Poll

What do you do when it comes to umbrella coverage?

I/we don't have an umbrella policy.
I/we have $1 million in umbrella coverage.
I/we have $2 million in umbrella coverage.
I/we have $3 million in umbrella coverage.
I/we have $4 million in umbrella coverage.
I/we have $5 million or more in umbrella coverage.
I/we would never waste our money on an umbrella policy.

Author Topic: Do you have an umbrella policy?  (Read 2355 times)

Omy

  • Handlebar Stache
  • *****
  • Posts: 1727
Do you have an umbrella policy?
« on: October 23, 2019, 07:10:11 AM »
I'm in the process of evaluating all of the insurance coverage we carry, and I'm curious what others are doing in this area. We have 2 rental units, fairly conservative driving habits, haven't been sued so far (knock on wood) and are just recently FIRE'd at ages 52 and 57 with no kids or pets.

We've had an umbrella policy for years, but I'm wondering if I should increase coverage, leave it the same, or drop it (if enough of you think I was bamboozled into purchasing this coverage in the first place). If this is something you carry, is your coverage limit related to your net worth? How did you choose your coverage limit?

Your answers and thoughts are much appreciated!
« Last Edit: October 23, 2019, 12:48:03 PM by Omy »

BeanCounter

  • Handlebar Stache
  • *****
  • Posts: 1755
Re: Do you have an umbrella policy?
« Reply #1 on: October 23, 2019, 07:17:23 AM »
 For those HNW individuals an umbrella policy is very important and often overlooked. Whereas life insurance might be a complete waste of money (depending on your situation) yet it seems everyone has that.

hops

  • Bristles
  • ***
  • Posts: 393
  • Location: United States
Re: Do you have an umbrella policy?
« Reply #2 on: October 23, 2019, 08:18:38 AM »
Our current policy is $1 million, but we're shopping around for more. We're in our thirties and for now our main concern is protecting future earnings. We're not currently HNW but should be there within about four years, barring catastrophic illness or injury.

GoCubsGo

  • Bristles
  • ***
  • Posts: 385
Re: Do you have an umbrella policy?
« Reply #3 on: October 23, 2019, 08:45:09 AM »
I own 2 rentals and have 2 driver age children (I assume they are covered but I should check).  I have $1 million policy and am HNW.  No real calculation went into the amount it was what my agent suggested .  I would never not have an umbrella with rentals but I've not seen a net worth to umbrella calculator out there.  If I drop my life insurance (which I've thought about recently), I may put that towards a larger umbrella policy.

herbgeek

  • Bristles
  • ***
  • Posts: 252
Re: Do you have an umbrella policy?
« Reply #4 on: October 23, 2019, 08:52:32 AM »
We have enough insurance to cover our assets.  I think umbrella insurance is very necessary if you have a large portfolio.

SpareChange

  • Pencil Stache
  • ****
  • Posts: 707
Re: Do you have an umbrella policy?
« Reply #5 on: October 23, 2019, 09:26:30 AM »
Nope. Don't think it makes sense in my case. I don't have any rentals, nor do I own a home. No dogs either. My financial status is not obvious from looking at my car or apt. My apt requires a small liability policy, so I do have that, although not with the same company as my auto insurance due to cost. Also, in Tx my understanding is that wages can't be garnished except for child support, alimony, student loans, or taxes. I did recently raise my auto liability limits, however.

BECABECA

  • Bristles
  • ***
  • Posts: 482
  • Age: 42
  • Location: Costa Mesa, CA
  • Retired since July 2017, not bored yet!
Re: Do you have an umbrella policy?
« Reply #6 on: October 23, 2019, 09:56:22 AM »
We got an umbrella policy when we had rental properties and got it at 2m since our net worth was just under that. Now we no longer own rental properties but we still own our home and we still drive one car and we still have two dogs. Our net worth is now nearly 2.5m and I haven’t upped the coverage to 3m yet. Not sure if I will... I felt that the rental property was the main reason to have umbrella.

WSUCoug1994

  • Pencil Stache
  • ****
  • Posts: 537
  • Location: Bay Area, California
Re: Do you have an umbrella policy?
« Reply #7 on: October 23, 2019, 09:57:26 AM »
Umbrella insurance is so incredibly cheap - I don't think there is a valid excuse for not having it.  A lot of things can happen that are out of your control that can easily exceed your regular insurance. 

honeybbq

  • Handlebar Stache
  • *****
  • Posts: 1468
  • Location: Seattle
Re: Do you have an umbrella policy?
« Reply #8 on: October 23, 2019, 12:37:12 PM »
We have a 2mil policy. It's a couple hundred bucks a year.
We own a home, we both drive. Anything can happen.
I shy away from even more, because I figure whatever the case is, my regular insurance (e.g. car) + umbrella will be enough. And if it's not, well, 5 mil ain't gonna be enough either.

ericrugiero

  • Pencil Stache
  • ****
  • Posts: 740
Re: Do you have an umbrella policy?
« Reply #9 on: October 23, 2019, 01:01:43 PM »
We just recently purchased one because we are starting to get into real estate investing and building net worth to the point that it seems "worth it".  Definitely a good idea for people with a high enough net worth.  Retirement accounts are more protected so I'd be more worried about protecting taxable accounts or real estate etc. 

Fuzz

  • Bristles
  • ***
  • Posts: 421
Re: Do you have an umbrella policy?
« Reply #10 on: October 23, 2019, 03:55:07 PM »
Short answer: carry the insurance. We carry it mostly because we have a rental, home equity and investments.

For a formula, think about it relative to the size of the mistake you could make and your assets. It's relatively rare to cause 5M in damage to someone, but 1-2M is more common. That said, I doubt the difference between 2M in coverage and 5M in coverage is that much. If you have over 500K in assets, I'd carry 2M in coverage. If you have over 2M, I'd consider more like 5M in coverage.

sailinlight

  • Bristles
  • ***
  • Posts: 353
Re: Do you have an umbrella policy?
« Reply #11 on: October 23, 2019, 04:01:22 PM »
I'd like to further OP's question and ask if anyone has actually used their umbrella insurance? What was the experience like?

Mgmny

  • Pencil Stache
  • ****
  • Posts: 996
  • Age: 33
  • Location: East Side of MSP
Re: Do you have an umbrella policy?
« Reply #12 on: October 24, 2019, 11:13:30 AM »
i recommend umbrella to everyone with a positive net worth JUST because of the legal fees. I pay $15 a month to have access to a team of corporate lawyers in case i ever get sued. Over 30 years, it's only like $5,000.

1 lawsuit could cost 10x that much in legal fees, and I have an entire insurance company's legal team to work for me in case something happens.

Omy

  • Handlebar Stache
  • *****
  • Posts: 1727
Re: Do you have an umbrella policy?
« Reply #13 on: October 24, 2019, 11:19:55 AM »
Thanks so much for all of the input so far. I bumped it up to $2 million today based on your responses. I am also curious...has anybody here had cause to "use" their policy?

Gyosho

  • Stubble
  • **
  • Posts: 148
  • Location: us-west-1
Re: Do you have an umbrella policy?
« Reply #14 on: October 28, 2019, 10:57:17 AM »
I don't have a car. I buy the supplemental liability insurance whenever I rent a car; that covers me for up to $1,000,000.

I don't own any rentals.

I have condo insurance for my small condo unit, as well as the larger homeowner's association insurance.

I feel adequately covered.