Author Topic: Umbrella Policy  (Read 5350 times)

dude

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Umbrella Policy
« on: April 08, 2015, 01:17:24 PM »
Curious as to whether you have one.  If so, why?  If not, why not?  Wonder if MMM himself does?

tarheeldan

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Re: Umbrella Policy
« Reply #1 on: April 08, 2015, 01:22:01 PM »
I don't, but only because they are expensive as a stand-alone product (I'm not a homeowner).

The marginal cost if you already have property and auto insurance seems worth it to protect your assets, particularly true the more assets you have to protect.

BlueHouse

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Re: Umbrella Policy
« Reply #2 on: April 08, 2015, 01:30:51 PM »
Yup.  Finally have enough assets that are worth protecting.  I live in a nice house in an area where many people believe that suing an insurance company is free money and doesn't hurt anyone else.   I live in a house with a sidewalk that someone could slip and fall on.  I have enough people working in or on my house that if they got hurt, I don't want to lose my house (or spend weeks of my life defending myself).  I also started requiring any workers that enter my house to provide me with a copy of their insurance policy. (house painters, welders for fence, housecleaner).  It's a little bit of money for a lot of peace of mind. 

Frankies Girl

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Re: Umbrella Policy
« Reply #3 on: April 08, 2015, 01:46:33 PM »
I got a quote for one recently - $214 for 1 million umbrella, bundled in with our home/auto. I'm still debating. While we do have well over that in assets, we are super low risk to actually ever need the extended coverage an umbrella provides. The first I heard of them was on this forum.

It's just me and the hubby, no kids. We drive basic cars, 1 is over 10 years old, the other newish but a base model and are safe drivers - never caused an accident and no tickets for anything. We barely get 5k a vehicle yearly as we don't drive a whole bunch in general. Own a small home in a working class neighborhood and no other property. No fancy watercraft or off-road vehicles, dogs, trampolines or other hazards. We don't have that many people over to the house. We're actually kind of boring when I think about it. ;)

I know that logically it makes sense for that "just in case" and it's not that much to pay, but it irks me that in the event that we were sued, the lawyers would see the umbrella and go for broke.

But probably later this year, we'll be opening an umbrella just for the peace of mind of having it.


But from what I've read recently, umbrellas are highly recommended on MMM forum, if you have enough in assets to justify getting one.

SaintM

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Re: Umbrella Policy
« Reply #4 on: April 08, 2015, 02:54:17 PM »
I got a quote for an umbrella policy a couple months ago.  the policy would cover liability associated with my three houses and two cars.  The cost was a couple hundred dollars for the umbrella policy, but it would require me to increase liability coverage on each car and house.  The total cost was several hundred dollars.

A better option would be to transfer the houses into corporations, and a spendthrift trust would own the corporations as well as our investments.  At that point, I would legally own next to nothing, so there is nothing for a creditor to collect.

BlueMR2

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Re: Umbrella Policy
« Reply #5 on: April 08, 2015, 03:03:40 PM »
No, for a couple of reasons.  We have more cars than people in our house, so we fall into the high risk category and the price per million is quite high.  Also, some of the car tour/rallye events we do are explicitly called out as disqualifying in the umbrella language.

It's funny, we're quite low risk overall.  We really don't use our cars that much.  I've never had a claim in my entire life.  My wife hasn't had one in nearly a decade (and has never had any more than a fender bender).  When statistics meet up with individuals outside the bell curve, interesting things happen I guess...

Candace

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Re: Umbrella Policy
« Reply #6 on: April 08, 2015, 03:05:04 PM »
Yes, I figure I need to get one, now that I have surpassed $1M in assets. Having assets can make you a target, even if you don't flaunt them.

I use USAA for my auto and homeowners'. It's been on my list for about a week now to get the umbrella. I wanted to do it a couple of years ago, but still technically co-owned a boat with my ex-husband although he had kept it. When I called USAA to find out about an umbrella policy back then, the cost was prohibitive because my name was still on the boat. Now he's managed to sell it, and my stash has grown, so I need to revisit. Hopefully it'll be a small price to pay against the possibility of losing my money in a lawsuit.

Thanks for the nudge.

Doulos

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Re: Umbrella Policy
« Reply #7 on: April 08, 2015, 03:05:45 PM »
We have one, and consider this the most important insurance above the rest.
It is not to protect our property.
It is to protect us.

It covers any crazy thing life can throw at you.  Like, if you were golfing and you somehow randomly injured someone with a golf ball.
What you are really buying is $1 million dollars of investment that the insurance company never wants to pay.

They will protect you with lawyers to ensure that you and they are cleared of responsibility in such cases.

That is how I view it.

NCGal

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Re: Umbrella Policy
« Reply #8 on: April 08, 2015, 03:36:20 PM »
For all the reasons already mentioned we have one too. We're two people with one house and one car. 1M costs $110 in addition to homeowner's and auto policies. It's worth every penny.

Eric

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Re: Umbrella Policy
« Reply #9 on: April 08, 2015, 03:39:46 PM »
Previous discussion if you're interested:

http://forum.mrmoneymustache.com/ask-a-mustachian/umbrella-insurance-yay-or-nay/

I was surprised by how many people said yes, they have it.

curler

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Re: Umbrella Policy
« Reply #10 on: April 08, 2015, 04:12:19 PM »
Only when it is raining.
(Sorry, couldn't help myself).

seattleite

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Re: Umbrella Policy
« Reply #11 on: April 09, 2015, 10:53:28 PM »
I have a $2M policy though I'm considering raising it as my net worth increases.

A fellow mustachian at my company who retired early a couple months ago gave a talk right before he left and brought up the subject of umbrella insurance. His take was that even if you don't have a lot of assets yet but have a high paying job you could still be a good target to go after since you'll be able to pay later with your high income.

What scares me is that I could be sued for more than I have, right before I plan on retiring, and be forced to continue working to pay it off, and maybe even work until normal retirement age. That scares the bajesus out of me. Man, why did you bring this up? Now I won't be able to sleep tonight. Somebody please tell me that my fears on unfounded.

Taran Wanderer

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Re: Umbrella Policy
« Reply #12 on: April 09, 2015, 11:46:35 PM »
Yes.  Minimal annual cost, and good protection. $1 million now on top of $500k coverage on home and auto policies. Will probably increase it as net worth exceeds the total coverage.

Valhalla

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Re: Umbrella Policy
« Reply #13 on: April 10, 2015, 01:13:29 AM »
I got a quote for an umbrella policy a couple months ago.  the policy would cover liability associated with my three houses and two cars.  The cost was a couple hundred dollars for the umbrella policy, but it would require me to increase liability coverage on each car and house.  The total cost was several hundred dollars.

A better option would be to transfer the houses into corporations, and a spendthrift trust would own the corporations as well as our investments.  At that point, I would legally own next to nothing, so there is nothing for a creditor to collect.
I dunno, sounds like a major pain to manage, unless you're doing it for estate planning purposes too.  This is also not cheap.  I'm not 100% convinced it shields you from liability, as a judgement could be filed against you to continually consume any and all disbursements from the corporation until it has paid off the judgement. 

Personally I have a $2 m liability policy. It only costs $600 and is cheap to protect what I have worked so hard to build up.  Don't be penny wise and pound foolish.

All it takes is one incident and you can be screwed. Slander someone, lawsuit goes after you for your net worth.  Have an accident and injure someone seriously, your net worth is at stake. 

This is what you have worked so hard for to FIRE... don't skimp on it to save a few hundred bucks.  I'd rather give up my cars and associated insurance on them than to skimp on this.  I have seen people who have paid tens / hundreds of thousands of dollars due to freak accidents and wished they had umbrella insurance.