@ysette9
I understand what you are saying. I did do an online quote for my insurance. The agent is in the town my oldest works in (actually right next door) so I stopped in to verify the online quote. It did show that I can actually increase my liability insurance and still pay $90/month less. He also recommended a $1,000,000 umbrella policy that would be $126/year. Do people recommend these umbrella policies? He explained to me that IF something were to happen that they could come after my teacher retirement pension, my 403b, and my wife's 401k. Is this accurate?
This is a hard question to answer and honestly depends on your risk/fear tolerance. Insurance companies make money. They make a lot of money selling any product they can. Chances are high that you are probably throwing your $126 a year down the drain. Let us assume that your liability insurance at $90 a month covers 25k personal injury 25k property. Chances are that you won't cause a major at-fault car accident. If you do, then the 25k property will only partially pay for the other persons new car (since most cars are >25k). If you hit other property, then the out of pocket expenses could be even greater. Also chances are that with health insurance that the 25k personal injury would be enough to cover the immediate medical expenses (ambulance, ER visit, etc). At this point you have a high probability of coming out financially ok.
Now here comes the umbrella. They typically go in 1 mil increments. The person you injured is a specialized doctor (400k/year) who can't work for 3 months due to your accident. The umbrella would pay him 100k work loss plus medical bills. You are relieved.
Now lets say the person you injured is a seasonal athlete who can't work for 3 months. He gets paid 10mil a season. Your insurance covers 1mil, and you are on the hook for 9mil. You are not relieved.
In a third scenario, you injure an average worker for 3 months at 40k/year. Your auto insurance covers the 10k from work loss.
In only one scenario above out of three highly unlikely scenarios does umbrella pay off.
Stats are all over the board, but in the US 37k people die and 2-3million are injured each year. Most of those deaths are alcohol/speeding/traffic infraction (red light running, texting/driving, etc) related. Chances are you will not cause a car accident death or be held liable. If you are, the average cost to you averages over 1million (more than umbrella). A disabling injury typically costs between 25k-100k (hardly worth umbrella), and a typical injury costs <20k (not covered by umbrella).
Unless you are extraordinarily uncomfortable with improbably events (likely <1 in 10,000, but someone should check those numbers), then you are wasting your money.
In your calculations you might want to keep in mind there is a minimum amount of coverage required before you can get an umbrella policy.
"In most states, umbrella insurance applicants must have a homeowners policy with a minimum of $300,000 in personal liability coverage, plus an auto policy with limits of $250,000 or $500,000 for bodily injury coverage and $100,000 for property damage coverage and uninsured/underinsured motorist coverage (or a single limit of $300,000)."
I think I heard a rule that you want as much insurance as you have in assets.
You also might want to check and see what assets can be taken if you are ever sued. I thought a 401k has more protections against being sued as well as your primary residence.
It could be a choice to not have an umbrella policy even if you have assets as long as they are mostly in a 401k and primary residence, of course I'm not 100% sure on these and it might be good to have just in case, but they might be things to take into consideration.