expensive vehicles on the roads these days and an ICU stay for a family isn’t cheap. The icing on the cake is that it is only $200 more. I don’t know if I’ve ever heard a bad story about someone being over-insured. On the other hand, bad stories about being under-insured…

    “But investing isn’t about beating others at their game. It’s about controlling yourself at your own game.”
    ― Benjamin Graham, The Intelligent Investor

    #180269 Reply
    Pharmvest Pharmvest 
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    I would probably add up my actual net worth and subtract out everything that is protected and figure out how much money you actually have at risk.  If it’s less than $1 million, why up it?  If it’s more than $1million, I’d probably get more

     

    Jason

    #180274 Reply
    Avatar treesrock 
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    You’re debating on whether an additional $200 yearly premium is worth it, when it will clearly give you better peace of mind?  Hell if its just an extra $200 per million increase, just bump it up to 3-million for good measure so you don’t spend another second thinking about this for a few more years.

    #180280 Reply
    Liked by Craigy
    Avatar G 
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    I like coffee too.

    Can you have a judgment that garnishes future wages?

    Like Jim has said, I think I’d be happy with my insurance company fighting for me to save their dollars – so the bigger the policy the better in that regard.

    I recently upped mine to 4 or 5MM. Interesting to hear about your rate going up with the your kids behind the wheel; I have a few more years to worry about that.

    #180283 Reply
    portlandia portlandia 
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    The following article mentions that “13% of personal injury liability awards and settlements are $1 million or more.” Most of this 13% were between 1-2M as I recall from another article that I cannot find at the moment. Based on that alone, would probably be worth it to increase to at least 2M. It is also my understanding that future wages can be at risk in a suit, not just assets. Would love to hear what some of the attorneys lurking have to say about this.

    https://www.forbes.com/sites/ashleaebeling/2012/03/05/the-1-fear-being-sued-but-shun-umbrella-insurance/#52ee2fb61669

     

    #180292 Reply
    Liked by Anne
    Avatar jhwkr542 
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    Yes, I would increase it to $2MM.  I’d consider upping it more depending on your unprotected assets.

    #180293 Reply
    Avatar Anne 
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    Status: Physician
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    I apologize in advance for this morbid example.  For some reason I am really good at thinking up bad examples happening to people.

    Let’s say you cause an accident.  You are driving, your spouse is in the passenger seat.  Your spouse dies.  The other driver sustains a cervical spine cord injury.  I would imagine (but could be wrong) that tenants in entirety no longer helps with asset protection.

    I would up it.  I pretty much always think trading money for not worrying is worth it though.

    #180295 Reply
    Liked by Tim
    Avatar Larry Ragman 
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    Status: Other Professional
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    Joined: 08/30/2018

    I have been mulling the same basic issue. I carry a million in umbrella coverage on top of home, auto, and “fire” insurance on the rental properties. My exposure outside retirement accounts is $1.5M, so I’m planning on upping the umbrella to $2M but have been procrastinating. Youngest is working and just moved out “for good” so I am going to have him pick up his own car insurance. Should cover the delta. Thanks for the motivating post.

    #180303 Reply
    Liked by Tim
    Avatar bean1970 
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    It is also my understanding that future wages can be at risk in a suit, not just assets.

    Click to expand…

    we are on the edge of retirement…so wages will be a thing of the past. our pensions are protected.

     

    thanks everyone!

    my feeling is i will just up it…the hopes are dropping my kid off policies over the years eventually will decrease the premium to basically what we are paying for 1 mil now and then i’ll have 2 million for that amount.

    #180317 Reply
    Liked by hatton1
    Avatar angeladiaz99 
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    I apologize in advance for this morbid example.  For some reason I am really good at thinking up bad examples happening to people.

    Let’s say you cause an accident.  You are driving, your spouse is in the passenger seat.  Your spouse dies.  The other driver sustains a cervical spine cord injury.  I would imagine (but could be wrong) that tenants in entirety no longer helps with asset protection.

    I would up it.  I pretty much always think trading money for not worrying is worth it though.

    Click to expand…

    If one spouse dies, you lose tenants by the entirety protection.

    In this example, even if one spouse doesn’t die, I believe tenants by the entirety doesn’t provide ironclad protection.

    If the car is registered in both the driving spouses names, assets are at risk.

    Another example I can see a slimy lawyer using would be non-driving spouse distracts driving spouse. Driving spouse causes accident. Both spouses are named in the suit and once again, tenants by the entirety protection is nullified.

    #180318 Reply
    Avatar Steven Podnos MD CFP 
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    I’d go with much more insurance.  A liability claim can be for millions today.  Why not have plenty of “cheap” risk sharing.

     

    Two additional points:  A large policy might attract a larger lawsuit-which may also be the case with malpractice insurance.  But I don’t think that’s a good enough reason not to have the larger policy.  Conversely, if the insurance company has much higher liability, they will be more motivated to provide the best defense counsel and to settle earlier in some cases.

    During my years of medical practice I started with 2M coverage and increased it to 5 million (about 1100 dollars a year cost) when I had teenage drivers.  I still have the same 5 million coverage now.

    #180366 Reply
    Craigy Craigy 
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    Seems like good value for money compared to the $700 for $1M.

    If I had more than $2M of assets, and was happy paying $700 for $1M of umbrella, I’d be happier paying $900 for $2M.  At least I think I would be.  🙂

    LEVEL 1 WCI FORUM MEMBER.

    #180519 Reply
    Avatar afan 
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    I am not a lawyer and I don’t know Florida law.

    Tenants by the entirety protection does require a married couple. If death or divorce leave you single then you don’t have that protection. I gather FL recognized TBE for financial accounts and other property. In some states TBE applies only to the family residence.

    For your home, you probably have a homestead protection that does not depend on marital status.

    For the cost of one year’s premium you could consult with an asset protection lawyer and get an informed opinion about your level of exposure. That lawyer should also have expert knowledge about the nature and level of risk you face. Then you can make a decision about the role of umbrella insurance.

    I don’t live in FL, but that would be a very high price for that level of coverage in my state, which is considered quite plaintiff friendly. Whatever you decide about the amount of coverage, you may want to shop. Usually umbrella is cheapest when bundled with home and auto. But currently my work offers an umbrella option that is much cheaper then what we were paying for a policy bundled with our home and auto.

     

    #180786 Reply
    Avatar bean1970 
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    Status: Physician
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    Joined: 07/12/2017
    Click to expand…
    Tenants by the entirety protection does require a married couple. If death or divorce leave you single then you don’t have that protection

    Click to expand…

    i get the TBE..if one of us dies….i (or he) would just readdress coverage then…everything would change and you would have to get a new policies anyways (there would be one less car, one less driver, one less person)….i am no insurance expert but I would assume the policy premiums would drop insuring one liability vs two. Though the marriage discount is gone…..

    yes.  cost of living is cheap in FL…everything except insurance.    ours is bundled with our auto.  most of the large carriers in FL don’t offer home insurance so we use a company for our home which does FL home only so can’t bundle anything else with that.  our auto/umbrella is with USAA.  i’ve shopped around for cheaper auto and haven’t been able to stumble on anything cheaper. With no claims, clean driving record, and credit score >830 and being a USAA customer all these years they continue to have the lowest premium which is sooooo much higher compared to when we lived in a different state other than FL.

    we had an asset protection consultation with a firm and they didn’t seem to think there was anything wrong with our umbrella.

    #180830 Reply
    Liked by hatton1

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