Do you have a catastrophic liability umbrella policy?

[Ginevra]

It's not something I thought about before but now that I am working in a law firm that deals with personal injuries and torts, I am 100% positive I am going to add this to our insurance plan. A million dollar umbrella plan for catastrophes that happen with your home, auto or person can be had for $120 or so per year. That seems wise. 

[1234]

Dh started his career as a property and casualty insurance actuary, and has always been adamant we have it. 

[TravelingChris]

Yes, we do.  

[Amethyst]

Yes

[Corraleno]

Yup

 

[Katy]

Yes. And it was only $3 more to triple the coverage from one million to three. 

[NorthwestMom]

I have had one for years. 

[EKS]

Yes.

[Frances]

Yes, for many years.

[amiesmom]

Um, I feel dumb for asking this, but is this something I would add to my homeowner's insurance policy, or would one buy this separately?

[SoCal_Bear]

You buy it separately from your homeowner's policy. The current insurer can sell you this policy. I carry enough to protect our total net worth.

 

[SoCal_Bear]

This might help you understand how umbrella coverage works. https://www.fidelity.com/viewpoints/wealth-management/do-you-need-umbrella-insurance

In fact, I carry a business umbrella policy and a personal umbrella policy.

Edited December 9, 2020 by calbear

[katilac]

Yes 

[Trilliumlady]

Call me the dunce of the bunch, but why would this be extra important in addition to current life insurance?

[BusyMom5]

Yes

[Frances]

24 minutes ago, Trilliumlady said:

Call me the dunce of the bunch, but why would this be extra important in addition to current life insurance?

It has nothing to do with life insurance. It’s for claims or lawsuits that exceed your auto or homeowner’s insurance.

https://www.investopedia.com/articles/personal-finance/040115/how-umbrella-insurance-works.asp
 

[Carol in Cal.]

Yes, and am considering increasing it.

[Guest]

6 hours ago, Trilliumlady said:

Call me the dunce of the bunch, but why would this be extra important in addition to current life insurance?

As Frances said, it is totally separate from life insurance. It is to protect your owned assets if you are in a legal battle whose damages value exceeds your insurance limits. 

Don’t feel dumb; I didn’t know about this either. 

[kbutton]

Yes. Our financial adviser put that on our to-do list. She said we're in the category of not having enough money to survive a law suit and having just enough to make it worthwhile for someone to file one. 

[Miss Tick]

We have friends who were involved in a minor accident. At some point the plaintiff discovered they had an umbrella policy and somehow the amount they were sued for was magically close to the policy limit. It bothered their rule-following hearts, but I guess that is how the system works.

[hs03842]

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Edited December 18, 2020 by hs03842

[Ditto]

Yes, we do.

[TravelingChris]

2 hours ago, SusanC said:

We have friends who were involved in a minor accident. At some point the plaintiff discovered they had an umbrella policy and somehow the amount they were sued for was magically close to the policy limit. It bothered their rule-following hearts, but I guess that is how the system works.

Yes, that may happen but what is worse for us is my dh has a retirement check and good income.  Without this, I could easily see them going after us for future earnings and retirement.

[Anne]

Yes, we do.

 

[Toocrazy!!]

We do now. Didn’t have one for a long time when we should have. Finally someone I was on a nonprofit board with recommended it. 

[Bambam]

The quotes we've gotten have been much more than $120/year. Much more. 

 

[Guest]

5 hours ago, SusanC said:

We have friends who were involved in a minor accident. At some point the plaintiff discovered they had an umbrella policy and somehow the amount they were sued for was magically close to the policy limit. It bothered their rule-following hearts, but I guess that is how the system works.

Yes, I can see it happening that way, but better that then the opponents finding out your house is mortgage-free, worth upwards of $700k, and then - poof! Magically increased demand for settlement. At least tapping the umbrella policy makes it make sense. 

Anyway, I am thinking of getting an umbrella for $1-3 million. It would be pretty hard for a lawyer to trump up a claim in the millions. 

[Guest]

5 hours ago, JoyKM said:

Due to this post we purchased one last night through our insurance provider--thank you!  

I’m so glad! 

🙂

[Guest]

25 minutes ago, Bambam said:

The quotes we've gotten have been much more than $120/year. Much more. 

 

Do you have home an auto bundled under one carrier? Do you have minimal limits on your regular policies? Those are things that I guess could change your quote. Or else if you have considerable exposure that makes you a high liability risk. 

[kbutton]

6 minutes ago, Quill said:

Do you have home an auto bundled under one carrier? Do you have minimal limits on your regular policies? Those are things that I guess could change your quote. Or else if you have considerable exposure that makes you a high liability risk. 

I think state laws can make a difference too. I have heard they do with auto rates.

[Bambam]

1 hour ago, Quill said:

Do you have home an auto bundled under one carrier? Do you have minimal limits on your regular policies? Those are things that I guess could change your quote. Or else if you have considerable exposure that makes you a high liability risk. 

I believe the deductibles you carry and what coverage you have can change the quote. Yes, we do have auto & home with one carrier. 

[TarynB]

6 hours ago, Quill said:

Yes, I can see it happening that way, but better that then the opponents finding out your house is mortgage-free, worth upwards of $700k, and then - poof! Magically increased demand for settlement. At least tapping the umbrella policy makes it make sense. 

Anyway, I am thinking of getting an umbrella for $1-3 million. It would be pretty hard for a lawyer to trump up a claim in the millions. 

If there's a car wreck resulting in a life-changing injury requiring intensive or long-term medical care, or the death of a breadwinner, it isn't so far out of the realm of possibility to face a million dollar-plus lawsuit, esp. if fault is clear (it happens). In terms of health care costs, a million dollars isn't what it used to be, unfortunately. But I've been told anecdotally that if you have an umbrella policy for $1 million or more, your insurance company is much more likely to have their lawyers fight for your/their side, vs. them just paying out on a regular (small) auto policy and walking away, which leaves you as an individual in a lurch. That makes sense to me. Very smart to have good umbrella coverage if you can swing it at all. Especially if you have a young/inexperienced driver in your family, as we do. (Putting kid on their own policy and/or having their car in kid's name doesn't cut it, at least in my state. They look at who supports the kid and pays their living expenses too, and come after that person as the "responsible" individual.)

Edited December 10, 2020 by TarynB

[Guest]

4 hours ago, TarynB said:

If there's a car wreck resulting in a life-changing injury requiring intensive or long-term medical care, or the death of a breadwinner, it isn't so far out of the realm of possibility to face a million dollar-plus lawsuit, esp. if fault is clear (it happens). In terms of health care costs, a million dollars isn't what it used to be, unfortunately. But I've been told anecdotally that if you have an umbrella policy for $1 million or more, your insurance company is much more likely to have their lawyers fight for your/their side, vs. them just paying out on a regular (small) auto policy and walking away, which leaves you as an individual in a lurch. That makes sense to me. Very smart to have good umbrella coverage if you can swing it at all. Especially if you have a young/inexperienced driver in your family, as we do. (Putting kid on their own policy and/or having their car in kid's name doesn't cut it, at least in my state. They look at who supports the kid and pays their living expenses too, and come after that person as the "responsible" individual.)

That’s not what I’m saying. I was responding to someone who said a “minor accident” suddenly turned into one that magically tapped the umbrella limits. So, it was trumped up. 

Of course a catastrophic accident can result in a million-dollar claim; that’s why I put up this post in the first place. I now see what happens when someone with policy minimums is catastrophically affected. I didn’t know about that previously. 

[Miss Tick]

13 hours ago, Quill said:

Yes, I can see it happening that way, but better that then the opponents finding out your house is mortgage-free, worth upwards of $700k, and then - poof! Magically increased demand for settlement. At least tapping the umbrella policy makes it make sense. 

Anyway, I am thinking of getting an umbrella for $1-3 million. It would be pretty hard for a lawyer to trump up a claim in the millions. 

Yes, this was the decision we made too.

And yes, the accident sounded very, very minor. Fender bump at elementary school parking lot speed.

7 hours ago, TarynB said:

Especially if you have a young/inexperienced driver in your family, as we do.

We are bracing for 2 young drivers in the next 12 months. I hadn't thought about this aspect yet.

[marbel]

3 hours ago, SusanC said:

Yes, this was the decision we made too.

And yes, the accident sounded very, very minor. Fender bump at elementary school parking lot speed.

We are bracing for 2 young drivers in the next 12 months. I hadn't thought about this aspect yet.

Adding young drivers will almost certainly add to it.  

As for premiums in general, that varies so much due to so many factors, I would never assume that what someone else is paying has anything to do with what I might pay. 

[TarynB]

8 hours ago, Quill said:

That’s not what I’m saying. I was responding to someone who said a “minor accident” suddenly turned into one that magically tapped the umbrella limits. So, it was trumped up. 

Of course a catastrophic accident can result in a million-dollar claim; that’s why I put up this post in the first place. I now see what happens when someone with policy minimums is catastrophically affected. I didn’t know about that previously. 

I understand your point. 

But whether the suit is trumped up or not doesn't really matter. What matters is who wins in court.

ETA: And I totally agree with you about the importance of umbrella policies. That's why I added some add'l points for others to consider. Not enough folks take advantage of them. 😊

Edited December 10, 2020 by TarynB

[Miss Tick]

1 hour ago, marbel said:

Adding young drivers will almost certainly add to it. 

Premiums will go up for sure, but no affect to the umbrella policy, right? Or are you saying that i should increase that at the same time?

[Melissa in Australia]

Our house insurance has it automatically. Not as an extra. 

Here in Australia traffic injury insurance is paid by every car owner as part of car registration. And covers all medical for anyone hurt by a car, motorbike, truck etc. 

[TravelingChris]

3 minutes ago, Melissa in Australia said:

Our house insurance has it automatically. Not as an extra. 

Here in Australia traffic injury insurance is paid by every car owner as part of car registration. And covers all medical for anyone hurt by a car, motorbike, truck etc. 

Your country is probably not as litigious as ours.  Umbrella insurance is top off insurance.  With my umbrella insurance, I already have to have a certain fairly high traffic policy.  It isn't necessarily even for real damages.  People hear have been sued for completely minor things for very high sums.  It is meant to protect your assets and future earnings because people do get 1 million dollar judgements and more against private parties.  It is to help protect against that kind of horror.

[marbel]

10 hours ago, SusanC said:

Premiums will go up for sure, but no affect to the umbrella policy, right? Or are you saying that i should increase that at the same time?

Adding new drivers adds additional liability, so sure, premiums may go up. Your insurance agent can tell you if you have enough coverage or not.