Race from $2M to $4M...and Beyond!

[tooqk4u22]

You buy insurance for the risks you can't handle yourself.   

For most people, it's unlikely their house will burn down or be destroyed by a weather event.  So, why buy insurance on it?  It's the exact same question as you're asking.

Interesting.  Are there people in this thread who don't carry home insurance?  I suspect this question will start to come up more often as premiums continue to rise. 

If it was just a matter of replacing my house, I might not carry insurance.  I have such a high deductible that I am unlikely to ever make much of a claim.  the reason I keep the insurance is for the liability coverage.  It is the same with cars.  I don't bother with collision.  I can afford to replace my cars, but the liability insurance is what I want (and the law requires).

How high is your home insurance deductible?  Ours is 5k.  I hadn't thought of needing liability coverage for a house.

Deductibles are kind of a funny thing.  If I had a $1,000 deductible and an incident of $1,500 I would probably pay out of pocket, and similar with a $5k deductible if it were a $7k claim so as not to get insurance jacked - as it always makes sense to spend an extra $2k just to see your insurance go up by $2k.   

[TempusFugit]

You buy insurance for the risks you can't handle yourself.   

For most people, it's unlikely their house will burn down or be destroyed by a weather event.  So, why buy insurance on it?  It's the exact same question as you're asking.

If it was just a matter of replacing my house, I might not carry insurance.  I have such a high deductible that I am unlikely to ever make much of a claim.  the reason I keep the insurance is for the liability coverage.  It is the same with cars.  I don't bother with collision.  I can afford to replace my cars, but the liability insurance is what I want (and the law requires).

How high is your home insurance deductible?  Ours is 5k.  I hadn't thought of needing liability coverage for a house.

Liability could be in the form of someone hurting themselves while working at your home or slipping on your sidewalk, or your dog biting someone, etc.  The latter being a reason some dog breeds have historically been a problem for home owners insurance. 

[jeroly]

You buy insurance for the risks you can't handle yourself.   

For most people, it's unlikely their house will burn down or be destroyed by a weather event.  So, why buy insurance on it?  It's the exact same question as you're asking.

Interesting.  Are there people in this thread who don't carry home insurance?  I suspect this question will start to come up more often as premiums continue to rise. 

For the question about umbrella, we carry a 2M policy.  It's not our whole net worth, more like half, but I figure it's good enough especially since retirement accounts are protected in my state.  Umbrella premiums inexplicably doubled this year, too, which gives me even less incentive to increase the coverage again.

I think that for many in the 'and above' grouping it may well make sense to self-insure on fire and similar risk.  In general, property / casualty insurance is priced so that the actual expected value of claims per premium dollar is only 60 cents, so you on average will save money versus paying out the premiums.  Now while this is a large value that is being put at risk, we should remember that we are not talking about the total value of your primary residence, just the replacement value of the house itself and the items within it - and in many HCOL cases, that's not even the majority of the value.  In a worst-case scenario if you are 'and above' you could absorb that loss, unpleasant though it may be - and I think that you might even be able to deduct some portion of the losses against income - but for most people taking that chance they should wind up ahead.   

There's a big 'however,' however - if you carry a mortgage on a property in almost all cases (all, AFAIK) you are required to carry homeowner's insurance on it, which includes fire coverage etc.

Moreover, as I wrote above, it's included in a homeowner's policy which may well include coverage for other risks that you don't want to absorb, such as liability against events occurring on your property.  (In fact it may be enough coverage of one's liability risks for many to decide to not get an umbrella policy.) Buying those individual pieces may wind up being more expensive than just getting the package that includes fire etc.

I once got involved in a situation where I was being sued for an event that occurred on my property and the company carrying my homeowner's insurance defended me (and won the case) and I did not even need to hire a lawyer.  They were on the hook for the whole amount, and I guess their in-house lawyers had nothing better to do than fight the case.  So I would not go out of my way to avoid getting homeowner's in the future, although I don't happen to have renter's insurance on my apartment.

[secondcor521]

You buy insurance for the risks you can't handle yourself.   

For most people, it's unlikely their house will burn down or be destroyed by a weather event.  So, why buy insurance on it?  It's the exact same question as you're asking.

Interesting.  Are there people in this thread who don't carry home insurance?  I suspect this question will start to come up more often as premiums continue to rise. 

For the question about umbrella, we carry a 2M policy.  It's not our whole net worth, more like half, but I figure it's good enough especially since retirement accounts are protected in my state.  Umbrella premiums inexplicably doubled this year, too, which gives me even less incentive to increase the coverage again.

I carry homeowner's insurance, but I have the maximum deductible allowed - $10K or something IIRC.  So I self insure for that amount and have coverage from $10K to the value of my home transferred to the insurance company.  They know I won't make any piddly claims, so my premium is quite low.

I carry $1M liability on my auto liability but have no umbrella currently because of my insurance company's stance on such policies when I have young adult offspring living in my house.  They won't write the policy to cover what I want, so I don't carry the policy.  (Yes, my pettiness may be cutting off my nose to spite my face.)

[Fomerly known as something]

I actually just decreased my umbrella policy from $5million to $2 million.  When I got it a few years ago the higher amount was incredibly cheap, less than $400.  But it increased significantly this year so I dropped it down because I don’t “need” $5 million.

[2sk22]

You buy insurance for the risks you can't handle yourself.   

For most people, it's unlikely their house will burn down or be destroyed by a weather event.  So, why buy insurance on it?  It's the exact same question as you're asking.

Interesting.  Are there people in this thread who don't carry home insurance?  I suspect this question will start to come up more often as premiums continue to rise. 

For the question about umbrella, we carry a 2M policy.  It's not our whole net worth, more like half, but I figure it's good enough especially since retirement accounts are protected in my state.  Umbrella premiums inexplicably doubled this year, too, which gives me even less incentive to increase the coverage again.

I carry homeowner's insurance, but I have the maximum deductible allowed - $10K or something IIRC.  So I self insure for that amount and have coverage from $10K to the value of my home transferred to the insurance company.  They know I won't make any piddly claims, so my premium is quite low.

I carry $1M liability on my auto liability but have no umbrella currently because of my insurance company's stance on such policies when I have young adult offspring living in my house.  They won't write the policy to cover what I want, so I don't carry the policy.  (Yes, my pettiness may be cutting off my nose to spite my face.)

I also have the maximum deductible allowed for my home insurance. I would have preferred a $10k deductible but in my case the maximum is only $2.5k My policy reads

A $2,500 deductible applies to covered perils other than hurricane-force winds from a hurricane named by The National
Weather Service, to which a $17,100 deductible applies. (This mandatory deductible is 2.00% of the Dwelling Limit shown
above). Deductible amounts will increase when the Dwelling limit is increased due to the Inflation Protection coverage. No
deductible applies to Liability losses.

[ROF Expat]

If it was just a matter of replacing my house, I might not carry insurance.  I have such a high deductible that I am unlikely to ever make much of a claim.  the reason I keep the insurance is for the liability coverage.  It is the same with cars.  I don't bother with collision.  I can afford to replace my cars, but the liability insurance is what I want (and the law requires).

How high is your home insurance deductible?  Ours is 5k.  I hadn't thought of needing liability coverage for a house.

My deductible is a little over $16,000.  It has been years since I started the policy, but as I recall, the higher deductible lowered my insurance cost enough to be worth it (to me).  The only disadvantage is that I believe in keeping my deductible amount in my general emergency fund.  My insurance company would allow me to increase the deductible up to about $40,000 but the savings in insurance cost would probably be outweighed by the opportunity cost of keeping that much money in my emergency fund. 

[BeanCounter]

You buy insurance for the risks you can't handle yourself.   

For most people, it's unlikely their house will burn down or be destroyed by a weather event.  So, why buy insurance on it?  It's the exact same question as you're asking.

Interesting.  Are there people in this thread who don't carry home insurance?  I suspect this question will start to come up more often as premiums continue to rise. 

For the question about umbrella, we carry a 2M policy.  It's not our whole net worth, more like half, but I figure it's good enough especially since retirement accounts are protected in my state.  Umbrella premiums inexplicably doubled this year, too, which gives me even less incentive to increase the coverage again.

I carry homeowner's insurance, but I have the maximum deductible allowed - $10K or something IIRC.  So I self insure for that amount and have coverage from $10K to the value of my home transferred to the insurance company.  They know I won't make any piddly claims, so my premium is quite low.

I carry $1M liability on my auto liability but have no umbrella currently because of my insurance company's stance on such policies when I have young adult offspring living in my house.  They won't write the policy to cover what I want, so I don't carry the policy.  (Yes, my pettiness may be cutting off my nose to spite my face.)

@secondcor521 can you elaborate on what they won’t cover? The biggest reason we are considering increasing the umbrella policy is because of “youthful drivers”. I want to make sure I ask the right questions. Thanks!

[BeanCounter]

I'm probably an outlier on the umbrella policy decision, many HNW folks get then because they seem incredibly inexpensive for the coverage.  I have high deductibles on my relatively inexpensive cars and home and have paid for a new roof and car repairs from an accident for my teen driver out of pocket.  The auto insurance covered the medical bills for the injured party.  I might get the umbrella if we flaunted our wealth, drove $100k+ cars, or heard of people actually using their umbrella coverage, but none of the boxes are checked for me.  I can understand the 'sleep at night' feature people pay for, but I already pay more than enough for insurance that mostly serves as a deterrent to suing us and covers a nice chunk of liability. 

I wouldn't mind being convinced that I should buy a policy, but I've also heard that it encourages people to go after a big settlement if they know you have one.

I could be wrong but I think the only way someone might know you have an umbrella policy is after they are already suing you and their attorneys are working with your insurance.

Having worked with health insurance claims, I know that it doesn’t take much for the cost of the injured parties medical bills and lost wages to rise above the auto policy limit. That’s why I buy umbrella insurance. Medical bills in excess of $1M are very real, and I don’t want to cover them with my nest egg.
There was just an example of this at a nearby University. Young driver turned into an intersection and hit another student in the crosswalk. Driver was driving a large Jeep and the pedestrian was pulled into the wheel well and trapped. Pedestrian spent 12 in brain surgery, weeks in the ICU, months in rehab and is now on outpatient rehab to learn to walk and talk again. It’s an unfortunate, unusual situation but as a parent of teen boys I feel I need insurance for. God forbid.
There are also litigious people. My DH and his friend experienced this in HS. They were in a fast food drive through and accidentally bumped the person ahead of them. They were driving an old Nissan. The boys got out of the car and once the other driver saw their private school uniforms the wheels started turning. She sued. What she didn’t know is that both boys were on academic scholarship and cleaned the school lunchroom for the rest of their tuition. They were not from wealthy families. People make crazy assumptions and try to make a buck where they can. I’d rather my insurance company deal with it than have to hire an attorney and write checks.

We do keep deductibles high, but the cost of the premiums is just the cost of doing business IMHO. I just don’t want to over insure!

[itchyfeet]

Shaking this working is proving hard

I am well and truly FI, and have no real concerns financially for the rest of my life. I have even changed my portfolio to being much more conservative as the game is won and optimizing portfolio growth is no longer the main goal. I just need to make sure I don’t lose my stash.

This week was meant to be the week that I finally gave notice, but here I am late on a Friday on the last day of the month  and I didn’t do it.

Without ggoing into an extensive explanation, my next opportunity to give notice is probably 3 months away due to various commitments and remuneration triggers.

I am very confident that this will be the last time I don’t pull the trigger, but I do feel a bit deflated at having to work for 3 months extra, even if financially it will be a nice little windfall (vesting long term incentives).

I have plenty of plans for RE life. I am really looking forward to that. But somehow my obligation and loyalty to my manager and my employees is standing in the way. I feel they are counting on me. They want me in the trenches with them.

I’m not even catholic, but I feel plenty guilty at leaving the team.

I don’t want to  be letting everyone down by  deserting them.

I guess to put a positive spin on it I do get some personal satisfaction reward from being valued and wanted.

However, Sadly, I feel a bit disappointed I didn’t put myself first when I have purchased the right to through 30+ years of steady saving and investing.

Well it’s done now (or more correctly not done). I missed the month end, and I have vente here. Haha.

I’m sure 3 months will fly by.hopefully my retirement will be long.

[2sk22]

Without ggoing into an extensive explanation, my next opportunity to give notice is probably 3 months away due to various commitments and remuneration triggers.

At my wife's company, people typically quit in May when RSUs vest. Nothing wrong with waiting for that :-)

[JGS1980]

Shaking this working is proving hard

I am well and truly FI, and have no real concerns financially for the rest of my life. I have even changed my portfolio to being much more conservative as the game is won and optimizing portfolio growth is no longer the main goal. I just need to make sure I don’t lose my stash.

This week was meant to be the week that I finally gave notice, but here I am late on a Friday on the last day of the month  and I didn’t do it.

Without ggoing into an extensive explanation, my next opportunity to give notice is probably 3 months away due to various commitments and remuneration triggers.

I am very confident that this will be the last time I don’t pull the trigger, but I do feel a bit deflated at having to work for 3 months extra, even if financially it will be a nice little windfall (vesting long term incentives).

I have plenty of plans for RE life. I am really looking forward to that. But somehow my obligation and loyalty to my manager and my employees is standing in the way. I feel they are counting on me. They want me in the trenches with them.

I’m not even catholic, but I feel plenty guilty at leaving the team.

I don’t want to  be letting everyone down by  deserting them.

I guess to put a positive spin on it I do get some personal satisfaction reward from being valued and wanted.

However, Sadly, I feel a bit disappointed I didn’t put myself first when I have purchased the right to through 30+ years of steady saving and investing.

Well it’s done now (or more correctly not done). I missed the month end, and I have vente here. Haha.

I’m sure 3 months will fly by.hopefully my retirement will be long.

So..... how itchy are those feet? More money for more of your finite time? When does that logic end?

[Josiecat22222]

+1 for ensuring the entire nest egg.

Sure you could ensure a fraction of it for 700 dollars.  But for 300 dollars more, you can have piece of mind.

We are in a similar HNW boat and have teen driver.

[BeanCounter]

Shaking this working is proving hard

I am well and truly FI, and have no real concerns financially for the rest of my life. I have even changed my portfolio to being much more conservative as the game is won and optimizing portfolio growth is no longer the main goal. I just need to make sure I don’t lose my stash.

This week was meant to be the week that I finally gave notice, but here I am late on a Friday on the last day of the month  and I didn’t do it.

Without ggoing into an extensive explanation, my next opportunity to give notice is probably 3 months away due to various commitments and remuneration triggers.

I am very confident that this will be the last time I don’t pull the trigger, but I do feel a bit deflated at having to work for 3 months extra, even if financially it will be a nice little windfall (vesting long term incentives).

I have plenty of plans for RE life. I am really looking forward to that. But somehow my obligation and loyalty to my manager and my employees is standing in the way. I feel they are counting on me. They want me in the trenches with them.

I’m not even catholic, but I feel plenty guilty at leaving the team.

I don’t want to  be letting everyone down by  deserting them.

I guess to put a positive spin on it I do get some personal satisfaction reward from being valued and wanted.

However, Sadly, I feel a bit disappointed I didn’t put myself first when I have purchased the right to through 30+ years of steady saving and investing.

Well it’s done now (or more correctly not done). I missed the month end, and I have vente here. Haha.

I’m sure 3 months will fly by.hopefully my retirement will be long.

I'm Catholic and have boat loads of guilt! ;) However, I fully believe that work doesn't love you back. You've done your time and have no obligation to anyone else.
We are all replaceable. The team will find someone else. That person will be better than you in some ways and not as good in others. Life will move on. You can always meet them for lunch and offer some moral support if needed.
I think it's a good exercise to think about your own demise. What do you want to have accomplished? What do you want people to say at your funeral? What are you NOT doing when your dedicated to the "team" and will that matter when you are dead?
Do the 3 more months, but really evaluate what your giving up for any extra days after that.

[BeanCounter]

At your level of wealth an extra $1000/year is not really something to spend much time worrying about -- it isn't going to impact your long-term financial success in any meaningful way as a budget item, and potentially it protects you in case something bad happens.

But I don't really think you need that much.  A couple of things to consider:

1)  Does your state protect certain assets?  In many states, your primary home (often deemed the "homestead" and your retirement accounts are safe.  Social security might be as well.

2) While a 5.5 mill nest egg is an amazing thing to have, do you really NEED that to live a happily FIREd life.  It would definitely suck to lose 1-2 mill in a lawsuit, but you would probably be fine on the other side financially even if you did.  So for me, I would probably only bump up the amount from 1 mill to 2 mill (because you already have some coverage through your main policies).
 

Thank you for this @lhamo!! I did not know that some (most) states protect retirement assets. I looked it up and mine protects IRAs/Roth IRAs (but not inherited IRAs). And of course the calculation tool from the insurance company didn't say anything about it.
So if I take that money out of the equation we really only need about $2.5m.
$2M policy is $567
$3M policy is $785
Both of those feel fairly reasonable to me, so we'll pick one and go with it. I feel that it's worth the cost to insure. If nothing else it gives me someone else's attorneys to fight over a potential claim.

[Fomerly known as something]

@itchyfeet unless you have to pay the company money for quitting today you aren’t locked in for 3 months.  I may or may not get a bonus just before I retire.  It really depends on when the money actually gets paid by possibly a week or month.  I’m going to retire from my job.  The bonus in the grand scheme of things means nothing to me even though it’s 7.5% of my salary.  Yeah am I leaving “a lot” of money on the table,I guess but does it matter that I am, not to my budget plans for life.

[Louise]

I’m sure 3 months will fly by.hopefully my retirement will be long.

It will fly by. I don't know where you live, but where I do, the weather in three months is glorious and something to look forward to. Don't feel too much guilt. I found that people are mostly surprised/slightly envious/happy for you and then move on.

[couponvan]

Itchyfeet. Take the next three months and pretend you are retired already and delegate/eliminate busy work from your position. Your goal is to transfer your work before your retire, and if they lay you off beforehand it’s a bonus. So practice your “XYZ person” would be better for that, and let me show you how to do that, and schedule some PTO/sick time (Dr. appts) in the next months to make sure everything is ship shape before you pull the trigger. It can take three months to get Dr. appts, so call now!

[itchyfeet]

Thanks for all the thoughts.

To be clear, my notice period is 3 months, so I’m looking down the barrel at 6 months now, as opposed to 3.

Of those 6 months, 2 would in my home in Australia and 4 abroad in France where I am expatriated.

I fly home tonight for a month. I’ll take stock of the situation.

If I make it to July there is an $80k bonus waiting, which you are right to say is not changing the grand scheme of things, but is my money :D, well with each passing month it’s closer to being my money.

Also, due to my expatriation I am currently in a situation where the company owes 2 years of my personal income taxes in Australia, which is blocked due to the slow French tax office. These back taxes are large(relevant in the grand scheme of things), and whilst should be no issue contractually, being on the ground to negotiate and push their payment is comforting.

[ATtiny85]

@itchyfeet unless you have to pay the company money for quitting today you aren’t locked in for 3 months.  I may or may not get a bonus just before I retire.  It really depends on when the money actually gets paid by possibly a week or month.  I’m going to retire from my job.  The bonus in the grand scheme of things means nothing to me even though it’s 7.5% of my salary.  Yeah am I leaving “a lot” of money on the table,I guess but does it matter that I am, not to my budget plans for life.

Yeah, I have a timeline and will give notice in a few short weeks. I set up that timing for a number of reasons, mostly personal (401k and HSA mostly, our bonuses are in December), but we also had a project schedule that would allow me to get my component to a major phase milestone (phase, milestone, looking forward to those words leaving my vocabulary). Just recently we have had to delay the program for all the normal "we suck as an organization" reasons. Well, sorry folks, I keep my timeline. I was tasked today with some work that is gong to carry into July. I just nodded...

[EscapeVelocity2020]

I'm probably an outlier on the umbrella policy decision, many HNW folks get then because they seem incredibly inexpensive for the coverage. 
...
I wouldn't mind being convinced that I should buy a policy, but I've also heard that it encourages people to go after a big settlement if they know you have one.

I could be wrong but I think the only way someone might know you have an umbrella policy is after they are already suing you and their attorneys are working with your insurance.

Having worked with health insurance claims, I know that it doesn’t take much for the cost of the injured parties medical bills and lost wages to rise above the auto policy limit. That’s why I buy umbrella insurance. Medical bills in excess of $1M are very real, and I don’t want to cover them with my nest egg.
There was just an example of this at a nearby University. Young driver turned into an intersection and hit another student in the crosswalk. Driver was driving a large Jeep and the pedestrian was pulled into the wheel well and trapped. Pedestrian spent 12 in brain surgery, weeks in the ICU, months in rehab and is now on outpatient rehab to learn to walk and talk again. It’s an unfortunate, unusual situation but as a parent of teen boys I feel I need insurance for. God forbid.
There are also litigious people. My DH and his friend experienced this in HS. They were in a fast food drive through and accidentally bumped the person ahead of them. They were driving an old Nissan. The boys got out of the car and once the other driver saw their private school uniforms the wheels started turning. She sued. What she didn’t know is that both boys were on academic scholarship and cleaned the school lunchroom for the rest of their tuition. They were not from wealthy families. People make crazy assumptions and try to make a buck where they can. I’d rather my insurance company deal with it than have to hire an attorney and write checks.

We do keep deductibles high, but the cost of the premiums is just the cost of doing business IMHO. I just don’t want to over insure!

I've always wanted to have an in depth conversation around this, especially if they had first hand information from someone relatively normal who has been 'saved' by having an umbrella policy.  Most times I hear anecdotes, it's just super-HNW people that need an umbrella to cover the ridiculous liability that they throw in people's faces by driving Bentleys and living in $10M homes, which will never pertain to me.

First off, do you know at which age the dependent becomes liable vs. the parent?  Is it 18, 21, or as long as they are dependents? 
Do umbrella providers actually pay out regularly, or are they like every other insurer and fight everything tooth and nail.  Even for our minor accident, I've had months of our auto insurance asking for every little detail.  Fortunately I paid for our own car repairs, so our rates didn't get jacked up, and the medical and damage to the other car were very minor.  As others have said, the biggest benefit of having an insurer has been the two insurance companies battling it out vs. me being on the front line or having to hire a lawyer, but I also wonder if the other party would've even bothered if they had to go after me specifically for what likely would've been a low judgement against me and would've been swallowed by the lawyers.  I have been on the other end, where the person that hit us didn't have insurance, and I had to use our own 'uninsured motorist' policy to fix our car!

Do you have any more details on if an umbrella policy paid for the medical in the case you cite and how it was resolved?  I'm also curious how other people's health insurance works in cases like this, most people have an out of pocket maximum and health insurance that should kick in...

Like I said, I could be convinced to get an umbrella policy, but then the next step is to figure out how much for.  My guess is that many umbrella holders are way over insured, both in amounts and in coverages.

[Dancin'Dog]

Many wealthy people have their assets held in trust to protect them from liability.  As trustees, they have full access and control of the assets but there is a legal separation protecting them from personal lawsuits.  Setting up a trust might be an option to consider for those discussing umbrella policies. 


Trust tax rates appear higher than personal taxes, but the taxable gains are paid as personal income on your individual return, which keeps the trust's income at zero. 

[Poundwise]

Shaking this working is proving hard

I am well and truly FI, and have no real concerns financially for the rest of my life. I have even changed my portfolio to being much more conservative as the game is won and optimizing portfolio growth is no longer the main goal. I just need to make sure I don’t lose my stash.

This week was meant to be the week that I finally gave notice, but here I am late on a Friday on the last day of the month  and I didn’t do it.

Without ggoing into an extensive explanation, my next opportunity to give notice is probably 3 months away due to various commitments and remuneration triggers.

I am very confident that this will be the last time I don’t pull the trigger, but I do feel a bit deflated at having to work for 3 months extra, even if financially it will be a nice little windfall (vesting long term incentives).

I have plenty of plans for RE life. I am really looking forward to that. But somehow my obligation and loyalty to my manager and my employees is standing in the way. I feel they are counting on me. They want me in the trenches with them.

I’m not even catholic, but I feel plenty guilty at leaving the team.

I don’t want to  be letting everyone down by  deserting them.

I guess to put a positive spin on it I do get some personal satisfaction reward from being valued and wanted.

However, Sadly, I feel a bit disappointed I didn’t put myself first when I have purchased the right to through 30+ years of steady saving and investing.

Well it’s done now (or more correctly not done). I missed the month end, and I have vente here. Haha.

I’m sure 3 months will fly by.hopefully my retirement will be long.

I'm Catholic and have boat loads of guilt! ;) However, I fully believe that work doesn't love you back. You've done your time and have no obligation to anyone else.
We are all replaceable. The team will find someone else. That person will be better than you in some ways and not as good in others. Life will move on. You can always meet them for lunch and offer some moral support if needed.
I think it's a good exercise to think about your own demise. What do you want to have accomplished? What do you want people to say at your funeral? What are you NOT doing when your dedicated to the "team" and will that matter when you are dead?
Do the 3 more months, but really evaluate what your giving up for any extra days after that.

Don't feel guilty on account of work. Somebody needs that job that you have... or the job that they are vacating.  Step out of the game of musical chairs, courteously offer your spot to another, and take a well deserved liedown.

[tooqk4u22]

Thanks for all the thoughts.

To be clear, my notice period is 3 months, so I’m looking down the barrel at 6 months now, as opposed to 3.

Of those 6 months, 2 would in my home in Australia and 4 abroad in France where I am expatriated.

I fly home tonight for a month. I’ll take stock of the situation.

If I make it to July there is an $80k bonus waiting, which you are right to say is not changing the grand scheme of things, but is my money :D, well with each passing month it’s closer to being my money.

Also, due to my expatriation I am currently in a situation where the company owes 2 years of my personal income taxes in Australia, which is blocked due to the slow French tax office. These back taxes are large(relevant in the grand scheme of things), and whilst should be no issue contractually, being on the ground to negotiate and push their payment is comforting.

Its weird that $80k isn't game changing and that's if that is what you clear, I would clear like half of that.   But yeah effectively 1-2% of the upper end of this threads band isn't game changing, especially when that can be a normal's day move in the portfolio.  Just weird.

[BeanCounter]

I'm probably an outlier on the umbrella policy decision, many HNW folks get then because they seem incredibly inexpensive for the coverage. 
...
I wouldn't mind being convinced that I should buy a policy, but I've also heard that it encourages people to go after a big settlement if they know you have one.

I could be wrong but I think the only way someone might know you have an umbrella policy is after they are already suing you and their attorneys are working with your insurance.

Having worked with health insurance claims, I know that it doesn’t take much for the cost of the injured parties medical bills and lost wages to rise above the auto policy limit. That’s why I buy umbrella insurance. Medical bills in excess of $1M are very real, and I don’t want to cover them with my nest egg.
There was just an example of this at a nearby University. Young driver turned into an intersection and hit another student in the crosswalk. Driver was driving a large Jeep and the pedestrian was pulled into the wheel well and trapped. Pedestrian spent 12 in brain surgery, weeks in the ICU, months in rehab and is now on outpatient rehab to learn to walk and talk again. It’s an unfortunate, unusual situation but as a parent of teen boys I feel I need insurance for. God forbid.
There are also litigious people. My DH and his friend experienced this in HS. They were in a fast food drive through and accidentally bumped the person ahead of them. They were driving an old Nissan. The boys got out of the car and once the other driver saw their private school uniforms the wheels started turning. She sued. What she didn’t know is that both boys were on academic scholarship and cleaned the school lunchroom for the rest of their tuition. They were not from wealthy families. People make crazy assumptions and try to make a buck where they can. I’d rather my insurance company deal with it than have to hire an attorney and write checks.

We do keep deductibles high, but the cost of the premiums is just the cost of doing business IMHO. I just don’t want to over insure!

I've always wanted to have an in depth conversation around this, especially if they had first hand information from someone relatively normal who has been 'saved' by having an umbrella policy.  Most times I hear anecdotes, it's just super-HNW people that need an umbrella to cover the ridiculous liability that they throw in people's faces by driving Bentleys and living in $10M homes, which will never pertain to me.

First off, do you know at which age the dependent becomes liable vs. the parent?  Is it 18, 21, or as long as they are dependents? 
Do umbrella providers actually pay out regularly, or are they like every other insurer and fight everything tooth and nail.  Even for our minor accident, I've had months of our auto insurance asking for every little detail.  Fortunately I paid for our own car repairs, so our rates didn't get jacked up, and the medical and damage to the other car were very minor.  As others have said, the biggest benefit of having an insurer has been the two insurance companies battling it out vs. me being on the front line or having to hire a lawyer, but I also wonder if the other party would've even bothered if they had to go after me specifically for what likely would've been a low judgement against me and would've been swallowed by the lawyers.  I have been on the other end, where the person that hit us didn't have insurance, and I had to use our own 'uninsured motorist' policy to fix our car!

Do you have any more details on if an umbrella policy paid for the medical in the case you cite and how it was resolved?  I'm also curious how other people's health insurance works in cases like this, most people have an out of pocket maximum and health insurance that should kick in...

Like I said, I could be convinced to get an umbrella policy, but then the next step is to figure out how much for.  My guess is that many umbrella holders are way over insured, both in amounts and in coverages.

I do not have any more details on the accident. Even if they aren't malicious, the victim's family's  medical bills for at least the next year, possibly forever will be so high that they may have to sue.
I can tell you from my experience working in health insurance finance that your health insurance does not cover the cost of claims caused by an accident. They WILL 100% subrogate those claims to your auto or homeowners insurance (depending on the type of accident). And if you hit your limits on either of those, then you pay the bills.

[BeanCounter]

Many wealthy people have their assets held in trust to protect them from liability.  As trustees, they have full access and control of the assets but there is a legal separation protecting them from personal lawsuits.  Setting up a trust might be an option to consider for those discussing umbrella policies. 


Trust tax rates appear higher than personal taxes, but the taxable gains are paid as personal income on your individual return, which keeps the trust's income at zero.

I am looking into this, but more for future generations than current. But the ordinary income is a factor and there are fees for the trust's existence. Those factors easily exceed the cost of the umbrella premium.

[Dancin'Dog]

Many wealthy people have their assets held in trust to protect them from liability.  As trustees, they have full access and control of the assets but there is a legal separation protecting them from personal lawsuits.  Setting up a trust might be an option to consider for those discussing umbrella policies. 


Trust tax rates appear higher than personal taxes, but the taxable gains are paid as personal income on your individual return, which keeps the trust's income at zero.

I am looking into this, but more for future generations than current. But the ordinary income is a factor and there are fees for the trust's existence. Those factors easily exceed the cost of the umbrella premium.

The attorney fees for establishing the trust & getting an EIN are a one-time cost.  The only ongoing cost is for filing an additional tax return. 


Trusts also avoid the headaches of dealing with the probate court when you pass.  Your financial affairs remain private. 


A few years ago, while researching the local real estate market I noticed that a high percentage of homes over a certain price were held in trusts.  I'd never thought about it before, but it makes sense.  Although we can't publically see it, many investment portfolios are also held in trusts. 

[Geppetto]

Really interesting discussion here. I'm a huge proponent of the $5MM umbrella policy, for anyone with assets even at a fraction of that amount. I want no plaintiff's attorney ever even having impure thoughts about my assets, let alone coming after them.

Revocable trusts (the kind it sounds like is being described above) don't do any good for liability protection, since your legal right to invade the trust can be marshalled by creditors. If you live in a state where "avoiding probate" is a worthwhile objective, they can be useful. But far too many people get set up with a revocable trust and think they've accomplished something relative to asset protection. And thereby pay nowhere near enough attention to their array of insurance armor.

[BeanCounter]

Many wealthy people have their assets held in trust to protect them from liability.  As trustees, they have full access and control of the assets but there is a legal separation protecting them from personal lawsuits.  Setting up a trust might be an option to consider for those discussing umbrella policies. 


Trust tax rates appear higher than personal taxes, but the taxable gains are paid as personal income on your individual return, which keeps the trust's income at zero.

I am looking into this, but more for future generations than current. But the ordinary income is a factor and there are fees for the trust's existence. Those factors easily exceed the cost of the umbrella premium.

The attorney fees for establishing the trust & getting an EIN are a one-time cost.  The only ongoing cost is for filing an additional tax return. 


Trusts also avoid the headaches of dealing with the probate court when you pass.  Your financial affairs remain private. 


A few years ago, while researching the local real estate market I noticed that a high percentage of homes over a certain price were held in trusts.  I'd never thought about it before, but it makes sense.  Although we can't publically see it, many investment portfolios are also held in trusts.

Your assets don't have to be in a trust to avoid probate. A simple TOD will work. So long as the distribution of the assets to heirs is straightforward and tight.
There are lots of trusts out there because attorney's are in the business of convincing everyone that they need one. But you often don't.

[secondcor521]

You buy insurance for the risks you can't handle yourself.   

For most people, it's unlikely their house will burn down or be destroyed by a weather event.  So, why buy insurance on it?  It's the exact same question as you're asking.

Interesting.  Are there people in this thread who don't carry home insurance?  I suspect this question will start to come up more often as premiums continue to rise. 

For the question about umbrella, we carry a 2M policy.  It's not our whole net worth, more like half, but I figure it's good enough especially since retirement accounts are protected in my state.  Umbrella premiums inexplicably doubled this year, too, which gives me even less incentive to increase the coverage again.

I carry homeowner's insurance, but I have the maximum deductible allowed - $10K or something IIRC.  So I self insure for that amount and have coverage from $10K to the value of my home transferred to the insurance company.  They know I won't make any piddly claims, so my premium is quite low.

I carry $1M liability on my auto liability but have no umbrella currently because of my insurance company's stance on such policies when I have young adult offspring living in my house.  They won't write the policy to cover what I want, so I don't carry the policy.  (Yes, my pettiness may be cutting off my nose to spite my face.)

@secondcor521 can you elaborate on what they won’t cover? The biggest reason we are considering increasing the umbrella policy is because of “youthful drivers”. I want to make sure I ask the right questions. Thanks!

It's not what they won't cover, exactly.  It's rather that the coverage they offer is not the coverage I want.

Right now I am 55, FIRE, paid off home, IRAs, taxable, etc.  I don't have a wild lifestyle but would like to protect my net worth.

I also have living with me my almost 25 year old son, who is doing well at his age but has a far lower net worth.  He drives his 600 HP Alfa Romeo car in excess of the speed limit sometimes.

USAA insists that since he lives with me, I must add him to my umbrella policy, and further that he must raise his auto insurance limits to coordinate with the umbrella policy.  If we did that, it is my understanding that my umbrella policy premium would skyrocket.  I point out that I'm not responsible for his actions, and I have no connection with the car other than it is parked at my house - no different than if I rented a room to someone.

USAA and I are at an impasse on this, and neither of us will budge.  Since most of my concern about liability is an auto accident, I have compromised by just having my auto policy at $1M, and will reconsider an umbrella policy after my son moves out.

[rmorris50]

I actually just decreased my umbrella policy from $5million to $2 million.  When I got it a few years ago the higher amount was incredibly cheap, less than $400.  But it increased significantly this year so I dropped it down because I don’t “need” $5 million.

I just increased our umbrella from $2m to $4m. The cost is only $400 a year. Also upped our homeowners and auto deductibles to offset the increased premiums.

[alienbogey]

All this talk of umbrella policies have led me to a question the best answer to which may well be "Ask an attorney", but I'll throw it out here anyway.

We own our home which is worth low seven digits and have a financial investments portfolio that is way into "Beyond" territory and about 82% in IRA's.  We live in Washington state which, so far as I can see from my very recent googling, protects both one's Homestead and IRA retirement accounts from "creditors". 

It appears to me that our exposure is two cars, a Class C motorhome, some motorcycles, two very small boats, odds and ends, and about $600k invested stocks that is not tax protected.

So . . . given that it appears that about 94% of our assets are currently protected from creditors, can anyone see a need for an umbrella policy given our circumstances?

[BeanCounter]

All this talk of umbrella policies have led me to a question the best answer to which may well be "Ask an attorney", but I'll throw it out here anyway.

We own our home which is worth low seven digits and have a financial investments portfolio that is way into "Beyond" territory and about 82% in IRA's.  We live in Washington state which, so far as I can see from my very recent googling, protects both one's Homestead and IRA retirement accounts from "creditors". 

It appears to me that our exposure is two cars, a Class C motorhome, some motorcycles, two very small boats, odds and ends, and about $600k invested stocks that is not tax protected.

So . . . given that it appears that about 94% of our assets are currently protected from creditors, can anyone see a need for an umbrella policy given our circumstances?

I’m not an attorney, and still figuring out this myself. I believe there is a caveat on the IRAs. While the balance is protected, once you start drawing on them the withdrawals are income and can be attached (probably at 75%) to satisfy a judgement.
On the house you should double check if that much is actually protected. I believe some states have limits on the homestead protection.

The question is if you were to be found at fault for a horrible auto accident where the victim’s medical claims exceed your auto insurance, do you want to hire an attorney to fight for reasonable damages and pay it out yourself or do you want your insurance company to do it? For me $1-$2 umbrella coverage is a no brainer. It’s too inexpensive NOT to have it. I’m debating the necessity of a $5M policy.

[Geppetto]

All this talk of umbrella policies have led me to a question the best answer to which may well be "Ask an attorney", but I'll throw it out here anyway.

We own our home which is worth low seven digits and have a financial investments portfolio that is way into "Beyond" territory and about 82% in IRA's.  We live in Washington state which, so far as I can see from my very recent googling, protects both one's Homestead and IRA retirement accounts from "creditors". 

It appears to me that our exposure is two cars, a Class C motorhome, some motorcycles, two very small boats, odds and ends, and about $600k invested stocks that is not tax protected.

So . . . given that it appears that about 94% of our assets are currently protected from creditors, can anyone see a need for an umbrella policy given our circumstances?

I’m not an attorney, and still figuring out this myself. I believe there is a caveat on the IRAs. While the balance is protected, once you start drawing on them the withdrawals are income and can be attached (probably at 75%) to satisfy a judgement.
On the house you should double check if that much is actually protected. I believe some states have limits on the homestead protection.

The question is if you were to be found at fault for a horrible auto accident where the victim’s medical claims exceed your auto insurance, do you want to hire an attorney to fight for reasonable damages and pay it out yourself or do you want your insurance company to do it? For me $1-$2 umbrella coverage is a no brainer. It’s too inexpensive NOT to have it. I’m debating the necessity of a $5M policy.

THIS! Thank you. The question is not "do my insurance limits cover all my net worth?" That isn't how it works. The insurance doesn't protect your assets. It satisfies liabilities. So what you're insuring against is someone wanting to invade your assets for a jumbo liability claim, rather than accepting policy limits in a settlement. Allow me to illustrate.

Say you have a $2MM umbrella policy on top of a $500K per occurrence automotive liability policy. So $2.5MM total coverage. You have $2.5MM in assets. You think each dollar of those assets is "protected" by the insurance.

You negligently run over a 32-year-old cardiology resident. He dies. His family sues. You tender for coverage. The carriers offer up the policy limits ($2.5MM) to satisfy the claim.

The plaintiff attorney says to the client (the dead cardiologist's family): "Our economic damages are $15 million. That is the net present value of the future earnings of the deceased, since he had a lucrative career ahead of him. We have another $5 million in pain and suffering and loss of consort and other damages. So $20 million is what we're suing for. The driver's policy limits are $2.5MM. We can accept that and be done. Or we can sue this out, get a judgment for $20 million, take the policy limits, and then take everything else the driver has in partial satisfaction of the judgment. I think the driver has about $2.5 million in assets. So on our best day, our total recovery could be $5 million. Should we go for the whole shebang?"

You don't want that conversation happening that way. What you want is for the plaintiff's attorney to be blown away by the amount of coverage in place, and to never even dream of recommending to the client that they run the risk of a trial in hopes of recovering in excess of the policy limits. A $5 million umbrella is going to do that, functionally always. (And ten years from now, when $5 million ain't what it used to be, that number needs to go up a lot. What I'm saying today about $5 million is what used to be said about $2 million, not too long ago.)

[rmorris50]

All this talk of umbrella policies have led me to a question the best answer to which may well be "Ask an attorney", but I'll throw it out here anyway.

We own our home which is worth low seven digits and have a financial investments portfolio that is way into "Beyond" territory and about 82% in IRA's.  We live in Washington state which, so far as I can see from my very recent googling, protects both one's Homestead and IRA retirement accounts from "creditors". 

It appears to me that our exposure is two cars, a Class C motorhome, some motorcycles, two very small boats, odds and ends, and about $600k invested stocks that is not tax protected.

So . . . given that it appears that about 94% of our assets are currently protected from creditors, can anyone see a need for an umbrella policy given our circumstances?

I’m not an attorney, and still figuring out this myself. I believe there is a caveat on the IRAs. While the balance is protected, once you start drawing on them the withdrawals are income and can be attached (probably at 75%) to satisfy a judgement.
On the house you should double check if that much is actually protected. I believe some states have limits on the homestead protection.

The question is if you were to be found at fault for a horrible auto accident where the victim’s medical claims exceed your auto insurance, do you want to hire an attorney to fight for reasonable damages and pay it out yourself or do you want your insurance company to do it? For me $1-$2 umbrella coverage is a no brainer. It’s too inexpensive NOT to have it. I’m debating the necessity of a $5M policy.

THIS! Thank you. The question is not "do my insurance limits cover all my net worth?" That isn't how it works. The insurance doesn't protect your assets. It satisfies liabilities. So what you're insuring against is someone wanting to invade your assets for a jumbo liability claim, rather than accepting policy limits in a settlement. Allow me to illustrate.

Say you have a $2MM umbrella policy on top of a $500K per occurrence automotive liability policy. So $2.5MM total coverage. You have $2.5MM in assets. You think each dollar of those assets is "protected" by the insurance.

You negligently run over a 32-year-old cardiology resident. He dies. His family sues. You tender for coverage. The carriers offer up the policy limits ($2.5MM) to satisfy the claim.

The plaintiff attorney says to the client (the dead cardiologist's family): "Our economic damages are $15 million. That is the net present value of the future earnings of the deceased, since he had a lucrative career ahead of him. We have another $5 million in pain and suffering and loss of consort and other damages. So $20 million is what we're suing for. The driver's policy limits are $2.5MM. We can accept that and be done. Or we can sue this out, get a judgment for $20 million, take the policy limits, and then take everything else the driver has in partial satisfaction of the judgment. I think the driver has about $2.5 million in assets. So on our best day, our total recovery could be $5 million. Should we go for the whole shebang?"

You don't want that conversation happening that way. What you want is for the plaintiff's attorney to be blown away by the amount of coverage in place, and to never even dream of recommending to the client that they run the risk of a trial in hopes of recovering in excess of the policy limits. A $5 million umbrella is going to do that, functionally always. (And ten years from now, when $5 million ain't what it used to be, that number needs to go up a lot. What I'm saying today about $5 million is what used to be said about $2 million, not too long ago.)

Thank you Geppetto, this is very helpful! I really wasn't appreciating this is how it would probably actually go down.

I just increased our family's from $2m to $4m, so hopefully $4m for now would have the desired affect of avoiding a trial. But if it's still dirt cheap in a couple years I'll mostly likely increase it to $5m.

On a different insurance note, I looked into flood insurance today since we are in a moderate risk zone. I was quoted $2600 a year for 5k deductible and $250k max payout on structure, and $5K deductible and max $100k payout on contents. Given we are very close to beyond territory, spouse and I agreed we would just self insure this once every 100-500 year risk.

[Fomerly known as something]

Also on insurance there is generally a provision of say $100k to cover lawyer fees.

A MPP problem I decided that I needed a new light to provided light to a seating area in my bedroom that my current lights just doesn’t cover well.  I found an “acceptable” one at homegoods that fills this need.  I now realized that my environmental hippie self won’t replace it with a nicer better version in the future because it “works fine”.

[ROF Expat]

Also on insurance there is generally a provision of say $100k to cover lawyer fees.

I think one of the reasons to have an umbrella policy is that it will normally cover legal expenses beyond the limits of regular insurance policies.  When the insurance company has millions of dollars potentially at risk, it has a strong incentive to ensure that you have first-rate legal representation. 

[BeanCounter]

All this talk of umbrella policies have led me to a question the best answer to which may well be "Ask an attorney", but I'll throw it out here anyway.

We own our home which is worth low seven digits and have a financial investments portfolio that is way into "Beyond" territory and about 82% in IRA's.  We live in Washington state which, so far as I can see from my very recent googling, protects both one's Homestead and IRA retirement accounts from "creditors". 

It appears to me that our exposure is two cars, a Class C motorhome, some motorcycles, two very small boats, odds and ends, and about $600k invested stocks that is not tax protected.

So . . . given that it appears that about 94% of our assets are currently protected from creditors, can anyone see a need for an umbrella policy given our circumstances?

I’m not an attorney, and still figuring out this myself. I believe there is a caveat on the IRAs. While the balance is protected, once you start drawing on them the withdrawals are income and can be attached (probably at 75%) to satisfy a judgement.
On the house you should double check if that much is actually protected. I believe some states have limits on the homestead protection.

The question is if you were to be found at fault for a horrible auto accident where the victim’s medical claims exceed your auto insurance, do you want to hire an attorney to fight for reasonable damages and pay it out yourself or do you want your insurance company to do it? For me $1-$2 umbrella coverage is a no brainer. It’s too inexpensive NOT to have it. I’m debating the necessity of a $5M policy.

THIS! Thank you. The question is not "do my insurance limits cover all my net worth?" That isn't how it works. The insurance doesn't protect your assets. It satisfies liabilities. So what you're insuring against is someone wanting to invade your assets for a jumbo liability claim, rather than accepting policy limits in a settlement. Allow me to illustrate.

Say you have a $2MM umbrella policy on top of a $500K per occurrence automotive liability policy. So $2.5MM total coverage. You have $2.5MM in assets. You think each dollar of those assets is "protected" by the insurance.

You negligently run over a 32-year-old cardiology resident. He dies. His family sues. You tender for coverage. The carriers offer up the policy limits ($2.5MM) to satisfy the claim.

The plaintiff attorney says to the client (the dead cardiologist's family): "Our economic damages are $15 million. That is the net present value of the future earnings of the deceased, since he had a lucrative career ahead of him. We have another $5 million in pain and suffering and loss of consort and other damages. So $20 million is what we're suing for. The driver's policy limits are $2.5MM. We can accept that and be done. Or we can sue this out, get a judgment for $20 million, take the policy limits, and then take everything else the driver has in partial satisfaction of the judgment. I think the driver has about $2.5 million in assets. So on our best day, our total recovery could be $5 million. Should we go for the whole shebang?"

You don't want that conversation happening that way. What you want is for the plaintiff's attorney to be blown away by the amount of coverage in place, and to never even dream of recommending to the client that they run the risk of a trial in hopes of recovering in excess of the policy limits. A $5 million umbrella is going to do that, functionally always. (And ten years from now, when $5 million ain't what it used to be, that number needs to go up a lot. What I'm saying today about $5 million is what used to be said about $2 million, not too long ago.)

You outlined this so well. Thank you.
I want the insurance company to be fighting for their money not mine. So even though it’s not a very likely scenario, I think I’d rather just pony up for the $5M policy.

[Much Fishing to Do]

I remember poking around on the "Top Verdict" website that posts the highest settlements/awards each year for each state to try to help support the $5M number I was looking at for an umbrella (which is similar to my net worth).  There were VERY few awards over this amount (and actually very few over $2M), and it seemed like the extremely high car accident ones where actually against auto manufacturers.

Usually my main question when buying insurance is what is the likelihood they'll actually come thru (what actually will get covered).  I don't think I know the answer to this one, but the price seemed low enough I went ahead and bought it.  I doubt I'll ever raise/lower it, just wanted to get something to set and forget.

[UnleashHell]

if you do get into a situation where an umbrella policy is needed to cover a claim then whoever is suing you will generally stop at the limit of the umbrella policy. going over that would involve an awful lot of work and effort for both side - not to mention the expense. Your policy would still cover the legal fees. if it ever got to court then the attempt to go beyond the insurance coverage would be viewed very unfavorably and the verdict is unlikely to go beyond the insurance amount anyway. Even if it did then whoever sued you would have the issue of collecting the amounts and the further issue of multiple rounds of appeals. It makes far more sense economically to settle for policy limits now than go through a decade of court procedures , expense and appeals only to find out that you'd spent all the money and there was nothing to collect!

[EscapeVelocity2020]

I remember poking around on the "Top Verdict" website that posts the highest settlements/awards each year for each state to try to help support the $5M number I was looking at for an umbrella (which is similar to my net worth).  There were VERY few awards over this amount (and actually very few over $2M), and it seemed like the extremely high car accident ones where actually against auto manufacturers.

Usually my main question when buying insurance is what is the likelihood they'll actually come thru (what actually will get covered).  I don't think I know the answer to this one, but the price seemed low enough I went ahead and bought it.  I doubt I'll ever raise/lower it, just wanted to get something to set and forget.

The strongest signal to me that these settlements, for all intents and purposes, never happen is that insurance companies charge so little for so much coverage.  They have an army of actuaries, so the fact they can make a profit providing millions of dollars of coverage for 1/1,000th the cost indicates that there is significantly less than 0.1% actual instance of them paying out that liability.  In most cases, the cost of the insurance doesn't even cost what lawyer fees would be, so these situations for individuals must be exceedingly rare.

I guess it is up to ourselves to judge our personal situation, but I hope folks also read the coverage that they are buying closely so as not to get a false sense of security.  For instance, if there is gross negligence on your 16 year old driver's behalf (like speeding or going through a stop sign), insurance will have discretion on how much they will pay...

With all that said, I'm going to look in to maybe a $1-2million low cost umbrella just to see if the costs have become more reasonable now that our kids are in their 20's.  I am prepared to put in the time reading all the documents and asking questions to be sure I get the right policy, there is a lot of variability out there when it comes to umbrella policies and providers.

[itchyfeet]

Thanks for all the thoughts.

To be clear, my notice period is 3 months, so I’m looking down the barrel at 6 months now, as opposed to 3.

Of those 6 months, 2 would in my home in Australia and 4 abroad in France where I am expatriated.

I fly home tonight for a month. I’ll take stock of the situation.

If I make it to July there is an $80k bonus waiting, which you are right to say is not changing the grand scheme of things, but is my money :D, well with each passing month it’s closer to being my money.

Also, due to my expatriation I am currently in a situation where the company owes 2 years of my personal income taxes in Australia, which is blocked due to the slow French tax office. These back taxes are large(relevant in the grand scheme of things), and whilst should be no issue contractually, being on the ground to negotiate and push their payment is comforting.

Its weird that $80k isn't game changing and that's if that is what you clear, I would clear like half of that.   But yeah effectively 1-2% of the upper end of this threads band isn't game changing, especially when that can be a normal's day move in the portfolio.  Just weird.

The $80K is gross, so after tax it won’t be much more than $40k. This is less than 1% of NW.

[BeanCounter]

I remember poking around on the "Top Verdict" website that posts the highest settlements/awards each year for each state to try to help support the $5M number I was looking at for an umbrella (which is similar to my net worth).  There were VERY few awards over this amount (and actually very few over $2M), and it seemed like the extremely high car accident ones where actually against auto manufacturers.

Usually my main question when buying insurance is what is the likelihood they'll actually come thru (what actually will get covered).  I don't think I know the answer to this one, but the price seemed low enough I went ahead and bought it.  I doubt I'll ever raise/lower it, just wanted to get something to set and forget.

The strongest signal to me that these settlements, for all intents and purposes, never happen is that insurance companies charge so little for so much coverage.  They have an army of actuaries, so the fact they can make a profit providing millions of dollars of coverage for 1/1,000th the cost indicates that there is significantly less than 0.1% actual instance of them paying out that liability.  In most cases, the cost of the insurance doesn't even cost what lawyer fees would be, so these situations for individuals must be exceedingly rare.

I guess it is up to ourselves to judge our personal situation, but I hope folks also read the coverage that they are buying closely so as not to get a false sense of security.  For instance, if there is gross negligence on your 16 year old driver's behalf (like speeding or going through a stop sign), insurance will have discretion on how much they will pay...

With all that said, I'm going to look in to maybe a $1-2million low cost umbrella just to see if the costs have become more reasonable now that our kids are in their 20's.  I am prepared to put in the time reading all the documents and asking questions to be sure I get the right policy, there is a lot of variability out there when it comes to umbrella policies and providers.

Actually I believe it’s just criminal negligence that is not covered. So an accident where the driver is under the influence of a substance, damages would not be covered.
In the case I mentioned where the student pedestrian was struck, the driver was not cited and it was determined to be an accident. He didn’t see her and she stepped out in front of the vehicle.
The other thing we are doing is getting dash cams in our vehicles. This is another layer of protection and we feel it’s particularly important with teen drivers.

[Geppetto]

if you do get into a situation where an umbrella policy is needed to cover a claim then whoever is suing you will generally stop at the limit of the umbrella policy. going over that would involve an awful lot of work and effort for both side - not to mention the expense. Your policy would still cover the legal fees. if it ever got to court then the attempt to go beyond the insurance coverage would be viewed very unfavorably and the verdict is unlikely to go beyond the insurance amount anyway. Even if it did then whoever sued you would have the issue of collecting the amounts and the further issue of multiple rounds of appeals. It makes far more sense economically to settle for policy limits now than go through a decade of court procedures , expense and appeals only to find out that you'd spent all the money and there was nothing to collect!

All true in terms of likelihoods. But, this board is populated by multimillionaires. If you've got a net worth of $10MM, things get awfully tricky when your carrier tenders your $2MM policy limit and the plaintiff's attorney smells another several million in "self-insurance" behind it. This does happen. That isn't to say it goes to trial. Given a really unholy set of facts underlying the claim, you'll probably sell your house in Aspen to cover the self-insurance portion.

The unlikelihood is extreme. And having it occur is intolerable for someone who's built wealth over a lifetime. Umbrella coverage being as cheap as it is, my view is there's no better value in insurance. I'll carry a fat umbrella long after I've cancelled my last life insurance and disability insurance policies.

[SwordGuy]

if you do get into a situation where an umbrella policy is needed to cover a claim then whoever is suing you will generally stop at the limit of the umbrella policy. going over that would involve an awful lot of work and effort for both side - not to mention the expense. Your policy would still cover the legal fees. if it ever got to court then the attempt to go beyond the insurance coverage would be viewed very unfavorably and the verdict is unlikely to go beyond the insurance amount anyway. Even if it did then whoever sued you would have the issue of collecting the amounts and the further issue of multiple rounds of appeals. It makes far more sense economically to settle for policy limits now than go through a decade of court procedures , expense and appeals only to find out that you'd spent all the money and there was nothing to collect!

All true in terms of likelihoods. But, this board is populated by multimillionaires. If you've got a net worth of $10MM, things get awfully tricky when your carrier tenders your $2MM policy limit and the plaintiff's attorney smells another several million in "self-insurance" behind it. This does happen. That isn't to say it goes to trial. Given a really unholy set of facts underlying the claim, you'll probably sell your house in Aspen to cover the self-insurance portion.

The unlikelihood is extreme. And having it occur is intolerable for someone who's built wealth over a lifetime. Umbrella coverage being as cheap as it is, my view is there's no better value in insurance. I'll carry a fat umbrella long after I've cancelled my last life insurance and disability insurance policies.

Yep. Right there with you.

[Josiecat22222]

if you do get into a situation where an umbrella policy is needed to cover a claim then whoever is suing you will generally stop at the limit of the umbrella policy. going over that would involve an awful lot of work and effort for both side - not to mention the expense. Your policy would still cover the legal fees. if it ever got to court then the attempt to go beyond the insurance coverage would be viewed very unfavorably and the verdict is unlikely to go beyond the insurance amount anyway. Even if it did then whoever sued you would have the issue of collecting the amounts and the further issue of multiple rounds of appeals. It makes far more sense economically to settle for policy limits now than go through a decade of court procedures , expense and appeals only to find out that you'd spent all the money and there was nothing to collect!

All true in terms of likelihoods. But, this board is populated by multimillionaires. If you've got a net worth of $10MM, things get awfully tricky when your carrier tenders your $2MM policy limit and the plaintiff's attorney smells another several million in "self-insurance" behind it. This does happen. That isn't to say it goes to trial. Given a really unholy set of facts underlying the claim, you'll probably sell your house in Aspen to cover the self-insurance portion.

The unlikelihood is extreme. And having it occur is intolerable for someone who's built wealth over a lifetime. Umbrella coverage being as cheap as it is, my view is there's no better value in insurance. I'll carry a fat umbrella long after I've cancelled my last life insurance and disability insurance policies.

Yep. Right there with you.

Couldn't agree more

[EscapeVelocity2020]

Well my insurer thanks you guys!  I'm getting quotes to increase my coverages to meet the umbrella minimums, adding uninsured coverage (had been self insuring for that, but it's the coverage I've used the most here in Houston), then another $1,450 for $2M of umbrella from Progressive...  Also can't wait until my daughter wraps up college and moves out, mainly so that they are on the hook for liability and not us...  We'd still help them with premiums, but remove our assets from exposure.  My son is out of the house, so I also need to move him on to his own policy.  I thought I was being nice (and saving money) keeping him on our insurance, but now realize why that isn't very wise.

[rmorris50]

Well my insurer thanks you guys!  I'm getting quotes to increase my coverages to meet the umbrella minimums, adding uninsured coverage (had been self insuring for that, but it's the coverage I've used the most here in Houston), then another $1,450 for $2M of umbrella from Progressive...  Also can't wait until my daughter wraps up college and moves out, mainly so that they are on the hook for liability and not us...  We'd still help them with premiums, but remove our assets from exposure.  My son is out of the house, so I also need to move him on to his own policy.  I thought I was being nice (and saving money) keeping him on our insurance, but now realize why that isn't very wise.

Wow, nearly $1500 for $2m of umbrella? Is that because of kids? Ours is $400 from State Farm for $4m coverage, (we also have auto and home through them) but we don't have children.

[Arbitrage]

if you do get into a situation where an umbrella policy is needed to cover a claim then whoever is suing you will generally stop at the limit of the umbrella policy. going over that would involve an awful lot of work and effort for both side - not to mention the expense. Your policy would still cover the legal fees. if it ever got to court then the attempt to go beyond the insurance coverage would be viewed very unfavorably and the verdict is unlikely to go beyond the insurance amount anyway. Even if it did then whoever sued you would have the issue of collecting the amounts and the further issue of multiple rounds of appeals. It makes far more sense economically to settle for policy limits now than go through a decade of court procedures , expense and appeals only to find out that you'd spent all the money and there was nothing to collect!

I have friends who sued the owner of a vacation home after a negligent maintenance issue caused serious injuries, several of them life-altering, to many of them (>10).  Though the medical and related bills far exceeded the $2M umbrella policy, they did not pursue anything beyond that.  I admit not knowing the details, but when it was a question of taking a settlement or going to court for years to try to get what may or may not have even been there, they just wanted to be done with the whole ordeal.  The friends, collectively, certainly had the financial means to pursue further legal action, but not the psychological will. 

[TempusFugit]

I just received my renewal notice for my State Farm $1M umbrella and it increased 16% this year to $175.

Still worth it, I guess, but annoying that there’s such an increase (which of course goes along with auto increase and the homeowners increase..)