Umbrella Insurance

[lutorm]

Update:  Our umbrella doesn't cover under and uninsured motorists.  I never knew that.  I guess I need to up my auto to the max.  What coverage do you all have? I do have 2 teen drivers.

This has been very helpful.  I was surprised how much "youthful" drivers raised the umbrella policy but my costs are still lower than many of you.  It does seem to vary a lot by region.  They also charge a bit more for rental properties.  I just asked about under and uninsured motorists.  Anything else I should ask about?

I have a $2 million umbrella policy. I do not have uninsured/underinsured motorist coverage. Everyone should carry sufficient medical insurance, disability insurance, and life insurance so that a car crash or other accident won't cause financial ruin, regardless of whose fault it is. Once you have those general-purpose insurances in place, underinsured motorist coverage just seems superfluous. Does the amount of money I need to recover from injuries differ if the accident was my own fault or someone else's? Not really. Then why buy insurance that will pay you more for a car crash with an uninsured motorist than it will pay you for a car crash with a tree?

Yeah I've never really understood why people fixate on underinsured/uninsured coverage for the medical part. In the absolute worst case scenario it will save you a couple years of deductible and copays. Maybe a leftover fear from the days before guaranteed health insurance issue? Or maybe it's just a more primal instinct tapping into our sense of fairness, I didn't cause this, I shouldn't have to pay.

I've been hit by an uninsured driver. I did not receive any severe injuries, but between the health insurance deductible, copays and the lost vehicle, I was probably out 2-3 grand, and that was a severe strain on my finances (this was in grad school.)

Just because you have medical insurance doesn't mean there will be no costs, so it's a matter of whether you're willing to accept the residual risk. If you screw up, there's no option but to pay those costs, but that's a risk/cost trade off you can make yourself. You have very little control over the risk imposed on you by others.

[Paul der Krake]

Update:  Our umbrella doesn't cover under and uninsured motorists.  I never knew that.  I guess I need to up my auto to the max.  What coverage do you all have? I do have 2 teen drivers.

This has been very helpful.  I was surprised how much "youthful" drivers raised the umbrella policy but my costs are still lower than many of you.  It does seem to vary a lot by region.  They also charge a bit more for rental properties.  I just asked about under and uninsured motorists.  Anything else I should ask about?

I have a $2 million umbrella policy. I do not have uninsured/underinsured motorist coverage. Everyone should carry sufficient medical insurance, disability insurance, and life insurance so that a car crash or other accident won't cause financial ruin, regardless of whose fault it is. Once you have those general-purpose insurances in place, underinsured motorist coverage just seems superfluous. Does the amount of money I need to recover from injuries differ if the accident was my own fault or someone else's? Not really. Then why buy insurance that will pay you more for a car crash with an uninsured motorist than it will pay you for a car crash with a tree?

Yeah I've never really understood why people fixate on underinsured/uninsured coverage for the medical part. In the absolute worst case scenario it will save you a couple years of deductible and copays. Maybe a leftover fear from the days before guaranteed health insurance issue? Or maybe it's just a more primal instinct tapping into our sense of fairness, I didn't cause this, I shouldn't have to pay.

I've been hit by an uninsured driver. I did not receive any severe injuries, but between the health insurance deductible, copays and the lost vehicle, I was probably out 2-3 grand, and that was a severe strain on my finances (this was in grad school.)

Just because you have medical insurance doesn't mean there will be no costs, so it's a matter of whether you're willing to accept the residual risk. If you screw up, there's no option but to pay those costs, but that's a risk/cost trade off you can make yourself. You have very little control over the risk imposed on you by others.

Sure, but we're not cash-strapped students anymore. We're millionaires and multi-millionaires discussing how much umbrella insurance to purchase.

[seattlecyclone]

Right. If paying your health insurance deductible will act as a severe strain on your finances, you should look into purchasing health insurance with a lower deductible. Your insurance budget would be better spent on this general-purpose coverage than on a special-purpose coverage that only protects you from one very specific way of being injured (and not all the others).

[jac941]

Yeah I've never really understood why people fixate on underinsured/uninsured coverage for the medical part. In the absolute worst case scenario it will save you a couple years of deductible and copays. Maybe a leftover fear from the days before guaranteed health insurance issue? Or maybe it's just a more primal instinct tapping into our sense of fairness, I didn't cause this, I shouldn't have to pay.

Umm, because when you’re hit by a car, knocked unconscious and have numerous serious injuries, you don’t get to choose your medical care. And medical insurance doesn’t cover a lot of stuff - like “durable medical equipment” like wheelchairs and walkers and shower chairs and canes. Or like the machine they used in emergency surgery to the tune of $30,000. Or the trauma therapy for yourself and your kids.

In my not even close to worst case scenario, we’re on the hook for $40,000 already and are waiting for another $400,000 of bills to ping pong back and forth between the hospitals and insurance company. I have contested every not covered expense with both the hospital and the insurance company and am having some luck getting things reduced, processed as in network, or eliminated. But we will definitely be out well more than our out of pocket maximum. By at least tenfold. And that doesn’t include lost wages or any of those “soft” costs from this type of incident.

In any case, I still recommend uninsured and underinsured motorist insurance even if you have great health insurance. Thankfully we can afford a pretty large outlay for this kind of event, but I would definitely be more stressed without the medpay policy and the uninsured motorists. The actual cost of this event to my family is easily going to be in the hundreds of thousands of dollars before all is said and done.

[Paul der Krake]

Yeah I've never really understood why people fixate on underinsured/uninsured coverage for the medical part. In the absolute worst case scenario it will save you a couple years of deductible and copays. Maybe a leftover fear from the days before guaranteed health insurance issue? Or maybe it's just a more primal instinct tapping into our sense of fairness, I didn't cause this, I shouldn't have to pay.

Umm, because when you’re hit by a car, knocked unconscious and have numerous serious injuries, you don’t get to choose your medical care. And medical insurance doesn’t cover a lot of stuff - like “durable medical equipment” like wheelchairs and walkers and shower chairs and canes. Or like the machine they used in emergency surgery to the tune of $30,000. Or the trauma therapy for yourself and your kids.

In my not even close to worst case scenario, we’re on the hook for $40,000 already and are waiting for another $400,000 of bills to ping pong back and forth between the hospitals and insurance company. I have contested every not covered expense with both the hospital and the insurance company and am having some luck getting things reduced, processed as in network, or eliminated. But we will definitely be out well more than our out of pocket maximum. By at least tenfold. And that doesn’t include lost wages or any of those “soft” costs from this type of incident.

In any case, I still recommend uninsured and underinsured motorist insurance even if you have great health insurance. Thankfully we can afford a pretty large outlay for this kind of event, but I would definitely be more stressed without the medpay policy and the uninsured motorists. The actual cost of this event to my family is easily going to be in the hundreds of thousands of dollars before all is said and done.

Well shit, this thread took a turn. Sorry to hear about your misfortune.

If it's possible to rack up hundreds of thousands of dollars of out of pocket costs after regular health insurance kicks in, then how can we possibly protect against it? Maybe it's different for carriers, but my medical payments coverage maxes out at $25,000, they won't buy more than that (to prevent fraud, I presume). Uninsured/underinsured, on the other hand, goes all the way to $300k. Can I be truly be "made whole" only if it's someone else's fault?

[jac941]

Well shit, this thread took a turn. Sorry to hear about your misfortune.

If it's possible to rack up hundreds of thousands of dollars of out of pocket costs after regular health insurance kicks in, then how can we possibly protect against it? Maybe it's different for carriers, but my medical payments coverage maxes out at $25,000, they won't buy more than that (to prevent fraud, I presume). Uninsured/underinsured, on the other hand, goes all the way to $300k. Can I be truly be "made whole" only if it's someone else's fault?

Thanks. Luckily I’m alive and going to mostly recover eventually and have some crazy scars to tell the story.

I put my example out there just so folks were aware that a truly serious car crash could cost you far more than the out of pocket maximums for insurance since there was this debate on “is it necessary”. If healthcare in this country wasn’t such a mess, the situation would be different. I wish I had a better solution than all kinds of extra insurance, but I don’t. People keep asking me if I’m going to sue the driver, but the guy has no money - there’s nothing there.

I think the average American would either go into debt for the bills or file for bankruptcy. And they would probably skip out on a lot of things that would help them recover due to cost - things like additional physical therapy, mental health services, assistance at home. Or they might miss doctors appointments because they can’t pay for transportation. I always knew that medical bills caused many bankruptcies, but now I really understand why.

We have $100k medpay and $1 million uninsured motorists. Not all insurance carriers offer that, so if it’s important to you, you may have to shop around. We only had such high policies because this was recommended by someone we personally know who dealt with a similar situation.

I’d like to know if there are other options out there. We insure to protect from catastrophic events - I consider anything in the $100k+ range worth insuring for. This definitely falls into that category.

[FIREby35]

I'm not mad at anyone who disagrees. But, I gotta say, uninsured/underinsured motorist coverage is important. I work as a lawyer representing people who are injured by the negligence of others. It happens often that the person who causes the crash has the state minimum insurance coverage (varies by state, but where I work it is 25k). When that person is judgement proof due to being poor (which is why they have minimum insurance), your own insurance choices matter - a lot.

I know everyone has a different point of view, but I prefer to pay for higher underinsured coverage rather than insane health insurance premiums (medical bill sharing is what I have). The fact is, an underinsured/uninsured negligent driver is one of the most likely catastrophic scenarios to affect any of us (speaking from an actuarial, mathematical point of view). Car crashes are common and, unfortunately, sometimes very serious, life changing events.

Working in the trenches, I highly recommend making sure you have enough underinsured motorist coverage.

Sincerely - Big Gun Joe Adler - https://www.youtube.com/watch?v=YVHzS7B1NbI

[FIREby35]

PS - I also agree medical payments coverage is useful immediately after a crash.

[jac941]

PS - I also agree medical payments coverage is useful immediately after a crash.

Agreed. Collecting the medpay has given us breathing room while we wait it out to make a claim against the uninsured motorists insurance so we aren't using our emergency fund for all of this. We probably won't finalize the claim against the UIM until well into 2022 because I may or may not have to have additional surgeries to remove hardware.

Moral of the story - don't get run over. Since that is unfortunately not avoidable because there will always be inattentive idiots driving - make sure you have insurance to make yourself "whole" if you do.

[seattlecyclone]

I'm not mad at anyone who disagrees. But, I gotta say, uninsured/underinsured motorist coverage is important. I work as a lawyer representing people who are injured by the negligence of others. It happens often that the person who causes the crash has the state minimum insurance coverage (varies by state, but where I work it is 25k). When that person is judgement proof due to being poor (which is why they have minimum insurance), your own insurance choices matter - a lot.

I know everyone has a different point of view, but I prefer to pay for higher underinsured coverage rather than insane health insurance premiums (medical bill sharing is what I have). The fact is, an underinsured/uninsured negligent driver is one of the most likely catastrophic scenarios to affect any of us (speaking from an actuarial, mathematical point of view). Car crashes are common and, unfortunately, sometimes very serious, life changing events.

Working in the trenches, I highly recommend making sure you have enough underinsured motorist coverage.

Sincerely - Big Gun Joe Adler - https://www.youtube.com/watch?v=YVHzS7B1NbI

Are the at-fault drivers ever seriously injured in your cases? What do they do about their own recovery expenses? What should they do?

For every person who is hit by a car, there's another driver on the other side of that crash who will not be paid by any liability or underinsured motorist insurance because they were the ones at fault. I think you're fooling yourself if you assume that person could never be you. It's important to buy appropriate insurance for that circumstance, not just on the liability side but also to make sure you can take care of yourself afterward. Once you're appropriately covered even in crashes of your own making, why is it necessary to buy additional coverage for a crash that's someone else's fault? You either bought too little insurance for the former case or too much insurance for the latter.

[iris lily]

The only car crash either one of us have had in 30+ years took place about five years ago. Someone ran into the back of DH’s truck. DH was gratified to see it was an out-of-state license plate as one of the first things he saw after the crash.

Out-of-state license plate means far more likely to have insurance.

Here in the ‘Lou we don’t take seriously  laws like requiring insurance to drive, up-to-date vehicle license, etc.

[subhobroto]

I work as a lawyer representing people who are injured by the negligence of others. It happens often that the person who causes the crash has the state minimum insurance coverage (varies by state, but where I work it is 25k). When that person is judgement proof due to being poor (which is why they have minimum insurance), your own insurance choices matter - a lot.

I am smelling a lot of baloney in these posts but it's a Friday so it's probably the neighbors cooking for the weekend so do afford me the assumption that I am acting on noisy data.

WHY are people buying so much Umbrella Insurance and you keep recommending they do?

Your own observation points out that poor people have the advantage in claims.

So what about a strategy that gives me, the poor person, access to a nice house, car and health coverage without me actually owning more than enough to cover immediate emergency expenses like $50k?

The most anyone can get from me is $50k.

The cost to hire a lawyer itself is not going to be worth collecting from me.

The house I live in, the car I drive are all leased. I own NOTHING.

Why is this discussion not even being had or spoken about?

DO I have to literally own the house I live in, the car I drive to enjoy the comforts and freedoms they bring?

[FIREby35]

I'm not mad at anyone who disagrees. But, I gotta say, uninsured/underinsured motorist coverage is important. I work as a lawyer representing people who are injured by the negligence of others. It happens often that the person who causes the crash has the state minimum insurance coverage (varies by state, but where I work it is 25k). When that person is judgement proof due to being poor (which is why they have minimum insurance), your own insurance choices matter - a lot.

I know everyone has a different point of view, but I prefer to pay for higher underinsured coverage rather than insane health insurance premiums (medical bill sharing is what I have). The fact is, an underinsured/uninsured negligent driver is one of the most likely catastrophic scenarios to affect any of us (speaking from an actuarial, mathematical point of view). Car crashes are common and, unfortunately, sometimes very serious, life changing events.

Working in the trenches, I highly recommend making sure you have enough underinsured motorist coverage.

Sincerely - Big Gun Joe Adler - https://www.youtube.com/watch?v=YVHzS7B1NbI

Are the at-fault drivers ever seriously injured in your cases? What do they do about their own recovery expenses? What should they do?

For every person who is hit by a car, there's another driver on the other side of that crash who will not be paid by any liability or underinsured motorist insurance because they were the ones at fault. I think you're fooling yourself if you assume that person could never be you. It's important to buy appropriate insurance for that circumstance, not just on the liability side but also to make sure you can take care of yourself afterward. Once you're appropriately covered even in crashes of your own making, why is it necessary to buy additional coverage for a crash that's someone else's fault? You either bought too little insurance for the former case or too much insurance for the latter.

You are correct that these insurances don't cover you if you cause the crash. That is an important thing to take into consideration.

Also, NO, I never represent a person injured by their own negligence. There is no claim in that situation. So, nothing I can do. In that situation, it's your own health insurance (medical bill sharing) and assets. If someone has a big medical liability from their own negligence, you could probably engage a lawyer to negotiate a global settlement to reduce medical liabilities. You'd have to pay by the hour and up front. But, I bet it would cost less than insurance premiums and you'd get your money's worth (if the lawyer is any good).

Me personally, I have good car insurance, medical bill sharing, an umbrella policy, disability and life. After that, I live close to my house to reduce risk and drive as little as I can. Perhaps I'm a nervous nelly, but cars are dangerous. Driving one mile to work is 5% as dangerous as driving 20 miles.

I was just pointing out that UIM/UM insurance has a role and those that can pay for good coverage, should. Just one man's opinion.

[FIREby35]

I work as a lawyer representing people who are injured by the negligence of others. It happens often that the person who causes the crash has the state minimum insurance coverage (varies by state, but where I work it is 25k). When that person is judgement proof due to being poor (which is why they have minimum insurance), your own insurance choices matter - a lot.

I am smelling a lot of baloney in these posts but it's a Friday so it's probably the neighbors cooking for the weekend so do afford me the assumption that I am acting on noisy data.

WHY are people buying so much Umbrella Insurance and you keep recommending they do?

Your own observation points out that poor people have the advantage in claims.

So what about a strategy that gives me, the poor person, access to a nice house, car and health coverage without me actually owning more than enough to cover immediate emergency expenses like $50k?

The most anyone can get from me is $50k.

The cost to hire a lawyer itself is not going to be worth collecting from me.

The house I live in, the car I drive are all leased. I own NOTHING.

Why is this discussion not even being had or spoken about?

DO I have to literally own the house I live in, the car I drive to enjoy the comforts and freedoms they bring?

Full disclosure, I don't understand you entirely.

Here is the deal, umbrella to protect your own finances is one thing. Maybe you need it, maybe you don't.

UM/UIM to protect yourself from others is another thing. Maybe you want it, maybe you don't.

Poor people have the advantage if a claim is made against them. They have disadvantage if they need to make a serious claim but they have the minimum insurance allowed by law.

As you know, individual circumstances may vary and all must make their own decisions.

[Paul der Krake]

I work as a lawyer representing people who are injured by the negligence of others. It happens often that the person who causes the crash has the state minimum insurance coverage (varies by state, but where I work it is 25k). When that person is judgement proof due to being poor (which is why they have minimum insurance), your own insurance choices matter - a lot.

I am smelling a lot of baloney in these posts but it's a Friday so it's probably the neighbors cooking for the weekend so do afford me the assumption that I am acting on noisy data.

WHY are people buying so much Umbrella Insurance and you keep recommending they do?

Your own observation points out that poor people have the advantage in claims.

So what about a strategy that gives me, the poor person, access to a nice house, car and health coverage without me actually owning more than enough to cover immediate emergency expenses like $50k?

The most anyone can get from me is $50k.

The cost to hire a lawyer itself is not going to be worth collecting from me.

The house I live in, the car I drive are all leased. I own NOTHING.

Why is this discussion not even being had or spoken about?

DO I have to literally own the house I live in, the car I drive to enjoy the comforts and freedoms they bring?

Yes, increased liability insurance is an indirect tax on the wealthy. Unless every state suddenly requires much higher liability coverage and becomes serious about cracking down on the uninsured, that's not going to change. Maybe you're a pauper right now and this doesn't apply to you, but do you intend on remaining judgement-proof for the rest of your life?

[FIREby35]

Also, it's true that I am not actually Big Gun Joe Adler. That is a lie and baloney.

I think that movie clip is funny because sometimes I feel like that when I demand a lot of money for injured people :)

[jac941]

@FIREby35 what option is there for a person who doesn’t drive? An individual who doesn’t own a car and walks, takes transit, or bicycles everywhere. Can this person get UIM without liability insurance?

I’ve been thinking a lot about this lately. Basically the people who chooses to not own a car, who are disabled and cannot drive, or who are too poor to own a car can’t protect themselves from judgment proof drivers. Pedestrians tend to have very serious injuries when hit if they survive at all.

[subhobroto]

Full disclosure, I don't understand you entirely.

I really appreciate you being a good sport. Thank you!

Here is the deal, umbrella to protect your own finances is one thing. Maybe you need it, maybe you don't.

UM/UIM to protect yourself from others is another thing. Maybe you want it, maybe you don't.

As you know, individual circumstances may vary and all must make their own decisions.

Agreed.

Poor people have the advantage if a claim is made against them. They have disadvantage if they need to make a serious claim but they have the minimum insurance allowed by law.

Not entirely true. What if I, although the proud owner of $50 in the bank, have a wealthy benefactor who's willing to help me out in times of need?

In the U.S., companies are people. So that wealthy benefactor can be a company that has a certain liking for me and my family.

@FIREby35 what option is there for a person who doesn’t drive? An individual who doesn’t own a car and walks, takes transit, or bicycles everywhere. Can this person get UIM without liability insurance?

I’ve been thinking a lot about this lately. Basically the people who chooses to not own a car, who are disabled and cannot drive, or who are too poor to own a car can’t protect themselves from judgment proof drivers. Pedestrians tend to have very serious injuries when hit if they survive at all.

The insurance industry goes by acturial models. For the majority of the U.S., this is very atypical and will require manual underwriting, which is extensive to keep doing over and over (first time they offer your a policy and every renewal period).

[reeshau]

Perhaps I'm a nervous nelly, but cars are dangerous. Driving one mile to work is 5% as dangerous as driving 20 miles.

But isn't it also true that a majority of accidents happen close to home?

https://www.injurylawcolorado.com/legal-news/auto-accidents/nearly-70-of-car-accidents-occur-within-10-miles-of-home.htm#:~:text=Figures%20provided%20by%20the%20National,69%25%20occur%20within%2010%20miles.

I have no solution to this; I see no way to skip those first five miles and continue on your commute.

[GodlessCommie]

But isn't it also true that a majority of accidents happen close to home?

https://www.injurylawcolorado.com/legal-news/auto-accidents/nearly-70-of-car-accidents-occur-within-10-miles-of-home.htm#:~:text=Figures%20provided%20by%20the%20National,69%25%20occur%20within%2010%20miles.

I have no solution to this; I see no way to skip those first five miles and continue on your commute.

It sounds like no solution is needed. Accidents that happen close to home are not what most on this board worry about (with a possible exception of hitting a pedestrian or cyclist):

Although the vast majority of accidents occur close to home, most of them tend to be relatively minor. Perhaps you’re leaving your neighborhood and a neighbor pulls out of their driveway and hits your car in the side. Or maybe you’re at the neighborhood grocery store and someone hits you while crossing through the parking lot.

Data from the survey also shows that the farther from home the accident occurs, the more severe it tends to be.

[jpdx]

Who is Justin Verlander?

[obstinate]

Update:  Our umbrella doesn't cover under and uninsured motorists.  I never knew that.  I guess I need to up my auto to the max.  What coverage do you all have? I do have 2 teen drivers.

This has been very helpful.  I was surprised how much "youthful" drivers raised the umbrella policy but my costs are still lower than many of you.  It does seem to vary a lot by region.  They also charge a bit more for rental properties.  I just asked about under and uninsured motorists.  Anything else I should ask about?

I have a $2 million umbrella policy. I do not have uninsured/underinsured motorist coverage. Everyone should carry sufficient medical insurance, disability insurance, and life insurance so that a car crash or other accident won't cause financial ruin, regardless of whose fault it is. Once you have those general-purpose insurances in place, underinsured motorist coverage just seems superfluous. Does the amount of money I need to recover from injuries differ if the accident was my own fault or someone else's? Not really. Then why buy insurance that will pay you more for a car crash with an uninsured motorist than it will pay you for a car crash with a tree?

Yeah I've never really understood why people fixate on underinsured/uninsured coverage for the medical part. In the absolute worst case scenario it will save you a couple years of deductible and copays. Maybe a leftover fear from the days before guaranteed health insurance issue? Or maybe it's just a more primal instinct tapping into our sense of fairness, I didn't cause this, I shouldn't have to pay.

I had been under the impression that your passengers could sue you if you are hit by an underinsured driver and you don't have this coverage. Is that incorrect? Probably depends on the individual state. Discuss with your insurance professional.

[ender]

This thread has been super useful to read and caused me to ask our insurance agent what it'd cost to add under/uninsured to our umbrella.

I also didn't see medical payments coverage in our policy so asking about that too!

[lhamo]

This is based off my friends lawsuit from severe injuries they suffered from an at fault accident (other drivers fault). The plaintiff usually does not know defendants insurance coverage limit.  The insurance company lawyers will present it to the jury they have no insurance and it is all coming out of the defendants pocket (ignoring fact that insurance company is forking a lot of money for lawyers so obviously they have skin in the game).  So you don't know if you are clearing them out personally or leaving insurance money on the table.

This run contrary to my understanding of lawsuits. Isn’t coverage one of the first things that get disclosed during discovery?

My experience was that the plaintiff knows, but it cannot be revealed to the jury.

[American GenX]

If you already have underinsured/uninsured motorist on your auto policy, is there any reason to have it on your umbrella - or one vs. the other.  I've always had this on my auto policy.

[ender]

If you already have underinsured/uninsured motorist on your auto policy, is there any reason to have it on your umbrella - or one vs. the other.  I've always had this on my auto policy.

You should read this thread.

[lutorm]

I had been under the impression that your passengers could sue you if you are hit by an underinsured driver and you don't have this coverage. Is that incorrect? Probably depends on the individual state. Discuss with your insurance professional.

This is the USA: anyone can sue you for anything. The questions are how likely they are to, how likely they are to win, and how much it'll cost you to defend it.

In the situation you're describing, it seems hard to imagine your passengers have a significant chance of winning. They can sue the driver who caused the accident, but you aren't liable for their actions and I've never heard of "not carrying uninsured coverage" being considered "reckless". But a lot of weird stuff happens in court, so who knows.

[American GenX]

If you already have underinsured/uninsured motorist on your auto policy, is there any reason to have it on your umbrella - or one vs. the other.  I've always had this on my auto policy.

You should read this thread.

I did, but there was some contradictory info posted and lack of detail in responses whether they were referring to uninsured motorist on their auto or umbrella, which is the point of my question.  Maybe someone else actually "knows" more on the topic and can post something useful.  Like I said, I already have it on my auto policy.

[FIREby35]

Perhaps I'm a nervous nelly, but cars are dangerous. Driving one mile to work is 5% as dangerous as driving 20 miles.

But isn't it also true that a majority of accidents happen close to home?

https://www.injurylawcolorado.com/legal-news/auto-accidents/nearly-70-of-car-accidents-occur-within-10-miles-of-home.htm#:~:text=Figures%20provided%20by%20the%20National,69%25%20occur%20within%2010%20miles.

I have no solution to this; I see no way to skip those first five miles and continue on your commute.

Yes, I understand this tp be a a product of the fact that most trips are within the 5 mile radius. So, from a probability standpoint, most crashes would occur in this zone. On an individual level, I think it is still accurate to say shorter trips reduce individual risk. Although, I suppose an actuary can come and tell me how I'm wrong :)

[FIREby35]

This is based off my friends lawsuit from severe injuries they suffered from an at fault accident (other drivers fault). The plaintiff usually does not know defendants insurance coverage limit.  The insurance company lawyers will present it to the jury they have no insurance and it is all coming out of the defendants pocket (ignoring fact that insurance company is forking a lot of money for lawyers so obviously they have skin in the game).  So you don't know if you are clearing them out personally or leaving insurance money on the table.

This run contrary to my understanding of lawsuits. Isn’t coverage one of the first things that get disclosed during discovery?

My experience was that the plaintiff knows, but it cannot be revealed to the jury.

Correct, the law keeps this information from the jury. I'm about to have a trial on an underinsured policy in federal court next month. We won't be able to tell the jury the value of the person's contract. The jury will only get to decide the nature and extent of the harms and losses suffered by my client and then have to choose a money verdict that matches the harm.

In my opinion, this is just insurance money exerting undue influence on our court system through lobbying and insurance alumni becoming judges. But, other people disagree and they hold more power.

[FIREby35]

If you already have underinsured/uninsured motorist on your auto policy, is there any reason to have it on your umbrella - or one vs. the other.  I've always had this on my auto policy.

Just make sure you have enough. Whatever that is is a personal decision.

[FIREby35]

Who is Justin Verlander?

A famous baseball player with a lot of money.

[Paul der Krake]

This is based off my friends lawsuit from severe injuries they suffered from an at fault accident (other drivers fault). The plaintiff usually does not know defendants insurance coverage limit.  The insurance company lawyers will present it to the jury they have no insurance and it is all coming out of the defendants pocket (ignoring fact that insurance company is forking a lot of money for lawyers so obviously they have skin in the game).  So you don't know if you are clearing them out personally or leaving insurance money on the table.

This run contrary to my understanding of lawsuits. Isn’t coverage one of the first things that get disclosed during discovery?

My experience was that the plaintiff knows, but it cannot be revealed to the jury.

Correct, the law keeps this information from the jury. I'm about to have a trial on an underinsured policy in federal court next month. We won't be able to tell the jury the value of the person's contract. The jury will only get to decide the nature and extent of the harms and losses suffered by my client and then have to choose a money verdict that matches the harm.

In my opinion, this is just insurance money exerting undue influence on our court system through lobbying and insurance alumni becoming judges. But, other people disagree and they hold more power.

Okay, the jury doesn't know, but everyone involved in the decision to bring the lawsuit instead of just settling within limits does. As a defendant, that doesn't make me feel any better.

[Chester Allen Arthur]

Anecdote: I'm not an insurance lawyer, but a family member has practiced insurance law for four decades.  He advised me to get $1mm in umbrella insurance (which covers my net worth).  He's extremely risk averse with money and if there had been any reason to go above $1mm he would have said so.
The above is not legal advice.  Don't take legal advice from a podcastrandom person on the internet.

[American GenX]

Anecdote: I'm not an insurance lawyer, but a family member has practiced insurance law for four decades.  He advised me to get $1mm in umbrella insurance (which covers my net worth).  He's extremely risk averse with money and if there had been any reason to go above $1mm he would have said so.
The above is not legal advice.  Don't take legal advice from a podcastrandom person on the internet.

Yeah, $1M sounds good.  But my stash is a lot more than that, and a lot of it is not in retirement accounts.  I might be better off with $2M if it doesn't cost that much more.

[seattlecyclone]

Anecdote: I'm not an insurance lawyer, but a family member has practiced insurance law for four decades.  He advised me to get $1mm in umbrella insurance (which covers my net worth).  He's extremely risk averse with money and if there had been any reason to go above $1mm he would have said so.
The above is not legal advice.  Don't take legal advice from a podcastrandom person on the internet.

Yeah, $1M sounds good.  But my stash is a lot more than that, and a lot of it is not in retirement accounts.  I might be better off with $2M if it doesn't cost that much more.

I don't think the size of your portfolio is really relevant here. The umbrella insurance isn't a promise from the insurance company that you'll get to keep $1 million (or whatever) of your assets after all is said and done; it's the promise to pay the first $1 million of costs. If you crash into a school bus full of little kids and everyone dies and a jury finds you liable for $50 million of damages you'll need a $50 million umbrella policy to avoid dipping into your stash, regardless of what your net worth is.

A nice thing about an umbrella policy is that there's a bigger incentive for the insurance company to hire a good lawyer on your behalf. In most cases a $1 or $2 million limit is sufficient incentive there, but if you kill a school bus full of kids the insurance company might take one look at it and say "no way this settles for less than your policy limits, good luck with your defense, let us know who to send the check to when it's all over."

[UnleashHell]

in case of a serious claim against you the insurance company would probably hire lawyers to protect you. Or offer up the full value of the policy. In certain circumstances if they do not offer up your limits (where its clear the claim is more) then the insurance company could be sued for more than the limits.
Its extremely rare to go after the individual or estate for balances over and above the limit of the policy because the cost of recovering any money is too high in comparison to the amount recovered.

however if you don't have a decent amount of insurance then you are the only source of funds and then you do become a financial target.

[Paul der Krake]

Anecdote: I'm not an insurance lawyer, but a family member has practiced insurance law for four decades.  He advised me to get $1mm in umbrella insurance (which covers my net worth).  He's extremely risk averse with money and if there had been any reason to go above $1mm he would have said so.
The above is not legal advice.  Don't take legal advice from a podcastrandom person on the internet.

Yeah, $1M sounds good.  But my stash is a lot more than that, and a lot of it is not in retirement accounts.  I might be better off with $2M if it doesn't cost that much more.

I don't think the size of your portfolio is really relevant here. The umbrella insurance isn't a promise from the insurance company that you'll get to keep $1 million (or whatever) of your assets after all is said and done; it's the promise to pay the first $1 million of costs. If you crash into a school bus full of little kids and everyone dies and a jury finds you liable for $50 million of damages you'll need a $50 million umbrella policy to avoid dipping into your stash, regardless of what your net worth is.

A nice thing about an umbrella policy is that there's a bigger incentive for the insurance company to hire a good lawyer on your behalf. In most cases a $1 or $2 million limit is sufficient incentive there, but if you kill a school bus full of kids the insurance company might take one look at it and say "no way this settles for less than your policy limits, good luck with your defense, let us know who to send the check to when it's all over."

Why would the dead children's parents (or the school district) sue?

Okay I kill a bunch of kids, and realistically that's worth around 50 million dollars worth of damage. Let's say my net worth is 2m, and I have a 2m umbrella policy. Enraged parents can:
- get 2m from my policy fairly quickly and try to put this behind them
- get 2m from my policy AND try to go after everything I have, for an additional 2m, which realistically is more like 1m after accounting for ERISA/IRA/homestead protections, maybe garnish some of my wages in the future, etc.

Maybe they really hate my guts and want me to suffer as much as possible but I don't know it seems... not worth anyone's time?

[seattlecyclone]

You really think that dozens of parents of dead kids are all going to be coldly rational about whether going after your other $2 million is worth the effort? Even if you "only" have $1 million left after applying legal protections to your various accounts, that still seems to be well worth paying for a few months of a lawyer's time to sort it all out.

[Paul der Krake]

I don't know. I don't fully understand how lawyers determine who is worth going after and under which circumstances, and how much more work that would be for them.

I find it unsettling that we all purchase umbrella coverage that's roughly our net worth to remove tail risk. If it's ultimately pointless for a large enough claim, why do we use this rule of thumb at all? Why not say, 99.999% of accidents are for less than $5 million (number made up), therefore $5 million is the optimal coverage for everyone?

[lutorm]

I find it unsettling that we all purchase umbrella coverage that's roughly our net worth to remove tail risk. If it's ultimately pointless for a large enough claim, why do we use this rule of thumb at all? Why not say, 99.999% of accidents are for less than $5 million (number made up), therefore $5 million is the optimal coverage for everyone?

Yeah, this is a good point.

I think the reasoning is this: If your net worth is "small" compared to your coverage limits, then the possibility of collecting a bit more by going after your personal assets after the insurance has paid out to the limits is unlikely to be worth it.

Of course, if your assets are a lot more than your coverage limits, then it IS worth going after you.

[American GenX]

Anecdote: I'm not an insurance lawyer, but a family member has practiced insurance law for four decades.  He advised me to get $1mm in umbrella insurance (which covers my net worth).  He's extremely risk averse with money and if there had been any reason to go above $1mm he would have said so.
The above is not legal advice.  Don't take legal advice from a podcastrandom person on the internet.

Yeah, $1M sounds good.  But my stash is a lot more than that, and a lot of it is not in retirement accounts.  I might be better off with $2M if it doesn't cost that much more.

I don't think the size of your portfolio is really relevant here. The umbrella insurance isn't a promise from the insurance company that you'll get to keep $1 million (or whatever) of your assets after all is said and done; it's the promise to pay the first $1 million of costs. If you crash into a school bus full of little kids and everyone dies and a jury finds you liable for $50 million of damages you'll need a $50 million umbrella policy to avoid dipping into your stash, regardless of what your net worth is.

A nice thing about an umbrella policy is that there's a bigger incentive for the insurance company to hire a good lawyer on your behalf. In most cases a $1 or $2 million limit is sufficient incentive there, but if you kill a school bus full of kids the insurance company might take one look at it and say "no way this settles for less than your policy limits, good luck with your defense, let us know who to send the check to when it's all over."

The bus full of dead kids sounds like an extreme cherry-picked example, though, and that the $2M figure I gave would protect me in the vast majority of incidents and protect my $tash.

[Paul der Krake]

I find it unsettling that we all purchase umbrella coverage that's roughly our net worth to remove tail risk. If it's ultimately pointless for a large enough claim, why do we use this rule of thumb at all? Why not say, 99.999% of accidents are for less than $5 million (number made up), therefore $5 million is the optimal coverage for everyone?

Yeah, this is a good point.

I think the reasoning is this: If your net worth is "small" compared to your coverage limits, then the possibility of collecting a bit more by going after your personal assets after the insurance has paid out to the limits is unlikely to be worth it.

Of course, if your assets are a lot more than your coverage limits, then it IS worth going after you.

If that's the case, what is a good ratio? If we follow the rule of thumb of policy limits = networth, by definition, there is 100% more to collect after the policy pays out if you choose to go after the at-fault party.
If we say policy limits = 2 * networth, then there is 50% more to collect after the policy pays out.
If we say policy limits = 4 * networth, then there is 25% more to collect after the policy pays out.
And so on.
At which point do we say nobody is going to bother going to court for XX% more?

[seattlecyclone]

The bus full of dead kids sounds like an extreme cherry-picked example, though, and that the $2M figure I gave would protect me in the vast majority of incidents and protect my $tash.

Of course it's cherry-picked. Car crashes that cause dozens of deaths are extremely rare. $2 million seems like a reasonable amount of insurance to choose. That's how much I carry myself. It feels like it should be sufficient coverage for most crashes. I however recognize that this coverage isn't actually "protecting" my stash except to the extent that the first $2 million of liability is now covered. I have always believed that this rule of thumb to buy insurance equal to your net worth relies on a flawed premise, and you should instead look at buying insurance to cover your entire liability in any reasonably likely scenario. How much is that number? I have no earthly idea.

[BlueMR2]

Yeah, $1M sounds good.  But my stash is a lot more than that, and a lot of it is not in retirement accounts.  I might be better off with $2M if it doesn't cost that much more.

Yeah, and that's the question.  I see people throwing around ridiculously low numbers here like $200 a year for 1 million umbrella on top of a 300k auto.  I'm 500k auto and a not only does a 1 million dollar umbrella quote in at 700-800 a year (with 2 million double that), but it comes with crazy restrictions that make it practically useless anyways.

I'd love to have an umbrella policy for better protection with all the crazy lawsuits going around these days, but apparently where I live is a terrible place to try and get one!

[jac941]

I see people throwing around ridiculously low numbers here like $200 a year for 1 million umbrella on top of a 300k auto.  I'm 500k auto and a not only does a 1 million dollar umbrella quote in at 700-800 a year (with 2 million double that), but it comes with crazy restrictions that make it practically useless anyways.

That’s crazy. We pay $90 / year for $1 million umbrella on top of $1 million auto (with $100k med pay) and $1 million homeowners (so $2 million total for most types of incidents). Maybe your auto and homeowners policy limits are too low? Have you tried raising those?

[PDXTabs]

At which point do we say nobody is going to bother going to court for XX% more?

In my experience, the cost of the litigation is 7%. That is, you can find a lawyer to represent you (as the plaintiff) on a contingency basis that will take 33% if they settle and 40% if they have to go to court. But also they have to do a lot more work if you go to court, so they are incentived to get you to settle. Also also, there is risk in litigation where as the settlement is a sure bet.

But yea, at some point the potential extra payout is going to be enough to drag your ass to court.

[sailinlight]

Yeah, $1M sounds good.  But my stash is a lot more than that, and a lot of it is not in retirement accounts.  I might be better off with $2M if it doesn't cost that much more.

Yeah, and that's the question.  I see people throwing around ridiculously low numbers here like $200 a year for 1 million umbrella on top of a 300k auto.  I'm 500k auto and a not only does a 1 million dollar umbrella quote in at 700-800 a year (with 2 million double that), but it comes with crazy restrictions that make it practically useless anyways.

I'd love to have an umbrella policy for better protection with all the crazy lawsuits going around these days, but apparently where I live is a terrible place to try and get one!

I'd be curious to know where you live. It seems you have a terrible agent if doubling your umbrella policy costs anywhere near to double the price. My experience is that's only slightly more. Do you have litigation issues in your past?

[Paul der Krake]

Yeah that's super weird. I have priced/purchased umbrella policies in 4 different US states now and it's always been in the $100-200 range for 1m.

[FIREby35]

This is based off my friends lawsuit from severe injuries they suffered from an at fault accident (other drivers fault). The plaintiff usually does not know defendants insurance coverage limit.  The insurance company lawyers will present it to the jury they have no insurance and it is all coming out of the defendants pocket (ignoring fact that insurance company is forking a lot of money for lawyers so obviously they have skin in the game).  So you don't know if you are clearing them out personally or leaving insurance money on the table.

This run contrary to my understanding of lawsuits. Isn’t coverage one of the first things that get disclosed during discovery?

My experience was that the plaintiff knows, but it cannot be revealed to the jury.

Correct, the law keeps this information from the jury. I'm about to have a trial on an underinsured policy in federal court next month. We won't be able to tell the jury the value of the person's contract. The jury will only get to decide the nature and extent of the harms and losses suffered by my client and then have to choose a money verdict that matches the harm.

In my opinion, this is just insurance money exerting undue influence on our court system through lobbying and insurance alumni becoming judges. But, other people disagree and they hold more power.

Okay, the jury doesn't know, but everyone involved in the decision to bring the lawsuit instead of just settling within limits does. As a defendant, that doesn't make me feel any better.

We are getting a bit technical here, but I'll share a bit more...

In MY cases, I ALWAYS offer to settle for the limit of the insurance. The insurance company rejects those offers 90% of the time. They violate their duty to their insured (you, the defendant) when they don't tell their client about the offers to settle.

After the pre-suit offers to settle for the insurance limit are rejected or ignored, I file a lawsuit. The insurance company chooses the defendant's lawyer and pays them. The insurance defense lawyer is now representing the defendant (real person) but being hired on many cases by the insurance company. This creates a conflict of interest where the insurance defense lawyer will have to choose between the interest of their a) one-time client who doesn't understand anything that is happening and b) their insurance client who pays them and works with them on dozens of cases. I will send multiple additional offers to settle for the limit of the insurance to the insurance defense lawyer. The vast majority of the time, the insurance defense lawyer doesn't tell their real-live client about the offers and rejects them (Yes, this is a violation of their professional duties. But, it still happens all the time.) Most often, the insurance defense lawyer will talk about their insurance company as the client -totally forgetting their client is the real person the insurance company pays them to defend!

The insurance defense lawyer, having withheld information from their client, then goes to litigate with me because they get paid by the hour. They spin their tires for a year or two. I keep waiting for a jury.

After the defense lawyers have milked the case for their portion, they call me and ask me to settle for the policy limit.

At that time, I tell them no, the offers to settle for the limit of the insurance have passed. I demand way more money than the insurance policy (like Big Gun Joe Addler!) - the amount of money my client's injuries are really worth. The insurance defense lawyer freaks out because they know they violated their professional duty to their client by failing to tell them about the offers to settle (Which the real live defendant would obviously have paid, but the insurance company does not want to pay).

If/when we achieve a jury verdict in excess of the insurance policy then I have to figure out how to collect. To do that, I contact the defendant who has been royally screwed by their insurance company and insurance defense lawyer. I tell them, "You can pay this entire verdict or you can work with me to sue your lawyer and insurance company for insurance bad faith and to collect this verdict." The defendant who I sued and who thought I was the problem is stunned by the betrayal, decides to work with me and then becomes my client. We go get paid by the insurance company.

--------------

I still recommend enough insurance. I especially recommend enough UIM insurance to protect your own self in the event of negligent driver damages you and has little/no insurance. But, there are many things that happen before a person will ever have their personal assets touched. Although such things do happen, they happen a lot less than you think because the high level injury lawyers never want an uncollectable judgement. To collect a judgement, you want an insurance company on the other side. Speaking for myself, I have practiced law for 10 years and never collected a penny from the person I sued. I have collected a lot from their insurance carriers - sometimes more than the insurance policy at issue.

It's a crazy world. Insurance companies are necessary. But, there is a lot of stuff happening the average person doesn't understand and the cynics milking the file or juicing claims handling profits will try to take advantage. Fear of getting sued motivates people to buy more insurance and is a good selling tactic. Bonus for the insurance companies: the fear sown is of the insurance companies main adversary - the trial lawyer. Look at this thread, there are comments about getting sued - but hardly any about needing to sue bc YOU are the victim of negligence. It's the way our minds and emotions work.

At the end of the day, I can tell you I know widows, children and others maimed and killed by negligence. I fight for years for these people before I ever get paid. I have to finance this litigation on behalf of the sick and injured. But, the insurance companies delay, deny and defend. They force me to become Big Gun Joe Adler just to get what people need. They create their fiercest adversary by pushing them to greater and greater lengths.

PS I attached a legal memo for any lawyers reading this.

Last PS - I had to leave before full editing. Please forgive any errors.