The Money Mustache Community
General Discussion => Welcome and General Discussion => Topic started by: phildonnia on November 10, 2020, 11:01:47 AM
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My financial advisor has always recommended that I carry umbrella coverage equal to my net worth.
Something doesn't seem right about this. Shouldn't I have coverage equal to the amount of a possible injury claim, regardless of my net worth?
Suppose Justin Verlander slips on my sidewalk and breaks his arm, costing him $28 million. Is a court going to award him:
1. My net worth, and then the insurance will pay me back
2. The amount of my insurance, but my net worth is protected
3. My net worth, plus my insurance coverage?
If 2 or 3, then what is the point of paying more for higher coverage?
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I'm pretty sure he would sue for $28 million and your insurance would pay up to the amount of coverage you have and then you would be on the hook for the rest - up to your net worth. So yes, technically you are correct, your net worth shouldn't matter when determining amount of coverage. That's my understanding anyway..
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You probably can't protect against every possible outcome but if you have a $1 million dollar policy, at least you will have the insurance company (and their team of lawyers) on your side trying to protect their million dollars.
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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.
So best suggestion is have more than whatever they might hit you for and keep that number close to the chest. If you don't have much net worth to protect, then getting cleared out isn't as much of a loss so you could run with little coverage and you can probably reveal that early on to prevent them wasting time on litigation that won't return much.
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Posting to follow. I also have a $1 million umbrella policy and am interested in hearing the collective wisdom of this forum.
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You probably can't protect against every possible outcome but if you have a $1 million dollar policy, at least you will have the insurance company (and their team of lawyers) on your side trying to protect their million dollars.
That is one thing I had considered. The higher your coverage, the more upset your insurance company will be, and the more lawyers they will throw at the problem. So maybe I should think of it more as legal cost insurance.
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You probably can't protect against every possible outcome but if you have a $1 million dollar policy, at least you will have the insurance company (and their team of lawyers) on your side trying to protect their million dollars.
That is one thing I had considered. The higher your coverage, the more upset your insurance company will be, and the more lawyers they will throw at the problem. So maybe I should think of it more as legal cost insurance.
Also, get quotes from your insurance agent. A $500,000 policy was about the same as $1 million policy for me. He said $1 million is the most common. I think the total cost was about $200/yr and that's extended to 4 houses (3 are rentals).
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He said $1 million is the most common. I think the total cost was about $200/yr and that's extended to 4 houses (3 are rentals).
We also have $1 million umbrella coverage and it was about $200/yr. I got that about 1-2 years ago. We were around $200K NW outside of the retirement accounts which are protected. I figured it was time since we were building enough wealth to worry about protecting it.
My reasoning was that the lawyers being on my side was worth a lot plus it would be a pretty big settlement to go over the $1M.
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This is why it's beneficial to have a whole bunch of gold. Ah geez Judge, I just can't afford any more than that (gold hidden in the back 40 somewhere).
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My financial advisor has always recommended that I carry umbrella coverage equal to my net worth.
Something doesn't seem right about this. Shouldn't I have coverage equal to the amount of a possible injury claim, regardless of my net worth?
Suppose Justin Verlander slips on my sidewalk and breaks his arm, costing him $28 million. Is a court going to award him:
1. My net worth, and then the insurance will pay me back
2. The amount of my insurance, but my net worth is protected
3. My net worth, plus my insurance coverage?
If 2 or 3, then what is the point of paying more for higher coverage?
Neither (in most cases) 2 or 3 is likely to happen.
My understanding is generally, insurance is not discussed in court. In fact, when it is actually the insurance doing the suing they tend to do it using the insured's name.
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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?
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I don't know the answer to the legal question, but I can say that we bought the biggest umbrella policy we could reasonably find. Our policy is 10M and it costs about twice as much as the 1M policy would. I am kind of interested in going up to 20M in the future but it's not a pressing concern.
The way a decided the amount was I tried to do some research on the types of losses one is likely to encounter that would be covered. Then I tried to get a sense of the distribution. I wanted to cover, say, 99% of the cases in which my wealth would be significantly depleted. From what I read personal injury judgments for more than 10M are extremely rare.
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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?
I'm afraid that the above is mistaken. I'm not aware of any jurisdiction that does not require timely disclosure of all insurance policies during initial paper discovery. In addition, I'm also not aware of any jurisdiction that permits disclosure to the jury of the presence of insurance. Moreover, your net worth is generally not admissible, except in some limited circumstances such as malicious acts that open the door for punitive damages.
In addition, most tax advantaged retirement accounts are protected from recovery in personal injury and libel suits. So, most people exclude these from net worth calculations for umbrella policies.
After 20 plus years in the industry, I can tell you that I never saw a case that did not resolve within the policy limits. When I previously researched whether to get an umbrella policy for our entire net worth or just a fraction of it, I also interviewed former classmates then working at AIG, Liberty Mutual, Chubb, and others, and they too were unaware of any case that resolved in excess of the policy limits. And, some of these folks handled excess casualty cases involving horrific accidents with estimated damages in excess of $20 million. Keep in mind that some of these cases went to a jury verdict, the verdict exceeded the policy limits, and the insurance companies after all appeals just tendered the policy limit to resolve the case. Plaintiff attorneys might seek more money beyond the policy from large, self-insured organizations, but none of my contacts was aware of them doing so against an individual. That's because most individuals just threaten bankruptcy, and the effort isn't worth it for plaintiff attorneys.
At the end of the day, it is a matter of risk tolerance, but the risk of a lawsuit recovery exceeding your policy limits and a plaintiff attorney who jumps through the hoops to try to collect is very unlikely.
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We recently increased our 1 million to a 2 million umbrella policy. I don't think I'll worry about holding much more than that in coverage.
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The more "public" you are, the more you need the umbrella policy. are you a landlord? do you own a small business? (even a side hustle on a 1099).
We have an umbrella policy equal to net worth. its a couple hundred bucks.
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Umbrella insurance is cheap, get it to protect your stash.
Really we are not insurance people. We insure for the catastrophic stuff, we don’t sweat the small stuff. We don’t have life insurance. We don’t have anything but liability on most of our vehicles. We don’t have all of the other kinds of “little “ insurances that people have. ( If it was at all economically viable I would seriously consider long-term care insurance, but that is no longer a reasonable option.) we are insured for the big stuff and of course along with that would never ever go without substantial healthcare insurance.
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If you think you need $28 million in coverage and you can afford it, then by all means, see if an insurer will sell it to you.
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In addition, most tax advantaged retirement accounts are protected from recovery in personal injury and libel suits. So, most people exclude these from net worth calculations for umbrella policies.
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That's because most individuals just threaten bankruptcy, and the effort isn't worth it for plaintiff attorneys.
Yup, I don't carry an umbrella policy because almost all of my net worth is sheltered from bankruptcy. However, if I had seven figures in a taxable account I sure as hell would have a policy!
We recently increased our 1 million to a 2 million umbrella policy. I don't think I'll worry about holding much more than that in coverage.
If you are going to carry an umbrella policy I would personally carry enough to kill a software engineer with your car. That's going to be something like lifetime earnings + $500K. For a Google software engineer that would possibly be something like $13M.
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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?
I'm afraid that the above is mistaken. I'm not aware of any jurisdiction that does not require timely disclosure of all insurance policies during initial paper discovery. In addition, I'm also not aware of any jurisdiction that permits disclosure to the jury of the presence of insurance. Moreover, your net worth is generally not admissible, except in some limited circumstances such as malicious acts that open the door for punitive damages.
In addition, most tax advantaged retirement accounts are protected from recovery in personal injury and libel suits. So, most people exclude these from net worth calculations for umbrella policies.
After 20 plus years in the industry, I can tell you that I never saw a case that did not resolve within the policy limits. When I previously researched whether to get an umbrella policy for our entire net worth or just a fraction of it, I also interviewed former classmates then working at AIG, Liberty Mutual, Chubb, and others, and they too were unaware of any case that resolved in excess of the policy limits. And, some of these folks handled excess casualty cases involving horrific accidents with estimated damages in excess of $20 million. Keep in mind that some of these cases went to a jury verdict, the verdict exceeded the policy limits, and the insurance companies after all appeals just tendered the policy limit to resolve the case. Plaintiff attorneys might seek more money beyond the policy from large, self-insured organizations, but none of my contacts was aware of them doing so against an individual. That's because most individuals just threaten bankruptcy, and the effort isn't worth it for plaintiff attorneys.
At the end of the day, it is a matter of risk tolerance, but the risk of a lawsuit recovery exceeding your policy limits and a plaintiff attorney who jumps through the hoops to try to collect is very unlikely.
Are you saying that the odds of someone trying to go past the usual 300k or so of regular auto policy is unlikely and therefore we shouldn't bother with an umbrella policy? Or that 1m umbrella is likely more than sufficient?
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It's a matter of risk tolerance. There's no one way to skin a cat.
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I got an umbrella policy ($1M) years ago as I was a landlord. I don't rent out properties anymore but kept the policy anyway. You just never know if someone is going to slip on the tiny patch of ice on your sidewalk, then sue you. I think mine is under $200/yr.
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$3M umbrella policy at $450/yr, plus $150/yr for landlord status. Moving down to $2M coverage would save only $100/yr. I shop around 1-2x a year but never find rates as good as I get overall from home/auto/landlord/umbrella combined.
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I'm afraid that the above is mistaken. I'm not aware of any jurisdiction that does not require timely disclosure of all insurance policies during initial paper discovery. In addition, I'm also not aware of any jurisdiction that permits disclosure to the jury of the presence of insurance. Moreover, your net worth is generally not admissible, except in some limited circumstances such as malicious acts that open the door for punitive damages.
In addition, most tax advantaged retirement accounts are protected from recovery in personal injury and libel suits. So, most people exclude these from net worth calculations for umbrella policies.
After 20 plus years in the industry, I can tell you that I never saw a case that did not resolve within the policy limits. When I previously researched whether to get an umbrella policy for our entire net worth or just a fraction of it, I also interviewed former classmates then working at AIG, Liberty Mutual, Chubb, and others, and they too were unaware of any case that resolved in excess of the policy limits. And, some of these folks handled excess casualty cases involving horrific accidents with estimated damages in excess of $20 million. Keep in mind that some of these cases went to a jury verdict, the verdict exceeded the policy limits, and the insurance companies after all appeals just tendered the policy limit to resolve the case. Plaintiff attorneys might seek more money beyond the policy from large, self-insured organizations, but none of my contacts was aware of them doing so against an individual. That's because most individuals just threaten bankruptcy, and the effort isn't worth it for plaintiff attorneys.
At the end of the day, it is a matter of risk tolerance, but the risk of a lawsuit recovery exceeding your policy limits and a plaintiff attorney who jumps through the hoops to try to collect is very unlikely.
Wow, can I just say that there is more useful information in this one forum post than everything Google can turn up on the subject? Thank you! (Although I am not planning to decrease our coverage, since it is already a relatively small cost.)
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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?
I'm afraid that the above is mistaken. I'm not aware of any jurisdiction that does not require timely disclosure of all insurance policies during initial paper discovery. In addition, I'm also not aware of any jurisdiction that permits disclosure to the jury of the presence of insurance. Moreover, your net worth is generally not admissible, except in some limited circumstances such as malicious acts that open the door for punitive damages.
In addition, most tax advantaged retirement accounts are protected from recovery in personal injury and libel suits. So, most people exclude these from net worth calculations for umbrella policies.
After 20 plus years in the industry, I can tell you that I never saw a case that did not resolve within the policy limits. When I previously researched whether to get an umbrella policy for our entire net worth or just a fraction of it, I also interviewed former classmates then working at AIG, Liberty Mutual, Chubb, and others, and they too were unaware of any case that resolved in excess of the policy limits. And, some of these folks handled excess casualty cases involving horrific accidents with estimated damages in excess of $20 million. Keep in mind that some of these cases went to a jury verdict, the verdict exceeded the policy limits, and the insurance companies after all appeals just tendered the policy limit to resolve the case. Plaintiff attorneys might seek more money beyond the policy from large, self-insured organizations, but none of my contacts was aware of them doing so against an individual. That's because most individuals just threaten bankruptcy, and the effort isn't worth it for plaintiff attorneys.
At the end of the day, it is a matter of risk tolerance, but the risk of a lawsuit recovery exceeding your policy limits and a plaintiff attorney who jumps through the hoops to try to collect is very unlikely.
Are you saying that the odds of someone trying to go past the usual 300k or so of regular auto policy is unlikely and therefore we shouldn't bother with an umbrella policy? Or that 1m umbrella is likely more than sufficient?
Personal Injury Lawyer here, I do a lot of work to make sure insurance companies pay every red cent I earn. In fact, there are ways to make the insurance company pay above the policy limits and I always "set the table" to make sure the person I sue will never have to pay anything. They never know it, but I do much more work to protect the person I sue than their own lawyer (bought and paid for by the insurance company). Say what you will, but that is a stone cold fact and much more common than most imagine.
The better way of thinking of all of this is that your insurance will PROTECT YOU if someone without enough insurance negligently INJURES YOU. Most (Every?) state has "Underinsured Motorist" and "Uninsured Motorist" coverage in their legally mandated insurance policies. This protects you in the event someone with a state minimum insurance policy runs a red light and causes you to suffer catastrophic injuries.
Think about it, if you are the injured person and the other person is underinsured/uninsured - what happens? Answer: You make a claim on your own underinsured/uninsured motorist policy. This happens much more often than Justin Verlander slipping and falling and causing a major liability! So, quit worrying about being held liable by some dastardly plaintiff lawyer for a freak accident and and worry about what YOUR plaintiff lawyer will want to see after a catastrophic injury when they are HELPING YOU! :)
I know it's hard to imagine, but Plaintiff lawyers aren't your enemy unless you are an insurance company or an insurance defense lawyer: https://www.youtube.com/watch?v=QMrjQNfd-J8&list=LLl9PURf0c65Y83tEKNB3snw&index=169 Even the insurance defense lawyers like me since they get paid by the hour to fight me!
When it comes to an umbrella policy, make sure it will protect you in the event of an underinsured/uninsured driver causing major injury. I had a case the other day, the client bought 1 million in umbrella coverage but it was for LIABILITY ONLY (i.e. it protected him from being sued, but did not protect himself from the medical bills caused by the other person!). That was a State Farm policy, not some fly-by-night operation. After this client received 500k+ in medical bills from a crash he did not cause and he learned his umbrella policy was useless, he was very disappointed.
The VAST majority of people are afraid of plaintiff lawyers when they need to be afraid of their underinsured neighbors and insurance companies. Protect yourself by having sufficient underinsured/uninsured coverage in your property and casualty insurance :)
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This thread inspired me to call my agent. He said that I would need to up my existing auto from 100k/300k to 250k/500k before an umbrella policy of 1m (the lowest one, they go up in 1m increments) would be available. Whatever the house needs to be at (to be able to purchase an umbrella policy) was already met by my current homeowner's policy. This was with All State.
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I'm a little disappointed in the Umbrella policy quotes I'm getting. I'm in Fl, have three cars, a home and a piece of vacant land. No violations on our drivers licenses, no lawsuits. The first quote was $559 and to add underinsured/uninsured motorist cover age was an additional $510. That is a $1M policy.
I got a second quote it was $311, but I had to have my auto with them, the auto is $240 a year more than the company I'm with. To add the underinsured/uninsured motorist to the umbrella was an additional $290.
If anyone is in Florida and has a company that is cheaper, please mention the name, so I can get a quote. Thanks
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I'm afraid that the above is mistaken. I'm not aware of any jurisdiction that does not require timely disclosure of all insurance policies during initial paper discovery. In addition, I'm also not aware of any jurisdiction that permits disclosure to the jury of the presence of insurance. Moreover, your net worth is generally not admissible, except in some limited circumstances such as malicious acts that open the door for punitive damages.
In addition, most tax advantaged retirement accounts are protected from recovery in personal injury and libel suits. So, most people exclude these from net worth calculations for umbrella policies.
After 20 plus years in the industry, I can tell you that I never saw a case that did not resolve within the policy limits. When I previously researched whether to get an umbrella policy for our entire net worth or just a fraction of it, I also interviewed former classmates then working at AIG, Liberty Mutual, Chubb, and others, and they too were unaware of any case that resolved in excess of the policy limits. And, some of these folks handled excess casualty cases involving horrific accidents with estimated damages in excess of $20 million. Keep in mind that some of these cases went to a jury verdict, the verdict exceeded the policy limits, and the insurance companies after all appeals just tendered the policy limit to resolve the case. Plaintiff attorneys might seek more money beyond the policy from large, self-insured organizations, but none of my contacts was aware of them doing so against an individual. That's because most individuals just threaten bankruptcy, and the effort isn't worth it for plaintiff attorneys.
At the end of the day, it is a matter of risk tolerance, but the risk of a lawsuit recovery exceeding your policy limits and a plaintiff attorney who jumps through the hoops to try to collect is very unlikely.
I'm going off word of mouth from my friend/coworker over a 12 month saga right up to the statute of limitations for the injury in our state. The other driver disclosed they had insurance obviously, but they definitely couldn't present limits in court to the jury, which we agree on it appears. She made it sound like she didn't know defendant's limits either though. During the jury trial defendant's insurance lawyers tried to make it out that the jury would be taking personally from that man and ruining him financially for life with massive debt obligations.
Plaintiff was just asking for reimbursement for actual medical costs experienced (spinal injury) to tune of six figures and anticipated medical costs for next 3 years of treatment.
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I'm going off word of mouth from my friend/coworker over a 12 month saga right up to the statute of limitations for the injury in our state. The other driver disclosed they had insurance obviously, but they definitely couldn't present limits in court to the jury, which we agree on it appears. She made it sound like she didn't know defendant's limits either though. During the jury trial defendant's insurance lawyers tried to make it out that the jury would be taking personally from that man and ruining him financially for life with massive debt obligations.
Plaintiff was just asking for reimbursement for actual medical costs experienced (spinal injury) to tune of six figures and anticipated medical costs for next 3 years of treatment.
Well, that's why I chose the hypothetical example I did. I'm not talking about gold diggers walking into a tree limb. I think people like that will go away if you just give them a thousand bucks. I want protection against the possibility that I will cause someone a real, legitimate injury, that needs to be made whole.
But if claims are in any way related to insurance coverage, then why pay more for higher coverage?
There's also a distinction that needs to be made between actual and punitive damages. Punitive damages are intended to hurt the defendant. Would a court say, okay, you need to be punished with a $1MM loss, but since you have $2MM in insurance, lets make that $3MM? Again, what is the point of even having coverage then?
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So, first, don't worry about punitive damages. They are very rare, very hard to get, and don't apply in the kinds of claims you'd be likely to be involved in -- and if they did, I doubt insurance would cover that anyway. Just behave reasonably and you should be fine. What you have to worry about are things like pain and suffering, economic loss (if someone can't do their job any more), and long-term care costs. Which can be huge in and of themselves.
The way it was described earlier is what I recall: the existence and amount of insurance is discoverable, but it cannot be presented to the jury, because you don't want a jury to say, hey, the guy has a $2M insurance policy, let's award $2M in pain and suffering for a $25K injury, it's just the insurance company. Now, personally, I don't think you should be able to talk about finances the other way, either; the jury's job is supposed to be to figure out who was at fault and how much that injury cost. If the plaintiffs can't point out that the defendants have insurance to cover those costs, then the defendants shouldn't be able to whine about how the claim will bankrupt them.
As a practical matter, yes, most cases settle for the insurance limits. Because most people don't have money! But that's not an actual rule or requirement. If you get a $3M judgment against you, and you have $1M in insurance, the plaintiff has ever right to expect you to pay the $2M difference out of your own assets. Yes, some assets will probably be protected, and that's going to be different in every state, but you have a legal judgment against you for $2M, and they can recover directly from you.
I don't think it's reasonable to expect perfection or insure against every risk, and I'm not trying to. But I got umbrella insurance years ago, because I know I'm a target. I'm a lawyer. People are going to look at me and think I'm rich, even if I'm not -- and I'm going to get zero sympathy from any jury around here. And I don't want one stupid or thoughtless moment (and I have ADD, so I definitely have them) -- to wipe out everything that I've worked for for decades. I think I have $2M. So if I take out Justin Verlander, I'm fucked, but it should be enough to entice a settlement for the vast majority of the kinds of claims that I could be involved in.
And yes, I did need to have certain auto and home limits to qualify for the insurance. But I already had those higher auto limits out of the same concerns that led to the umbrella insurance.
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This thread inspired me to call my agent. He said that I would need to up my existing auto from 100k/300k to 250k/500k before an umbrella policy of 1m (the lowest one, they go up in 1m increments) would be available. Whatever the house needs to be at (to be able to purchase an umbrella policy) was already met by my current homeowner's policy. This was with All State.
That's pretty standard to require very high coverage on your auto insurance as a condition of getting umbrella coverage. All the insurance companies have that.
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This thread caused me to look again st our umbrella coverage and take it ip a milli9n. It does not cover our assets. The cost will be around $1,100 annually.
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Another thing to consider is that 401(k) plans, and IRAs in some states, are not touchable by lawsuits. ERISA protections. If the bulk of your net worth is in those types of plans, it should factor in to whether or not you want to lay out the cash for an umbrella plan.
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This thread caused me to look again st our umbrella coverage and take it ip a milli9n. It does not cover our assets. The cost will be around $1,100 annually.
Is there a typo here?
I pay around $600 for auto, renters, and umbrella, per year, combined!
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This thread caused me to look again st our umbrella coverage and take it ip a milli9n. It does not cover our assets. The cost will be around $1,100 annually.
Is there a typo here?
I pay around $600 for auto, renters, and umbrella, per year, combined!
Is there a typo here?! That sounds extremely low to me, but I’m in an expensive insurance state. What company are you with?
All GEICO policies underwritten for Hawaii.
Breakdown:
$165 auto every 6 months, 300/300/100 liability
$124 renters every 12 months, 300 liability
$154 umbrella every 12 months, 1m liability
I realize that my state in on the cheaper side for auto, but not crazily so. On the mainland the highest paid for the same coverage was around $300 every 6 months in Seattle. For some reason umbrella and renters are slightly more expensive here though.
But I've never seen umbrella policies costing $1,100/year, even with the maximum 10m coverage. So I'm curious how @iris lily is getting such numbers.
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This thread caused me to look again st our umbrella coverage and take it ip a milli9n. It does not cover our assets. The cost will be around $1,100 annually.
Is there a typo here?
I pay around $600 for auto, renters, and umbrella, per year, combined!
That $1,200 ish is just for umbrella insurance. We pay a lot more in addition for auto insurance but then of course we have 4+ vehicles.
One pays a premium to live in the urban core where car break-ins, car thefts, looting and rioting take place on the regular. Thug life does affect our pocketbook.
Provider is Allstate. I thought it was cheaper to until I talk to our agent a couple days ago. But it is what it is and it allows me to sleep at night so it’s fine.
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I'm now paying $271 for $2MM in coverage, through "Stillwater Insurance Group".
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This thread inspired me to call my agent. He said that I would need to up my existing auto from 100k/300k to 250k/500k before an umbrella policy of 1m (the lowest one, they go up in 1m increments) would be available. Whatever the house needs to be at (to be able to purchase an umbrella policy) was already met by my current homeowner's policy. This was with All State.
That's pretty standard to require very high coverage on your auto insurance as a condition of getting umbrella coverage. All the insurance companies have that.
I tried to get umbrella insurance recently and was surprised to find that they wouldn't sell it to me since I don't have car insurance/ don't own a car. Apparently they would require a non-owners car insurance policy first. I already get supplemental liability whenever I rent a car, but it upped the cost significantly to need to add on non-owners car insurance for the whole year. You'd think I'd be more attractive to them since I rarely drive!
To echo what others have said, I've been reading a lot about this on Bogleheads and many seemed to be of the mind that just having a policy for ~$1-2M meant that the insurance company would be motivated to defend you in court, and if it came to that offer an attractive settlement.
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Mine's $370 for $2M coverage through Allstate.
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This thread caused me to look again st our umbrella coverage and take it ip a milli9n. It does not cover our assets. The cost will be around $1,100 annually.
Is there a typo here?
I pay around $600 for auto, renters, and umbrella, per year, combined!
That $1,200 ish is just for umbrella insurance. We pay a lot more in addition for auto insurance but then of course we have 4+ vehicles.
One pays a premium to live in the urban core where car break-ins, car thefts, looting and rioting take place on the regular. Thug life does affect our pocketbook.
Provider is Allstate. I thought it was cheaper to until I talk to our agent a couple days ago. But it is what it is and it allows me to sleep at night so it’s fine.
My old zipcode in Seattle was also in the urban core and refused to be out-protested by the People's Republic of Portland, so we saw our fair share of breakins and protests. But really it shouldn't matter for the cost of liability insurance, which is what umbrella policies provide.
You mentioned 4 cars. Any teenage drivers that could be causing premiums to be this high?
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This thread caused me to look again st our umbrella coverage and take it ip a milli9n. It does not cover our assets. The cost will be around $1,100 annually.
Is there a typo here?
I pay around $600 for auto, renters, and umbrella, per year, combined!
That $1,200 ish is just for umbrella insurance. We pay a lot more in addition for auto insurance but then of course we have 4+ vehicles.
One pays a premium to live in the urban core where car break-ins, car thefts, looting and rioting take place on the regular. Thug life does affect our pocketbook.
Provider is Allstate. I thought it was cheaper to until I talk to our agent a couple days ago. But it is what it is and it allows me to sleep at night so it’s fine.
My old zipcode in Seattle was also in the urban core and refused to be out-protested by the People's Republic of Portland, so we saw our fair share of breakins and protests. But really it shouldn't matter for the cost of liability insurance, which is what umbrella policies provide.
You mentioned 4 cars. Any teenage drivers that could be causing premiums to be this high?
Nope we are old people. In fact a certain age Our auto insurance went down.We have no claims on insurance ever in 30 years. we’ve had the same company for 30 years never had at one claim.
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This thread caused me to look again st our umbrella coverage and take it ip a milli9n. It does not cover our assets. The cost will be around $1,100 annually.
Is there a typo here?
I pay around $600 for auto, renters, and umbrella, per year, combined!
That $1,200 ish is just for umbrella insurance. We pay a lot more in addition for auto insurance but then of course we have 4+ vehicles.
One pays a premium to live in the urban core where car break-ins, car thefts, looting and rioting take place on the regular. Thug life does affect our pocketbook.
Provider is Allstate. I thought it was cheaper to until I talk to our agent a couple days ago. But it is what it is and it allows me to sleep at night so it’s fine.
My old zipcode in Seattle was also in the urban core and refused to be out-protested by the People's Republic of Portland, so we saw our fair share of breakins and protests. But really it shouldn't matter for the cost of liability insurance, which is what umbrella policies provide.
You mentioned 4 cars. Any teenage drivers that could be causing premiums to be this high?
Nope we are old people. In fact a certain age Our auto insurance went down.We have no claims on insurance ever in 30 years. we’ve had the same company for 30 years never had at one claim.
Maybe its time to shop around.
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This thread caused me to look again st our umbrella coverage and take it ip a milli9n. It does not cover our assets. The cost will be around $1,100 annually.
Is there a typo here?
I pay around $600 for auto, renters, and umbrella, per year, combined!
That $1,200 ish is just for umbrella insurance. We pay a lot more in addition for auto insurance but then of course we have 4+ vehicles.
One pays a premium to live in the urban core where car break-ins, car thefts, looting and rioting take place on the regular. Thug life does affect our pocketbook.
Provider is Allstate. I thought it was cheaper to until I talk to our agent a couple days ago. But it is what it is and it allows me to sleep at night so it’s fine.
My old zipcode in Seattle was also in the urban core and refused to be out-protested by the People's Republic of Portland, so we saw our fair share of breakins and protests. But really it shouldn't matter for the cost of liability insurance, which is what umbrella policies provide.
Yep. We've had two catalytic converter thefts in the past year. My insurance company had no reason to care because we have a liability-only policy. The comprehensive coverage would have been worth it this year, but not enough to make up for the past decade where we would not have made any claims.
Our latest insurance bills:
Car (liability only, 15-year-old Prius): $148/6 months
Homeowners ($400k replacement cost, 1% deductible): $610/year
Umbrella ($2 million): $235/year
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I haven't had a comprehensive claim in a long time, but it's so cheap that I still carry it anyway. Vandalism, falling trees, deer in the road, etc. It seems like cheap insurance for and expensive piece of property.
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I was wrong that our umbrella insurance is $1200 a year, it’s not that much.p but still may be high at $847. Here is what our insurance guy says where PUP is umbrella coverage:
Your PUP is $847/year for 3 million with 4 cars, specialty auto, and 3 properties.
63104 is a factor
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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?
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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 was rear ended by a car while riding my bicycle and was very seriously injured. The person driving was at fault and there were numerous witnesses so the police report reflects that he was at fault (it was egregious). The insurance information the driver provided was for a policy not in effect on the date of the incident — he was effectively uninsured.
Based on my personal experience, I would recommend having the maximum medpay (usually $100,000) and at least $1 million in uninsured and underinsured motorist insurance. This is what we have, and I’m thankful for it now. The med pay is very important because it provides money for medical bills while you wait for the rest of the insurance claim to settle. This can easily take years when injuries are severe.
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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?
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We do have all the other coverages but I have a friend who was in a bad accident and the person at fault was under insured. They did eventually pay out on the bills but it was a fight. It is quite costly for me to add more with teen drivers. Interesting the differing advice.
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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.
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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.
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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.
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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).
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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.
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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?
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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.
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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
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PS - I also agree medical payments coverage is useful immediately after a crash.
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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.
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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.
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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.
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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?
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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.
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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.
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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?
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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 :)
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@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.
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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).
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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.
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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.
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Who is Justin Verlander?
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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.
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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!
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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.
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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.
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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.
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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.
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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.
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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 :)
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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.
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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.
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Who is Justin Verlander?
A famous baseball player with a lot of money.
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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.
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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.
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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.
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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."
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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.
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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?
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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.
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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?
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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.
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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.
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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?
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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.
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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!
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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?
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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.
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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?
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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.
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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.
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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.
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Thanks for the detailed run-down! Do you think your process is the way most personal injury lawyers handle it?If every plaintiff hires someone like you I think I'd be satisfied with that outcome in the end. If you get lawyers who often take cases where they don't offer to settle for the insurance amount or less, or they fail to do the turnabout thing where they team up with you to sue the insurance company for negligence, then you as a defendant are still on the hook for the excess. It would be useful to know how much of a risk that actually is.
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Thanks for detailed inside baseball @FIREby35, super interesting stuff.
A few questions:
1) why do insurers hire defense lawyers and pay them by the hour, creating the claim milking phenomenon, instead of having salaried in-house lawyers who could be more easily supervised?
2) as a defendent, what can I do minimize the risk of my representation breaching their quasi-fiduciary duty to me? Regularly ask them point blank, in writing, if a settlement has been offered?
3) I didn't fully understand what comfort letters are supposed to achieve, from the insurer's point of view. Why send one at all?
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Seattle:
The way I described is not how average lawyers do it. Average lawyers will never push past your insurance limits. You should understand they are too lazy to pursue assets beyond the insurance policy. If not lazy, then not yet fully formed advocates. If a personal injury lawyer pushes for true, full and fair compensation for serious injuries they will encounter a lot of insurance pushback. It takes time to become the advocate required to really get injured people what they deserve. It is much easier to take what the insurance company gives without a fight. A personal injury lawyer can be fat and happy on easy insurance payments as long as they don't think about how little the injured person is getting.
Paul der Krake:
1. Insurance companies do set up "in-house" relationships in addition to hiring outside firms. But, that is a raging conflict of interest and gives me everything I need to blow past their policy limits. Can you see it? Does the insurance company in-house lawyer represent their employer or the client? The law says they are supposed to rep the real, live person. Practical reality of an in-house counsel is that the insurer is calling the shots in their own interest.
2. The milking phenomenon is a part of any hourly paid legal service. It's really unavoidable. What's interesting, to me, is how the insurance companies do successfully negotiate for very low hourly rates in my town. There are plenty of lawyers ready to get on the corporate gravy train. But, the idea that insurance defense lawyers are prestigious is laughable. Most of the time they are nothing but low-level pawns taking orders from insurance adjusters. They may parade around town as "Corporate lawyers" but they have no power. Of course, there are exceptions to this generalization. But, I hardly bother talking to my opposing lawyers until we begin preparing the case for trial bc that lawyer has to get permission from the insurance adjuster for everything.
3. Comfort letters protect the insured. They say, "Be comforted, we will pay any verdict because we rejected offers to settle inside your insurance limit." Insurance companies hate them. I always try to force them to issue them. Average lawyer has never heard of it. Insurance defense lawyers pretend they have never heard of them. If the insurance defense lawyer really represented the live, human defendant then they would pursue a comfort letter for their client every single time. When I start asking them to get one for their client and they don't, the cement their conflict of interest and confirm my ability to collect an excess verdict. If they do get it, then they also confirm my ability to collect a full verdict. That's a "heads I win, tails you lose" situation for an insurance defense lawyer. You can imagine how much they like me.
4. To protect yourself, yes, 100% ask your lawyer if offers to settle have been made. Even better, tell them to offer the policy limit in writing. Really want to protect yourself? Go hire a Plaintiff lawyer in your town as "Personal Counsel" and have them demand this information and a comfort letter. This lawyer will behave differently than the lawyer paid by the insurance company because they are not compromised by the obvious conflict of interest.
5. I show my offer letters to defendants in depositions. I can always tell when the defense lawyer hasn't told the client about it because they object and ruin my deposition. The defendant is totally confused. This just proves the insurance defense lawyer violated their professional duty to inform their client of offers to settle. After some years, I have learned to have all depositions recorded and I have sanctions motions and briefs on file, ready to go for immediately after. We'll do the same thing again, but this time they are paying.
PS: I don't have to "set up" insurance companies to commit bad-faith. They do it on their own. When they get caught they say, "Hey, you set me up!" lol.
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It's rather surprising to hear that collecting from a known higher-net-worth individual is so difficult that most lawyers won't even bother to try for a higher settlement, but I'm happy to defer to your experience on that.
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Seattle: If you have a 1 million dollar policy you can rest assured knowing the insurance company will protect THEIR one-million with vigor. (Here, your interests align with the insurer). Few lawyers in your town have ever achieved a one-million dollar verdict or settlement. The insurance company knows which lawyers those are. If they sense advantage, they will force the lawyer to "go get it." Even with a strong opponent, a million dollar verdict is not so common. They will take their chances and defend. It's a rational choice, just not in their client's interest.
If you negligently hurt someone so bad that a one-million dollar policy is offered easily, your insurance company will demand a release of liability to protect your assets before paying.
The situation you are concerned about, major loss, insurance company offers limit timely and the opposing lawyer still wants to collect your personal assets is possible, but rare. Imagine the average lawyers saying, "No, I don't want your one million (333k to lawyer). Instead, I want to litigate for years, at my cost and go to a jury trial for the possibility of collecting marginally more 3, 4 or 5 years in the future (and the possibility of losing the jury trial)."
Possible? Yes. Likely? No.
I'm gonna have a trial in a month. State Farm has never offered a penny for 6 years since the crash. This is much more common. Straight deny and see who can climb the mountain.
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If you negligently hurt someone so bad that a one-million dollar policy is offered easily, your insurance company will demand a release of liability to protect your assets before paying.
Sorry, this bit wasn't clear to me. Would the insurance company demand I sign something to promise not to go after them for the excess, or would they demand the opposing party sign something to promise they won't go after me?
The situation you are concerned about, major loss, insurance company offers limit timely and the opposing lawyer still wants to collect your personal assets is possible, but rare. Imagine the average lawyers saying, "No, I don't want your one million (333k to lawyer). Instead, I want to litigate for years, at my cost and go to a jury trial for the possibility of collecting marginally more 3, 4 or 5 years in the future (and the possibility of losing the jury trial)."
"Possible but rare" is exactly why I'm buying insurance, no? If you're saying the insurance company flat-out won't ever agree to a settlement above the policy limit where I pay the excess, and that the only way to get more than the policy limit is to go to trial, that actually makes me feel pretty good about things. I know a few lawyers, and their income can be very irregular because of cases that drag out. The number who can afford to turn down being paid today in order to be paid double in five years isn't very high.
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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?
Ohio. Never been sued. No accident claims (house or vehicle), not even a speeding ticket ever myself. I've shopped multiple companies and the numbers all come back in the same range. One place told me it's because they penalize people with more vehicles than drivers. Seems crazy to me. It's not like I'm using more than 1 at a time... And yet somehow if I owned multiple houses and rented them out it wouldn't increase the risk and payments?
Then as I mentioned above, reading the fine print they exempt the umbrella from covering things that the standard insurance does cover, so you should expect to fall back to that base coverage anyways. It's kind of like that credit card car rental insurance, sounds like a great idea, but read the terms and conditions and it's unusable in practice due to all the restrictions and requirements. Every discussion with insurance agents (including ones I otherwise like and use) about umbrella insurance has me walking out feeling like they're trying to rip me off.
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... reading the fine print they exempt the umbrella from covering things that the standard insurance does cover, so you should expect to fall back to that base coverage anyways.
Isn't that why it's called "umbrella", it's "on top" of the other things that they want you to insure separately?
I assumed the reason it can be cheap is because the marginal risk of needing to use the insurance beyond the standard coverages is so small.
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Reading all this stuff is very interesting.
A hypothetical situation:
If I was getting sued and I know I might lose, knowing what type of assets are protected.
Beside the primary home, 401k, IRAs, SS, I can go buy an annuity with money I have left so there are very little left they can take from it. Is this the gist of it or there's more to it ??
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If you negligently hurt someone so bad that a one-million dollar policy is offered easily, your insurance company will demand a release of liability to protect your assets before paying.
Sorry, this bit wasn't clear to me. Would the insurance company demand I sign something to promise not to go after them for the excess, or would they demand the opposing party sign something to promise they won't go after me?
The situation you are concerned about, major loss, insurance company offers limit timely and the opposing lawyer still wants to collect your personal assets is possible, but rare. Imagine the average lawyers saying, "No, I don't want your one million (333k to lawyer). Instead, I want to litigate for years, at my cost and go to a jury trial for the possibility of collecting marginally more 3, 4 or 5 years in the future (and the possibility of losing the jury trial)."
"Possible but rare" is exactly why I'm buying insurance, no? If you're saying the insurance company flat-out won't ever agree to a settlement above the policy limit where I pay the excess, and that the only way to get more than the policy limit is to go to trial, that actually makes me feel pretty good about things. I know a few lawyers, and their income can be very irregular because of cases that drag out. The number who can afford to turn down being paid today in order to be paid double in five years isn't very high.
1. The release is for the person injured by negligence. Before receiving any settlement, the insurance for the negligent person will require the negligence victim to sign a complete release. I'll say to my injured client, "When you sign this paper it means the case is over. You will never be able to come back for more. If we discover something new and terrible after you sign this paper it does not matter. So, when you sign this know it means case closed FOREVER."
From the point of view of the person whose negligence caused injury, this "release of liability" ends the threat of any liability in excess of your insurance.
2. You point about lawyers, their finances and the rare few who can turn down a big settlement today in favor of pursuing a "full justice verdict" tomorrow is spot on. I'm able to do what I do for injured people bc of my Mustachian nature. I can play the long game against insurance companies. While I don't have resources equal to an insurance company, I have enough that it doesn't matter on a single lawsuit. They can't outspend or outlast me. This is "FU" money applied professionally.
The fact is you should feel pretty good knowing what I have told you. The insurance will fight hard to protect their money. So hard, they sometimes forget their job is to protect you and not their money. If/When they make that mistake, I can "judo" that mistake into the potential for an unlimited recovery at trial. An excess verdict would rarely be a problem where your assets are at risk after any common negligence if you are adequately insured (car crash, is the obvious example).
3. Just like, final overview, the purpose of Umbrella, liability only insurance is protecting you if you negligently cause injury. All we have discussed is highly fact-specific for any individual case. But, having an umbrella policy to protect your assets is a good, necessary thing. Make it proportional to your assets without overdoing it. I've tried to make sure everyone understands an umbrella policy usually protects against liability only. To protect yourself against the negligence of others you need to pump up your Uninsured/Underinsured coverage or make a point to have that included within an umbrella coverage. It is at least as big a risk that a negligent driver will injure you, have little insurance and cause major financial liability as the other way around. So, don't focus on being negligent so much that you forget it is also possible to be a victim of negligence.
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DH and I have been going back and forth on umbrella for a while too. Most of our assets are not in protected forms so they should be protected, but the cost for us isn't as cheap as others are finding and how it protects we find off putting.
Cost:
1 million for us is about 440 per year and that covers liability and non/underinsured motorists (they are required to both be equal or the motorist to be denied).
2 million goes up to 660 per year.
We have never had a car accident, no tickets, good credit, no kids, no previous litigation etc. I think our issue is also that we have 2 drivers and three cars, even though we don't drive much (FIREd).
How it protects:
As someone else stated, we aren't sure how much to buy since buying up to networth makes no sense. You don't need your networth protected, you need the amount you can likely be sued for plus one dollar. I have no idea what that number is. If we got the 1 million policy and someone sued us for 1.5 million and the insurance paid the million, that 500,000 would still crash the stash. So now you need 2 million coverage. But if you are sued for 2.5 million, same problem.
So what are the likelihoods of actually being sued (or damaged by under/non- insured) in values in excess of the more standard 300,000/500,000? And if lawyers are only targeting insurance limits, why pay for more than that? That's pretty reasonable coverage?
I feel like I am lacking a graph or table with which to help me make an informed decision based on actual data.
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Thank you FIREby35 this really helps me. Keep up the good work with your clients!
I got my umbrella insurance and now I will up under and uninsured motorists.
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So what are the likelihoods of actually being sued (or damaged by under/non- insured) in values in excess of the more standard 300,000/500,000? And if lawyers are only targeting insurance limits, why pay for more than that? That's pretty reasonable coverage?
I feel like I am lacking a graph or table with which to help me make an informed decision based on actual data.
I’m definitely no expert, but I can tell you that we looked at this from the other way around. How much UM/UIM and med pay coverage do we need that we would not feel it was worth it to go after the at fault party for amounts beyond the coverage limits. For us it was $100k med pay and $1 million UM/UIM. We also have $1 million umbrella which is cheap and worth the peace of mind.
My concern about the level of guilt I’d feel for destroying someone’s life so badly that they could get more than $2 million out of me is more than my concern about having my net worth impacted. To get that kind of settlement, you generally have to permanently disable or kill someone. Doing $300k worth of damages on the other hand isn’t that hard. Hit someone making $100k / yr, shatter their tibia and a small brain injury (both very common) will result in not permanent disability but easily a couple of years of surgery / recovery / rehab. Lost wages + medical bills could easily hit that and you aren’t even getting into pain and suffering, scarring, and other real but less quantifiable effects.
Having personally been badly injured in a car crash, I mostly want to move on and get enough money that my expenses are covered and that I don’t lose money on the whole thing. No amount of money will make it ok, and if I had the choice I’d have the at fault driver’s license and vehicle revoked over any financial settlement. I’ve spoken to a lot of victims and most would give all the money back to not have the injuries.
In any case, that all goes back to think of what you will need and hope that it’s enough for any damage that you do. For me $1 million felt right - it will cover my salary and expenses for a few years plus the additional expenses of extra medical bills, physical therapy, mental health therapy, transportation to appointments, food delivery, gardener, housekeeper, childcare and other extra expenses for more household and transportation help incurred while I focus on my recovery. For me, the highest priority is getting better and knowing I don’t have to maintain a strict budget and can instead pay for all the extra help I need is worth having the higher level of coverage.
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Cost:
1 million for us is about 440 per year and that covers liability and non/underinsured motorists (they are required to both be equal or the motorist to be denied).
2 million goes up to 660 per year.
This made me go look at our USAA policy, we have homeowners and our cars insured there as well and our $2M umbrella policy is $815 per year, about $68 a month. I have no idea how other folks are getting such low rates!
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Cost:
1 million for us is about 440 per year and that covers liability and non/underinsured motorists (they are required to both be equal or the motorist to be denied).
2 million goes up to 660 per year.
This made me go look at our USAA policy, we have homeowners and our cars insured there as well and our $2M umbrella policy is $815 per year, about $68 a month. I have no idea how other folks are getting such low rates!
I have USAA Umbrella as well and agree that they are quite expensive. On the other hand - I keep them because I feel that they are one of the more reputable companies out there when it comes to insurance.
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The company I am looking at is USAA as well. I can't really imagine going with another company either since they have a history of sticking by the people they insure. All my other insurance is with them, so it would tie everything together.
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So what are the likelihoods of actually being sued (or damaged by under/non- insured) in values in excess of the more standard 300,000/500,000? And if lawyers are only targeting insurance limits, why pay for more than that? That's pretty reasonable coverage?
I feel like I am lacking a graph or table with which to help me make an informed decision based on actual data.
I’m definitely no expert, but I can tell you that we looked at this from the other way around. How much UM/UIM and med pay coverage do we need that we would not feel it was worth it to go after the at fault party for amounts beyond the coverage limits. For us it was $100k med pay and $1 million UM/UIM. We also have $1 million umbrella which is cheap and worth the peace of mind.
My concern about the level of guilt I’d feel for destroying someone’s life so badly that they could get more than $2 million out of me is more than my concern about having my net worth impacted. To get that kind of settlement, you generally have to permanently disable or kill someone. Doing $300k worth of damages on the other hand isn’t that hard. Hit someone making $100k / yr, shatter their tibia and a small brain injury (both very common) will result in not permanent disability but easily a couple of years of surgery / recovery / rehab. Lost wages + medical bills could easily hit that and you aren’t even getting into pain and suffering, scarring, and other real but less quantifiable effects.
Having personally been badly injured in a car crash, I mostly want to move on and get enough money that my expenses are covered and that I don’t lose money on the whole thing. No amount of money will make it ok, and if I had the choice I’d have the at fault driver’s license and vehicle revoked over any financial settlement. I’ve spoken to a lot of victims and most would give all the money back to not have the injuries.
In any case, that all goes back to think of what you will need and hope that it’s enough for any damage that you do. For me $1 million felt right - it will cover my salary and expenses for a few years plus the additional expenses of extra medical bills, physical therapy, mental health therapy, transportation to appointments, food delivery, gardener, housekeeper, childcare and other extra expenses for more household and transportation help incurred while I focus on my recovery. For me, the highest priority is getting better and knowing I don’t have to maintain a strict budget and can instead pay for all the extra help I need is worth having the higher level of coverage.
That is an interesting way of looking at it. Good food for thought.
I (thankfully) never had to deal with car accidents or even damaged property so knowing how (and how often) expenses leap from 500,000 to 1Million to 2million is still a mystery to me.
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Not bragging at all, but just to put out a data point- we have three car policies, homeowners, and six rental property policies with USAA and our 1MM umbrella is $255/year. No idea why it's lower than others'. 2MM would be $425, that's a bigger increase than I would have thought.
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The company I am looking at is USAA as well. I can't really imagine going with another company either since they have a history of sticking by the people they insure. All my other insurance is with them, so it would tie everything together.
Don't be too sure. My father, a veteran, had USAA for years. Then, while pulling a 32' Airstream with a new truck, a wind gust whipped the Airstream into resonance (sort of) which caused it to go back and forth until my dad went into the median and rolled both airstream and truck. Both were totaled. Amazingly, my Mom and Dad walked away with only a little glass in their skin.
USAA covered both trailer and truck. They then moved to a different state and when they went to renew their policy were promptly dropped. USAA will no longer insure them.
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The company I am looking at is USAA as well. I can't really imagine going with another company either since they have a history of sticking by the people they insure. All my other insurance is with them, so it would tie everything together.
Don't be too sure. My father, a veteran, had USAA for years. Then, while pulling a 32' Airstream with a new truck, a wind gust whipped the Airstream into resonance (sort of) which caused it to go back and forth until my dad went into the median and rolled both airstream and truck. Both were totaled. Amazingly, my Mom and Dad walked away with only a little glass in their skin.
USAA covered both trailer and truck. They then moved to a different state and when they went to renew their policy were promptly dropped. USAA will no longer insure them.
USAA won't give any special treatment. They will act just like all the other insurance companies. If there is a dispute, they hire the same defense lawyers, who use the same tactics. Buying insurance is necessary. But, thinking your insurance company is your friend or somehow going to treat you better than another is just not realistic.
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No, I don't see them as a friend. They are a company and their job is to provide insurance (and make money). They have a reputation of sticking by the product they are providing. I have had friends that have insurance with other companies that have hemmed and hawed about paying out what is owned by the contact signed. Not something you need after an accident. USAA has not done that to anyone I know personally that has used them, and their reputation is that they generally don't do that to people (they come out highly rated for an insurance company).
I was warned by my dad when I was young that they would dropped my like a hot potato if I became too expense to insure (since it is their job to make money, and they only insure people that fit that cost-benefit model). That seems to be what another posters family found out after their accident when they couldn't renew. But USAA paid out until that point, as they should have.
LV
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DH and I have been going back and forth on umbrella for a while too. Most of our assets are not in protected forms so they should be protected, but the cost for us isn't as cheap as others are finding and how it protects we find off putting.
Cost:
1 million for us is about 440 per year and that covers liability and non/underinsured motorists (they are required to both be equal or the motorist to be denied).
2 million goes up to 660 per year.
We have never had a car accident, no tickets, good credit, no kids, no previous litigation etc. I think our issue is also that we have 2 drivers and three cars, even though we don't drive much (FIREd).
How it protects:
As someone else stated, we aren't sure how much to buy since buying up to networth makes no sense. You don't need your networth protected, you need the amount you can likely be sued for plus one dollar. I have no idea what that number is. If we got the 1 million policy and someone sued us for 1.5 million and the insurance paid the million, that 500,000 would still crash the stash. So now you need 2 million coverage. But if you are sued for 2.5 million, same problem.
So what are the likelihoods of actually being sued (or damaged by under/non- insured) in values in excess of the more standard 300,000/500,000? And if lawyers are only targeting insurance limits, why pay for more than that? That's pretty reasonable coverage?
I feel like I am lacking a graph or table with which to help me make an informed decision based on actual data.
I have umbrella i surance
I keep wads of $$$ only in financial institutions that insure the account up to $100,000.
All of my houses are paid off, I own them free and clear.
All of this is to provide me sleep at night. No charts necessary, wouldnt change my mind.
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USAA won't give any special treatment. They will act just like all the other insurance companies. If there is a dispute, they hire the same defense lawyers, who use the same tactics. Buying insurance is necessary. But, thinking your insurance company is your friend or somehow going to treat you better than another is just not realistic.
I worked in health insurance, and I advise people that insurance companies are in business to make money, not provide quality health care. If the insurance companies are supporting it (i.e. legislation), then you should assume it's not good for you.
I really appreciate this thread. In Michigan, you are covered by your own policy (no-fault), so I don't understand the need for uninsured motorist coverage. My policy will pay me, not the other person's.
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One more USAA data point . . . Our $2M policy is $272 per year. Two Cars/Drivers and Three houses covered.
However, I'm thinking it may not include coverage for uninsured / underinsured though, going to check on that. The website says coverage is for: Personal Liability - protection if someone makes a claim or files a suit against you (or someone covered by the policy) for accidental bodily injury or property damage and the cost to defend any such claims or suits against you.
Overall very interesting discussing. Thank you all, especially FIREby35.
ETA: Umbrella policy does NOT cover uninsured/underinsured; "This policy provides no uninsured motorists coverage, underinsured motorists coverage, auto no-fault coverage or medical payments coverage." Coverage for that still appears to be at the Auto Policy limits of $300,000/500,000 per person/per accident.
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There has been a lot of good discussion on here about including uninsured motorist coverage and the like, but I'm curious what do people here that have umbrella insurance look for in it besides that. By this, I mean, what specifically do you look for wording wise or specifics wise that it covers that you checked for before you got it. I realize this is probably an igorant question, but I am considering getting some for general liability protection but don't want to buy something missing obvious aspects that need to be insured or something like that. I may also be overthinking it, and if so, I would be grateful to hear and know that.
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I keep wads of $$$ only in financial institutions that insure the account up to $100,000.
@iris lily you should check around, the FDIC raised its insurance limits some time back to $250k per depositor per institution per ownership type.
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I keep wads of $$$ only in financial institutions that insure the account up to $100,000.
@iris lily you should check around, the FDIC raised its insurance limits some time back to $250k per depositor per institution per ownership type.
You are right, and I think DH made that clear. I just dorgot the “new” limits.
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This thread is really helpful! I'm just buying umbrella insurance for the first time in a while and I definitely didn't know to ask about UM/UIM coverage. I felt much more confident reviewing the options my insurance broker gave me.
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Great thread. Many thanks to everyone who shared their experience and knowledge. Very helpful.
It may be time to have a chat with our insurance company about the specifics of our coverage, so I'll understand better what they will and won't pay for.
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I'm catching up. Something Paul and Seattle brought up a while back that I feel was never clarified. All this concern over UM/UIM coverage in the umbrella policy seems to imply that people assume if something happens to them it's not going to be their fault. What happens if it IS your fault? Then you're fucked, but that's ok because you deserve it, because it was your fault? Wouldn't it be better to put all this mental effort and insurance into something that covers you regardless of fault, and then the UM/UIM part is irrelevant?
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I'm catching up. Something Paul and Seattle brought up a while back that I feel was never clarified. All this concern over UM/UIM coverage in the umbrella policy seems to imply that people assume if something happens to them it's not going to be their fault. What happens if it IS your fault? Then you're fucked, but that's ok because you deserve it, because it was your fault? Wouldn't it be better to put all this mental effort and insurance into something that covers you regardless of fault, and then the UM/UIM part is irrelevant?
I can't sue myself for millions of dollars.
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I'm catching up. Something Paul and Seattle brought up a while back that I feel was never clarified. All this concern over UM/UIM coverage in the umbrella policy seems to imply that people assume if something happens to them it's not going to be their fault. What happens if it IS your fault? Then you're fucked, but that's ok because you deserve it, because it was your fault? Wouldn't it be better to put all this mental effort and insurance into something that covers you regardless of fault, and then the UM/UIM part is irrelevant?
I can't sue myself for millions of dollars.
No but you can injure yourself for millions of dollars. And the UM/UIM isn't about getting sued/suing. It's about covering yourself for your own injuries.
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I'm catching up. Something Paul and Seattle brought up a while back that I feel was never clarified. All this concern over UM/UIM coverage in the umbrella policy seems to imply that people assume if something happens to them it's not going to be their fault. What happens if it IS your fault? Then you're fucked, but that's ok because you deserve it, because it was your fault? Wouldn't it be better to put all this mental effort and insurance into something that covers you regardless of fault, and then the UM/UIM part is irrelevant?
I can't sue myself for millions of dollars.
No but you can injure yourself for millions of dollars. And the UM/UIM isn't about getting sued/suing. It's about covering yourself for your own injuries.
Exactly. That's why I personally don't advocate for UIM coverage. You can get injured by an uninsured motorist, yes. You can also injure yourself misjudging a curve and driving off a cliff. Do you need to be paid more in the former case than the latter? I sure don't think so. UIM coverage is for people who feel differently.
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I'm catching up. Something Paul and Seattle brought up a while back that I feel was never clarified. All this concern over UM/UIM coverage in the umbrella policy seems to imply that people assume if something happens to them it's not going to be their fault. What happens if it IS your fault? Then you're fucked, but that's ok because you deserve it, because it was your fault? Wouldn't it be better to put all this mental effort and insurance into something that covers you regardless of fault, and then the UM/UIM part is irrelevant?
I can't sue myself for millions of dollars.
No but you can injure yourself for millions of dollars. And the UM/UIM isn't about getting sued/suing. It's about covering yourself for your own injuries.
Exactly. That's why I personally don't advocate for UIM coverage. You can get injured by an uninsured motorist, yes. You can also injure yourself misjudging a curve and driving off a cliff. Do you need to be paid more in the former case than the latter? I sure don't think so. UIM coverage is for people who feel differently.
Is there data around severe medical bills and how often it's someone else's fault and either they cover you, or you would be otherwise covered by UM/UIM insurance? I assume most cases fall outside of that circle (but maybe not?). For all the data analysis we do here, I feel like this one is a reaction based on emotion. "Other people are crazy and they're likely to seriously injure me! But I'm rational and don't do dangerous things and am unlikely to injure myself. So therefore I need maximum coverage against others, while I ignore the gaping hole in my coverage on if it were actually my fault (or no one's fault)."
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Insurance companies surely have this data, and they're not terribly interested in sharing it. You could probably get a reasonable ballpark estimate by comparing the premiums for liability coverage vs. UIM coverage. For me personally the relative likelihood is mostly irrelevant. Injury from an uninsured motorist is a common enough occurrence that it makes sense to have insurance for it. Injury from a circumstance where you're personally at fault and would therefore not be covered by anyone's liability or UIM coverage is also common enough to be worth insuring against: for this you need some level of disability and health insurance. If you have sufficient disability and health insurance to be okay when you hurt yourself, another insurance policy to pay you even more when someone else injures you just seems superfluous to me. Others clearly disagree.
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Insurance companies surely have this data, and they're not terribly interested in sharing it. You could probably get a reasonable ballpark estimate by comparing the premiums for liability coverage vs. UIM coverage. For me personally the relative likelihood is mostly irrelevant. Injury from an uninsured motorist is a common enough occurrence that it makes sense to have insurance for it. Injury from a circumstance where you're personally at fault and would therefore not be covered by anyone's liability or UIM coverage is also common enough to be worth insuring against: for this you need some level of disability and health insurance. If you have sufficient disability and health insurance to be okay when you hurt yourself, another insurance policy to pay you even more when someone else injures you just seems superfluous to me. Others clearly disagree.
I think there's definitely an emotional aspect in my coverage decision making. I've already had to rely on my disability insurance from a freak accident. I've also had 5-digits of necessary medical care that wasn't covered by my health insurance. I'm definitely more likely to over-insure because of my prior experiences.
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I'm catching up. Something Paul and Seattle brought up a while back that I feel was never clarified. All this concern over UM/UIM coverage in the umbrella policy seems to imply that people assume if something happens to them it's not going to be their fault. What happens if it IS your fault? Then you're fucked, but that's ok because you deserve it, because it was your fault? Wouldn't it be better to put all this mental effort and insurance into something that covers you regardless of fault, and then the UM/UIM part is irrelevant?
I can't sue myself for millions of dollars.
No but you can injure yourself for millions of dollars. And the UM/UIM isn't about getting sued/suing. It's about covering yourself for your own injuries.
Sure, but this is why I have broad health insurance, and disability insurance (everyone who pays into Social Security does too). I am happy with the amount of coverage this gives me.
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If you have sufficient disability and health insurance to be okay when you hurt yourself, another insurance policy to pay you even more when someone else injures you just seems superfluous to me. Others clearly disagree.
No but you can injure yourself for millions of dollars. And the UM/UIM isn't about getting sued/suing. It's about covering yourself for your own injuries.
Sure, but this is why I have broad health insurance, and disability insurance (everyone who pays into Social Security does too). I am happy with the amount of coverage this gives me.
These are what I'm getting at. If you have good health and disability that will cover you if you get injured at no fault of someone else, then why such a fuss over UM/UIM? Mostly asking others that are concerned about it.
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If you have sufficient disability and health insurance to be okay when you hurt yourself, another insurance policy to pay you even more when someone else injures you just seems superfluous to me. Others clearly disagree.
No but you can injure yourself for millions of dollars. And the UM/UIM isn't about getting sued/suing. It's about covering yourself for your own injuries.
Sure, but this is why I have broad health insurance, and disability insurance (everyone who pays into Social Security does too). I am happy with the amount of coverage this gives me.
These are what I'm getting at. If you have good health and disability that will cover you if you get injured at no fault of someone else, then why such a fuss over UM/UIM? Mostly asking others that are concerned about it.
For myself, it's because I know my entire stash could be wiped out by medical bills, whether I'm at fault for my injuries or not. UI/UIM doesn't cover all possibilities, but it mitigates one part of the risk for catastrophically high medical bills.
It's really about the U.S.'s broken, opaque, and astronomically expensive health care system, especially knowing that even good health insurance won't save you from destitution in some situations. Unexpected high medical bills are the one area that worries me in retirement.
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These are what I'm getting at. If you have good health and disability that will cover you if you get injured at no fault of someone else, then why such a fuss over UM/UIM? Mostly asking others that are concerned about it.
For myself, it's because I know my entire stash could be wiped out by medical bills, whether I'm at fault for my injuries or not. UI/UIM doesn't cover all possibilities, but it mitigates one part of the risk for catastrophically high medical bills.
It's really about the U.S.'s broken, opaque, and astronomically expensive health care system, especially knowing that even good health insurance won't save you from destitution in some situations. Unexpected high medical bills are the one area that worries me in retirement.
I guess this is the question. Is there an affordable solution to the problem for if it's not someone else's fault... or can we only covering one small use-case(someone else's fault), and we're f'd on the others (our fault, or no fault, or an uncovered-circumstance).
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These are what I'm getting at. If you have good health and disability that will cover you if you get injured at no fault of someone else, then why such a fuss over UM/UIM? Mostly asking others that are concerned about it.
For myself, it's because I know my entire stash could be wiped out by medical bills, whether I'm at fault for my injuries or not. UI/UIM doesn't cover all possibilities, but it mitigates one part of the risk for catastrophically high medical bills.
It's really about the U.S.'s broken, opaque, and astronomically expensive health care system, especially knowing that even good health insurance won't save you from destitution in some situations. Unexpected high medical bills are the one area that worries me in retirement.
I guess this is the question. Is there an affordable solution to the problem for if it's not someone else's fault... or can we only covering one small use-case(someone else's fault), and we're f'd on the others (our fault, or no fault, or an uncovered-circumstance).
It's a good question. I wish I knew the answer. Maybe medical tourism in a country with lower-cost health care? This is why we need health-care reform -- and until that happens, the risk of being wiped out by unexpected medical expenses remains.
This is one reason I'm padding my stash beyond the 4% SWR. I'm old enough to have had enough medical issues that I have no illusions about my personal indestructibility -- or that exercise and eating right will shield me from health problems.
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These are what I'm getting at. If you have good health and disability that will cover you if you get injured at no fault of someone else, then why such a fuss over UM/UIM? Mostly asking others that are concerned about it.
For myself, it's because I know my entire stash could be wiped out by medical bills, whether I'm at fault for my injuries or not. UI/UIM doesn't cover all possibilities, but it mitigates one part of the risk for catastrophically high medical bills.
It's really about the U.S.'s broken, opaque, and astronomically expensive health care system, especially knowing that even good health insurance won't save you from destitution in some situations. Unexpected high medical bills are the one area that worries me in retirement.
I guess this is the question. Is there an affordable solution to the problem for if it's not someone else's fault... or can we only covering one small use-case(someone else's fault), and we're f'd on the others (our fault, or no fault, or an uncovered-circumstance).
Oh I see what you mean now, and I agree with your assessment.
I think it boils down to the perceived unfairness of someone else fucking you up.
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Every state is going to be different as each state has their own insurance board. Higher litigious/more lenient courts are going to result in higher and more difficult to get premiums. In red/rural areas, Coverage can be $100 +$10 per million/year. In blue urban areas, coverage might cost $1000 per million up to a low cap, but one can always go to AIG or Lloyds for a syndicate umbrella.
For individuals that do not own a business or high-profile person $1 mil is sufficient. Business owners should be 2x-3x value of business and high-profile people need a broker split up the exposure over several insurance companies.
I carry $1,000,000, might bump it up in the future.
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In red/rural areas, Coverage can be $100 +$10 per million/year. In blue urban areas, coverage might cost $1000 per million up to a low cap, but one can always go to AIG or Lloyds for a syndicate umbrella.
I've now carried umbrella insurance in 3 über-blue, über-urban insurance markets in 3 different states: San Francisco, Seattle, and Honolulu. It's never been anywhere near $1,000. More like $150. Where are you seeing those premiums?
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2. The milking phenomenon is a part of any hourly paid legal service. It's really unavoidable. What's interesting, to me, is how the insurance companies do successfully negotiate for very low hourly rates in my town. There are plenty of lawyers ready to get on the corporate gravy train. But, the idea that insurance defense lawyers are prestigious is laughable. Most of the time they are nothing but low-level pawns taking orders from insurance adjusters. They may parade around town as "Corporate lawyers" but they have no power. Of course, there are exceptions to this generalization. But, I hardly bother talking to my opposing lawyers until we begin preparing the case for trial bc that lawyer has to get permission from the insurance adjuster for everything.
...
PS: I don't have to "set up" insurance companies to commit bad-faith. They do it on their own. When they get caught they say, "Hey, you set me up!" lol.
Sorry I'm only now catching up on this.
I'm not an attorney and don't play one on TV, and @FIREby35 is completely correct about this.
DW & I were once involved in litigation over an automobile accident. The other (negligent) party never appeared for anything, but his insurance company's attorney represented him. The dispute concerned ~$2000 in damage to our 10 year-old vehicle, so we were pro se. The attorney kept pestering us to settle, including sending us a fax for 1/2 the amount the night before trial, but since we were pro se, we went all the way - we wanted those bastards to pay. After we won a full judgment, he bitched about his client and about [insurance co] forcing him to waste his time on such a piddling amount, and said [insurance co] wouldn't contest further. He also implied that I had a friend help write our pleading, which I corrected. We got the check the next day, leaving me to reflect what happens to less eloquent writers and less educated drivers whose cars are totaled.
I later crossed paths with a Diplomatic Courier, a retired attorney who had toiled for one of the big auto insurance companies, and I related this experience. He said, yeah, that's typical. I would often tell my supervisors, the other side will take us to a jury, and they'll say this and show that and demonstrate the other, and they'll win. And the supervisors would say, we don't care, go defend us at trial anyway. And despite my best efforts, we'd always lose exactly the way I predicted.
Why did they insist, I asked.
Because underwriting's job is to write policies, and claims' job is to avoid paying claims, and the left and right hand don't much communicate, he responded.
He was much happier in his job as a Diplomatic Courier, methinks, than working as an attorney for [insurance co.].
This reminds me, I need to renew my umbrella coverage. Apologies for the derail.
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Regarding UIM, I got this from a Forbes article:
Do you have other insurance to cover car accident injuries? The primary function of uninsured motorist coverage is to pay medical bills after a car accident with an uninsured driver. If you have good health insurance, you may not feel you need UM coverage. But if you have a high deductible health plan and would pay a large amount of money for a hospitalization, UM might be attractive.
UM is a way to cover car accident injuries without paying co-insurance, copays and health insurance deductibles. UM also provides some benefits that health insurance won’t, like money for pain and suffering and lost wages.
The average claim payment for UM for injuries is $29,825, according to the National Association of Insurance Commissioners’ most recent report.
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Regarding UIM, I got this from a Forbes article:
Do you have other insurance to cover car accident injuries? The primary function of uninsured motorist coverage is to pay medical bills after a car accident with an uninsured driver. If you have good health insurance, you may not feel you need UM coverage. But if you have a high deductible health plan and would pay a large amount of money for a hospitalization, UM might be attractive.
UM is a way to cover car accident injuries without paying co-insurance, copays and health insurance deductibles. UM also provides some benefits that health insurance won’t, like money for pain and suffering and lost wages.
The average claim payment for UM for injuries is $29,825, according to the National Association of Insurance Commissioners’ most recent report.
Yes, everything about that is factually correct. They correctly identify that many people have insufficient health and disability insurance, and correctly identify that UIM coverage can help remedy that deficiency for the specific case where you get hurt by an underinsured motorist. What they fail to discuss is that if your medical deductibles are higher than you can afford when you get hit by an underinsured motorist, UIM insurance doesn't fix the fact that your deductible will still be unaffordable when you crash your own car, or when you get cancer, or any number of other things that could be medically very expensive.
Perhaps if you get health insurance through your employer and all their options are terrible, papering over that problem with special-purpose supplemental insurance such as UIM is the best you can do. But if you have the option to take that money you would have spent on UIM and instead put it toward better health or disability insurance, that's probably the better play.
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In red/rural areas, Coverage can be $100 +$10 per million/year. In blue urban areas, coverage might cost $1000 per million up to a low cap, but one can always go to AIG or Lloyds for a syndicate umbrella.
I've now carried umbrella insurance in 3 über-blue, über-urban insurance markets in 3 different states: San Francisco, Seattle, and Honolulu. It's never been anywhere near $1,000. More like $150. Where are you seeing those premiums?
New policies vs established client. If a client has been with XYZ insurance company for 20 years with no or minimal number of claims, umbrella will be cheap, regardless of location. If a new client in lenient/blue state asks for umbrella, cost will reflect the risk as cost of claims are higher. Within states, premiums can be different depending on zip code based on how courts are designed.
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In blue urban areas, coverage might cost $1000 per million up to a low cap, but one can always go to AIG or Lloyds for a syndicate umbrella.
FWIW, I live in the bluest of the blue areas, in the heart of a big, high cost of living city. I carry $10M of umbrella coverage and it is $800 per year, including $1M of underinsured motorist coverage. This is via Nationwide and this is our first year on this policy, although we previously had a policy of the same magnitude with AIG.
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In blue urban areas, coverage might cost $1000 per million up to a low cap, but one can always go to AIG or Lloyds for a syndicate umbrella.
FWIW, I live in the bluest of the blue areas, in the heart of a big, high cost of living city. I carry $10M of umbrella coverage and it is $800 per year, including $1M of underinsured motorist coverage. This is via Nationwide and this is our first year on this policy, although we previously had a policy of the same magnitude with AIG.
Hmm - I pay $938 for $2M umbrella coverage in NJ. Its probably because I have a daughter under the age of 25 on my car insurance.
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I tried to get umbrella insurance recently and was surprised to find that they wouldn't sell it to me since I don't have car insurance/ don't own a car. Apparently they would require a non-owners car insurance policy first. I already get supplemental liability whenever I rent a car, but it upped the cost significantly to need to add on non-owners car insurance for the whole year. You'd think I'd be more attractive to them since I rarely drive!
I ran into the same thing several year ago. Haven't owned a car or driven in years, but I would like to have the assurance of having some additional liability coverage. You would think they could specifically exclude liability due to automobile injuries or something. Maybe that would mean it's not an umbrella policy.
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I tried to get umbrella insurance recently and was surprised to find that they wouldn't sell it to me since I don't have car insurance/ don't own a car. Apparently they would require a non-owners car insurance policy first. I already get supplemental liability whenever I rent a car, but it upped the cost significantly to need to add on non-owners car insurance for the whole year. You'd think I'd be more attractive to them since I rarely drive!
I ran into the same thing several year ago. Haven't owned a car or driven in years, but I would like to have the assurance of having some additional liability coverage. You would think they could specifically exclude liability due to automobile injuries or something. Maybe that would mean it's not an umbrella policy.
A non-owner's policy should be cheap, and even pay for itself if it means not buying the supplemental Liability Insurance when you rent a car. I think my policy costs me $25 per year and it meets my insurance company's requirement for an umbrella policy.
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Business owners should be 2x-3x value of business
Why is that?
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Recently, CarMax paid us almost as much for our car as it cost brand new in 2019. Since we barely used the car, anyway, we decided to take the cash. Moving forward, we're planning on renting cars occasionally and/or just using Uber/Lyft to travel distances further than can be easily covered on foot or by bike. When I called to cancel our auto insurance policy, we ended up accepting GEICO's offer of a "Named Non-Owner" policy that will cover me and DW as drivers of rental or borrowed cars, at a cost of $208/year. Just checked, and the policy includes $300K of both under/uninsured motorist coverage. Our umbrella liability policy, also with GEICO, costs $102/year for $1MM in coverage.
Just curious, wasn't able to easily tell by looking at GEICO's website, anyone know if the Under/Uninsured motorist coverage will cover us if we are hit by a car while walking or riding our bikes, or do auto insurance policies typically only cover you if you are driving a car?
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Recently, CarMax paid us almost as much for our car as it cost brand new in 2019. Since we barely used the car, anyway, we decided to take the cash. Moving forward, we're planning on renting cars occasionally and/or just using Uber/Lyft to travel distances further than can be easily covered on foot or by bike. When I called to cancel our auto insurance policy, we ended up accepting GEICO's offer of a "Named Non-Owner" policy that will cover me and DW as drivers of rental or borrowed cars, at a cost of $208/year. Just checked, and the policy includes $300K of both under/uninsured motorist coverage. Our umbrella liability policy, also with GEICO, costs $102/year for $1MM in coverage.
Just curious, wasn't able to easily tell by looking at GEICO's website, anyone know if the Under/Uninsured motorist coverage will cover us if we are hit by a car while walking or riding our bikes, or do auto insurance policies typically only cover you if you are driving a car?
It SHOULD cover you as a pedestrian. I'd need to read a policy to say for sure and that is beyond my internet posting boundaries :) You could show it to a local PI lawyer if you really want to know.
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Recently, CarMax paid us almost as much for our car as it cost brand new in 2019. Since we barely used the car, anyway, we decided to take the cash. Moving forward, we're planning on renting cars occasionally and/or just using Uber/Lyft to travel distances further than can be easily covered on foot or by bike. When I called to cancel our auto insurance policy, we ended up accepting GEICO's offer of a "Named Non-Owner" policy that will cover me and DW as drivers of rental or borrowed cars, at a cost of $208/year. Just checked, and the policy includes $300K of both under/uninsured motorist coverage. Our umbrella liability policy, also with GEICO, costs $102/year for $1MM in coverage.
Just curious, wasn't able to easily tell by looking at GEICO's website, anyone know if the Under/Uninsured motorist coverage will cover us if we are hit by a car while walking or riding our bikes, or do auto insurance policies typically only cover you if you are driving a car?
14 years ago Geico underinsured motorist coverage paid when my son was hit by car as a pedestrian, so I would assume they still would.
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It SHOULD cover you as a pedestrian. I'd need to read a policy to say for sure and that is beyond my internet posting boundaries :) You could show it to a local PI lawyer if you really want to know.
14 years ago Geico underinsured motorist coverage paid when my son was hit by car as a pedestrian, so I would assume they still would.
What is Extraordinary Medical Benefits Coverage?
Extraordinary Medical Benefits coverage pays medical, dental, hospital and funeral expenses for you, household relatives and guest passengers injured in a motor vehicle accident. Also protects you and household relatives if injured while in other vehicles or if injured when struck as a pedestrian.
Payments under this coverage begin only when covered medical expenses exceed $100,000 and are capped at the lifetime limit of $1,000,000. In choosing whether to carry this coverage, you may want to consider your ability to meet your medical expenses and other financial obligations if you were injured in a vehicle accident. This material is intended for general information only. It does not expand coverage beyond the policy contract. Please refer to your policy contract for any specific information or questions on applicability of coverage.
The only thing I've been able to find on GEICO's website that mentions possible coverage in the event one of us is hit by a car as a pedestrian (not sure if bicyclists are considered 'pedestrians'?) is under 'Extraordinary Medical Benefits' section. There's nothing in the 'First Party Benefits' section that mentions whether the policy would pay if we were hit by a car while walking or riding a bike.
Tried using GEICO's virtual assistant, but it didn't understand my question. I can't figure out where my actual policy is on GEICO's website. All I'm looking at is, basically, a synopsis. There must be an actual legal document somewhere. Just haven't found it yet. Guess I'll need to give GEICO a call. Since our main means of transportation is walking and riding our bikes, it would be nice if some insurance (homeowners?, auto?) covered us in the event we were hit by a distracted driver with no/not enough insurance.
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Since our main means of transportation is walking and riding our bikes, it would be nice if some insurance (homeowners?, auto?) covered us in the event we were hit by a distracted driver with no/not enough insurance.
Yes, definitely check this. It’s especially important to have uninsured / underinsured motorist if you bike and walk a lot. It is much more common for collisions with people walking and on bikes to be hit and runs whether the driver is insured or not. And the level of injuries and potential costs are dramatically higher if you’re not in the protective bubble of a car. So minimal liability policies are cleaned out pretty quickly.
If Geico doesn’t cover it, many others do. Shop around.
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Great thread although it kept me up too late reading @FIREby35 's posts which read like a John Grisham novel!
I still dont understand the case for carrying auto insurance that covers medical expenses for the insured like UIM, Medpay, etc for the well health insured individual. From the avoiding medical bankruptcy thread we've established that the ACA change things so there are no lifetime out of pocket (OOP) max's on covered services which appear to include just about everything that could be considered "conventional medicine" due to the standards established by ACA and the annual OOP max's are reasonable (8k individual, 17k family) for someone with savings. Perhaps these coverages made more sense pre-aca when most plans had lifetime limits, you could be screwed for life due to pre-existing conditions, etc?
I get that these coverages can cover lost work, expenses related to travel to appointments, etc and @jac941 's experience has good info, but maybe that experience was pre-aca when plans didn't have to cover things like mental health? UIM seems like double coverage in many ways which would be a waste of money. Dealing with one insurance company for healthcare costs seems simpler that dealing with 2. I'm sure the insurance companies (health and auto) would fight over who pays for what. In general I want to pay deductibles for one policy not two, etc and medical expenses paid by the auto insurer would not count towards health insurance deductibles, OOP max, etc. It just doesn't make much sense to me and certainly adds alot of complication to an already complicated scenario, if it is really necessary that is really too bad.
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Great thread although it kept me up too late reading @FIREby35 's posts which read like a John Grisham novel!
I still dont understand the case for carrying auto insurance that covers medical expenses for the insured like UIM, Medpay, etc for the well health insured individual. From the avoiding medical bankruptcy thread we've established that the ACA change things so there are no lifetime out of pocket (OOP) max's on covered services which appear to include just about everything that could be considered "conventional medicine" due to the standards established by ACA and the annual OOP max's are reasonable (8k individual, 17k family) for someone with savings. Perhaps these coverages made more sense pre-aca when most plans had lifetime limits, you could be screwed for life due to pre-existing conditions, etc?
I get that these coverages can cover lost work, expenses related to travel to appointments, etc and @jac941 's experience has good info, but maybe that experience was pre-aca when plans didn't have to cover things like mental health? UIM seems like double coverage in many ways which would be a waste of money. Dealing with one insurance company for healthcare costs seems simpler that dealing with 2. I'm sure the insurance companies (health and auto) would fight over who pays for what. In general I want to pay deductibles for one policy not two, etc and medical expenses paid by the auto insurer would not count towards health insurance deductibles, OOP max, etc. It just doesn't make much sense to me and certainly adds alot of complication to an already complicated scenario, if it is really necessary that is really too bad.
I just want to clarify that my experience is current. In fact, I live and have health insurance in California which has numerous consumer protection laws around healthcare and health insurance that far exceed US requirements.
Health insurance and healthcare in the US are broken. We have “excellent” health insurance with extensive coverage. It covers substantially more physical therapy, mental health therapy, and home healthcare than most policies. It even covers things like acupuncture, etc. Our in network and out of network out of pocket maximums per person are $4,000 each - so $8,000. As of Dec 31, 2021, my “patient responsibility” as shown by my health insurance company was $45k for the year - and every single facility I went to including the trauma center was in network (though not all physicians were). That balance doesn’t include the extra physical therapy I did, any durable medical equipment, balance billing from the ambulance companies, any of the gardening, housekeeping, and childcare help we paid for, my lost wages … I could go on and on.
Medical bills are a top cause of bankruptcy for a reason. Motor vehicle accidents are the most common form of accidental injury for most age groups in the US (because our transportation system is broken too). You can rely on your health insurance instead of paying for UIM, but it’s a risk. And it’s a risk for a very common type of incident.
If you choose to not have coverage, just make sure you understand the risk you’re taking.
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Great thread although it kept me up too late reading @FIREby35 's posts which read like a John Grisham novel!
I still dont understand the case for carrying auto insurance that covers medical expenses for the insured like UIM, Medpay, etc for the well health insured individual. From the avoiding medical bankruptcy thread we've established that the ACA change things so there are no lifetime out of pocket (OOP) max's on covered services which appear to include just about everything that could be considered "conventional medicine" due to the standards established by ACA and the annual OOP max's are reasonable (8k individual, 17k family) for someone with savings. Perhaps these coverages made more sense pre-aca when most plans had lifetime limits, you could be screwed for life due to pre-existing conditions, etc?
I get that these coverages can cover lost work, expenses related to travel to appointments, etc and @jac941 's experience has good info, but maybe that experience was pre-aca when plans didn't have to cover things like mental health? UIM seems like double coverage in many ways which would be a waste of money. Dealing with one insurance company for healthcare costs seems simpler that dealing with 2. I'm sure the insurance companies (health and auto) would fight over who pays for what. In general I want to pay deductibles for one policy not two, etc and medical expenses paid by the auto insurer would not count towards health insurance deductibles, OOP max, etc. It just doesn't make much sense to me and certainly adds alot of complication to an already complicated scenario, if it is really necessary that is really too bad.
I just want to clarify that my experience is current. In fact, I live and have health insurance in California which has numerous consumer protection laws around healthcare and health insurance that far exceed US requirements.
Health insurance and healthcare in the US are broken. We have “excellent” health insurance with extensive coverage. It covers substantially more physical therapy, mental health therapy, and home healthcare than most policies. It even covers things like acupuncture, etc. Our in network and out of network out of pocket maximums per person are $4,000 each - so $8,000. As of Dec 31, 2021, my “patient responsibility” as shown by my health insurance company was $45k for the year - and every single facility I went to including the trauma center was in network (though not all physicians were). That balance doesn’t include the extra physical therapy I did, any durable medical equipment, balance billing from the ambulance companies, any of the gardening, housekeeping, and childcare help we paid for, my lost wages … I could go on and on.
Medical bills are a top cause of bankruptcy for a reason. Motor vehicle accidents are the most common form of accidental injury for most age groups in the US (because our transportation system is broken too). You can rely on your health insurance instead of paying for UIM, but it’s a risk. And it’s a risk for a very common type of incident.
If you choose to not have coverage, just make sure you understand the risk you’re taking.
Thanks for the explanation, your insurance does indeed sound like it is top notch. I just dont understand how its possible to end up with $45k in costs with a plan that has an 8k out of pocket max while only seeing in network providers? Is it due to some of the medical services not being covered at all by insurance? Maybe I dont understand what "out of pocket maximum" means?
Sounds like a just awful ordeal to have to go thru, i commuted by bike every day from 2001 until covid, many many close calls, this could have easily happened to me.
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Thanks for the explanation, your insurance does indeed sound like it is top notch. I just dont understand how its possible to end up with $45k in costs with a plan that has an 8k out of pocket max while only seeing in network providers? Is it due to some of the medical services not being covered at all by insurance? Maybe I dont understand what "out of pocket maximum" means?
Sounds like a just awful ordeal to have to go thru, i commuted by bike every day from 2001 until covid, many many close calls, this could have easily happened to me.
From healthcare.gov:
The out-of-pocket limit doesn't include:
Your monthly premiums
Anything you spend for services your plan doesn't cover
Out-of-network care and services
Costs above the allowed amount for a service that a provider may charge
My interpretation of that is, if the insurance company says that a surgeon should charge $1000 for a certain procedure, and your surgeon actually bills $2000, you are responsible for the additional $1000 - and it doesn't count toward your out-of-pocket max. If your plan covers 5 physical therapy appointments, but it actually takes 10 appointments to regain function, you pay for those extra 5 appointments yourself - and they don't count toward your OOP max.
https://www.healthcare.gov/glossary/out-of-pocket-maximum-limit/
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Thanks for the explanation, your insurance does indeed sound like it is top notch. I just dont understand how its possible to end up with $45k in costs with a plan that has an 8k out of pocket max while only seeing in network providers? Is it due to some of the medical services not being covered at all by insurance? Maybe I dont understand what "out of pocket maximum" means?
Sounds like a just awful ordeal to have to go thru, i commuted by bike every day from 2001 until covid, many many close calls, this could have easily happened to me.
From healthcare.gov:
The out-of-pocket limit doesn't include:
Your monthly premiums
Anything you spend for services your plan doesn't cover
Out-of-network care and services
Costs above the allowed amount for a service that a provider may charge
My interpretation of that is, if the insurance company says that a surgeon should charge $1000 for a certain procedure, and your surgeon actually bills $2000, you are responsible for the additional $1000 - and it doesn't count toward your out-of-pocket max. If your plan covers 5 physical therapy appointments, but it actually takes 10 appointments to regain function, you pay for those extra 5 appointments yourself - and they don't count toward your OOP max.
https://www.healthcare.gov/glossary/out-of-pocket-maximum-limit/
I thought that as an in-network provider a surgeon has to charge the agreed upon covered rate for a procedure, thus they could not charge $2000 for a procedure that the agreed upon rate is $1000. They could perform an additional surgery for $1000 that is "not covered" by the insurance plan though but I have not been able to find good examples of conventional medicine not covered by aca compatible plans.
The limit on physical therapy # of visits may be a valid concern for some people with especially stingy plans such as your example of 5 physical therapy visits per year. I just checked my plan and it covers upto 60 physical therapy visits per year of a combined physical therapists, occupational therapists, speech therapists. The example of a plan covering 5 physical therapy visiits sounds extremely stingy.
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Thanks for the explanation, your insurance does indeed sound like it is top notch. I just dont understand how its possible to end up with $45k in costs with a plan that has an 8k out of pocket max while only seeing in network providers? Is it due to some of the medical services not being covered at all by insurance? Maybe I dont understand what "out of pocket maximum" means?
Sounds like a just awful ordeal to have to go thru, i commuted by bike every day from 2001 until covid, many many close calls, this could have easily happened to me.
From healthcare.gov:
The out-of-pocket limit doesn't include:
Your monthly premiums
Anything you spend for services your plan doesn't cover
Out-of-network care and services
Costs above the allowed amount for a service that a provider may charge
My interpretation of that is, if the insurance company says that a surgeon should charge $1000 for a certain procedure, and your surgeon actually bills $2000, you are responsible for the additional $1000 - and it doesn't count toward your out-of-pocket max. If your plan covers 5 physical therapy appointments, but it actually takes 10 appointments to regain function, you pay for those extra 5 appointments yourself - and they don't count toward your OOP max.
https://www.healthcare.gov/glossary/out-of-pocket-maximum-limit/
I thought that as an in-network provider a surgeon has to charge the agreed upon covered rate for a procedure, thus they could not charge $2000 for a procedure that the agreed upon rate is $1000. They could perform an additional surgery for $1000 that is "not covered" by the insurance plan though but I have not been able to find good examples of conventional medicine not covered by aca compatible plans.
The limit on physical therapy # of visits may be a valid concern for some people with especially stingy plans such as your example of 5 physical therapy visits per year. I just checked my plan and it covers upto 60 physical therapy visits per year of a combined physical therapists, occupational therapists, speech therapists. The example of a plan covering 5 physical therapy visiits sounds extremely stingy.
I picked the numbers at random for illustration purposes, not trying to represent any particular real plan.
If it wasn't possible for a provider to charge more than the "allowed amount," why would healthcare.gov bother listing it?
I know I've heard from plenty of people about an ambulance ride being agreed to be medically necessary and preapproved by insurance (i.e. moving from one hospital to another) but insurance will only pay $500 while actual billed cost is $3000. If that happens, you are on the hook for $2500 which doesn't count toward OOP.
You say you don't understand how someone can generate costs in excess of OOP, so people are giving examples. You said you might not understand what OOP meant, so I found you the official definition. Not really sure what you're looking for?
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Thanks for the explanation, your insurance does indeed sound like it is top notch. I just dont understand how its possible to end up with $45k in costs with a plan that has an 8k out of pocket max while only seeing in network providers? Is it due to some of the medical services not being covered at all by insurance? Maybe I dont understand what "out of pocket maximum" means?
Sounds like a just awful ordeal to have to go thru, i commuted by bike every day from 2001 until covid, many many close calls, this could have easily happened to me.
From healthcare.gov:
The out-of-pocket limit doesn't include:
Your monthly premiums
Anything you spend for services your plan doesn't cover
Out-of-network care and services
Costs above the allowed amount for a service that a provider may charge
My interpretation of that is, if the insurance company says that a surgeon should charge $1000 for a certain procedure, and your surgeon actually bills $2000, you are responsible for the additional $1000 - and it doesn't count toward your out-of-pocket max. If your plan covers 5 physical therapy appointments, but it actually takes 10 appointments to regain function, you pay for those extra 5 appointments yourself - and they don't count toward your OOP max.
https://www.healthcare.gov/glossary/out-of-pocket-maximum-limit/
I thought that as an in-network provider a surgeon has to charge the agreed upon covered rate for a procedure, thus they could not charge $2000 for a procedure that the agreed upon rate is $1000. They could perform an additional surgery for $1000 that is "not covered" by the insurance plan though but I have not been able to find good examples of conventional medicine not covered by aca compatible plans.
The limit on physical therapy # of visits may be a valid concern for some people with especially stingy plans such as your example of 5 physical therapy visits per year. I just checked my plan and it covers upto 60 physical therapy visits per year of a combined physical therapists, occupational therapists, speech therapists. The example of a plan covering 5 physical therapy visiits sounds extremely stingy.
I picked the numbers at random for illustration purposes, not trying to represent any particular real plan.
If it wasn't possible for a provider to charge more than the "allowed amount," why would healthcare.gov bother listing it?
I know I've heard from plenty of people about an ambulance ride being agreed to be medically necessary and preapproved by insurance (i.e. moving from one hospital to another) but insurance will only pay $500 while actual billed cost is $3000. If that happens, you are on the hook for $2500 which doesn't count toward OOP.
You say you don't understand how someone can generate costs in excess of OOP, so people are giving examples. You said you might not understand what OOP meant, so I found you the official definition. Not really sure what you're looking for?
Sure, to clarify i was looking for examples of how someone could exceed their OOP max + premiums for the year since I like to think of this combined figure as a worst case scenario for healthcare expenses for a year. Since @jac941 is the only one Ive ever heard of who had tens of thousands of dollars in bills in excess of premiums + OOP max I am wondering what services incurred those costs. I want to make sure I'm not making a mistake by budgeting for premiums + OOP max for my early retirement and not paying for UIM so I'm looking for evidence that I need to save more or purchase UIM to pay for medical care.
Your examples of the in network surgeon charging twice as much for a procedure as the agreed upon rate and a plan only covering 5 physical therapy visits havent convinced me that it is easy to go over my OOP + premiums budget.
The published prices mandated by healthcare.gov or whatever are "out of pocket" rates assuming someone had no health insurance/not a member of any group. The negotiated rate your insurer pays the provider could be more/could be less than that amount, I think the negotiated rates are often less than that amount. Its irrelevant for people with insurance looking at prices for in-network services. Insurance companies dont publish the negotiated rates for services.
I just checked my health insurance for ambulance coverage and its very good. There is basically no situation where I could end up with tens of thousands in ambulance bills unless I voluntarily used an ambulance where one was not needed or used an air ambulance when it was not a necessity. Basically ambulance coverage counts towards OOP max as long as its necessary and not what I would consider taking an ambulance for joy ride. Ironically if Im injured badly enough to require air/ground ambulance my injuries are likely to cost more than the OOP max for the year so all that really matters is that the ambulance services count toward the OOP, ie it does not matter to me if I spend the full OOP amount on an ambulance or on the hundreds of other expenses that Im likely to incur, it would actually be more convenient to pay the ambulance company a large amount that way I have less bills to deal with for the rest of the year. Last year I exceeded the OOP max due to birth of my son and it was quite nice to go the rest of year not worrying about paying for any medical services other than checking to see if the provider was in network.
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Sure, to clarify i was looking for examples of how someone could exceed their OOP max + premiums for the year since I like to think of this combined figure as a worst case scenario for healthcare expenses for a year. Since @jac941 is the only one Ive ever heard of who had tens of thousands of dollars in bills in excess of premiums + OOP max I am wondering what services incurred those costs. I want to make sure I'm not making a mistake by budgeting for premiums + OOP max for my early retirement and not paying for UIM so I'm looking for evidence that I need to save more or purchase UIM to pay for medical care.
Your examples of the in network surgeon charging twice as much for a procedure as the agreed upon rate and a plan only covering 5 physical therapy visits havent convinced me that it is easy to go over my OOP + premiums budget.
The published prices mandated by healthcare.gov or whatever are "out of pocket" rates assuming someone had no health insurance/not a member of any group. The negotiated rate your insurer pays the provider could be more/could be less than that amount, I think the negotiated rates are often less than that amount. Its irrelevant for people with insurance looking at prices for in-network services. Insurance companies dont publish the negotiated rates for services.
I just checked my health insurance for ambulance coverage and its very good. There is basically no situation where I could end up with tens of thousands in ambulance bills unless I voluntarily used an ambulance where one was not needed or used an air ambulance when it was not a necessity. Basically ambulance coverage counts towards OOP max as long as its necessary and not what I would consider taking an ambulance for joy ride.
If actual examples from actual people who have gone through it can't convince you it happens, I don't know what can. No one is trying to convince you that you personally need more coverage than you get through your health insurance. If your coverage is that amazing, then good for you. But insisting it can't happen to anyone just because you don't think it can happen to you feels disingenuous.
Also, you do know that even if you're at an in-network hospital with an in-network surgeon, you can still wind up with a big non-covered bill from an out-of-network specialist, right? A good friend of mine had this happen with a planned surgery that was pre-approved through insurance, and verified with the hospital that everything was covered ahead of time. Day of the surgery comes, no one thinks to tell her that the scheduled, in-network anesthesiologist is out that day, and the replacement is out-of-network. Bam, multi-thousand dollar non-covered bill.
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Sure, to clarify i was looking for examples of how someone could exceed their OOP max + premiums for the year since I like to think of this combined figure as a worst case scenario for healthcare expenses for a year. Since @jac941 is the only one Ive ever heard of who had tens of thousands of dollars in bills in excess of premiums + OOP max I am wondering what services incurred those costs. I want to make sure I'm not making a mistake by budgeting for premiums + OOP max for my early retirement and not paying for UIM so I'm looking for evidence that I need to save more or purchase UIM to pay for medical care.
Your examples of the in network surgeon charging twice as much for a procedure as the agreed upon rate and a plan only covering 5 physical therapy visits havent convinced me that it is easy to go over my OOP + premiums budget.
The published prices mandated by healthcare.gov or whatever are "out of pocket" rates assuming someone had no health insurance/not a member of any group. The negotiated rate your insurer pays the provider could be more/could be less than that amount, I think the negotiated rates are often less than that amount. Its irrelevant for people with insurance looking at prices for in-network services. Insurance companies dont publish the negotiated rates for services.
I just checked my health insurance for ambulance coverage and its very good. There is basically no situation where I could end up with tens of thousands in ambulance bills unless I voluntarily used an ambulance where one was not needed or used an air ambulance when it was not a necessity. Basically ambulance coverage counts towards OOP max as long as its necessary and not what I would consider taking an ambulance for joy ride.
If actual examples from actual people who have gone through it can't convince you it happens, I don't know what can. No one is trying to convince you that you personally need more coverage than you get through your health insurance. If your coverage is that amazing, then good for you. But insisting it can't happen to anyone just because you don't think it can happen to you feels disingenuous.
Also, you do know that even if you're at an in-network hospital with an in-network surgeon, you can still wind up with a big non-covered bill from an out-of-network specialist, right? A good friend of mine had this happen with a planned surgery that was pre-approved through insurance, and verified with the hospital that everything was covered ahead of time. Day of the surgery comes, no one thinks to tell her that the scheduled, in-network anesthesiologist is out that day, and the replacement is out-of-network. Bam, multi-thousand dollar non-covered bill.
The surprise medical billing rules that went into effect Jan 1, 2022 have put an end to the situation you describe with your friend in surgery for everything but ground ambulances. Prior to this, I believe this was a valid concern.
https://www.cms.gov/nosurprises/Ending-Surprise-Medical-Bills
It could be that I have just have excellent insurance but sounds like @jac941 has excellent insurance too so I am really curious how he/she and others could have ended up with $45k in costs after meeting an OOP max. It puzzles me and keeps me up at nite. I was looking for specific examples of actual services/charges that did not quality towards the OOP max, the general reports of "i paid more than my OOP max" dont help me understand the situation. Im interested in the details/nuance.
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If actual examples from actual people who have gone through it can't convince you it happens, I don't know what can. No one is trying to convince you that you personally need more coverage than you get through your health insurance. If your coverage is that amazing, then good for you. But insisting it can't happen to anyone just because you don't think it can happen to you feels disingenuous.
^^^This.
I feel like @afox is being willfully obtuse. I'm truly thrilled for them that they haven't suffered significant ill health or injury and that their health insurance has always been generous coverage for their needs. But most people in the US - regardless of even the cadillac insurance plans - have 5 or 6 figure medical bills when they have the misfortune of getting really sick or injured. Yes, balance billing aka surprise bills should become a thing of the past thank goodness. But the insurance plans, not your doctors, determine what is "medically necessary" and they often determine that after the fact. Maybe you don't think you were joyriding in that ambulance when you thought you were having a heart attack, but United or Aetna or Humana or whoever can decide you were when you're sent home from the emergency room with a non-emergent diagnosis.
I was running about $20,000/year in uncovered medical bills before I became Medicare eligible and that was just for routine care and no hospitalizations for my medical condition because the insurance company determined that not a single medical treatment or imaging test that I required qualified under the plan. And that's even with me being a doctor and chasing every billing code.
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If actual examples from actual people who have gone through it can't convince you it happens, I don't know what can. No one is trying to convince you that you personally need more coverage than you get through your health insurance. If your coverage is that amazing, then good for you. But insisting it can't happen to anyone just because you don't think it can happen to you feels disingenuous.
^^^This.
I feel like @afox is being willfully obtuse. I'm truly thrilled for them that they haven't suffered significant ill health or injury and that their health insurance has always been generous coverage for their needs. But most people in the US - regardless of even the cadillac insurance plans - have 5 or 6 figure medical bills when they have the misfortune of getting really sick or injured. Yes, balance billing aka surprise bills should become a thing of the past thank goodness. But the insurance plans, not your doctors, determine what is "medically necessary" and they often determine that after the fact. Maybe you don't think you were joyriding in that ambulance when you thought you were having a heart attack, but United or Aetna or Humana or whoever can decide you were when you're sent home from the emergency room with a non-emergent diagnosis.
I was running about $20,000/year in uncovered medical bills before I became Medicare eligible and that was just for routine care and no hospitalizations for my medical condition because the insurance company determined that not a single medical treatment or imaging test that I required qualified under the plan. And that's even with me being a doctor and chasing every billing code.
Was that pre-aca or did you have a plan that got around the ACA requirements (healthcare ministry, temporary insurance, etc)? THe ACA put minimum standards of coverage in place, in hindsight prior to the ACA it was the wild west and many people bought health insurance that was useless.
I think it is necessary to appeal your health insurance rulings when claims are denied and this happens often. Denying valid claims is part of the business model for health insurance companies. I am in the process of appealing a denied claim right now, I consider that just part of the process for dealing with healthcare in the U.S. The more appeals I file, the better I get at the process.
I promise im not being purposefully obtuse, i really am just trying to understand examples of the circumstances in which one could end up with tens of thousands in expenses for medically necessary conventional medicine even after meeting their OOP max.
ALso, if health insurance companies behave this badly and routinely wrongfully deny medically necessary conventional medicine why would an auto insurer behave better and cover those things???
Maybe there is no good answer and the only solution is to work longer and have massive savings for healthcare expenses or move to another country that values human health more than profits.
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Sounds like ambulances are a major problem so don't use one unless it's life or death. This is a good example of the kind of healthcare expense loophole everyone should be aware of. My brother had an injury at a ski area and patrol wanted to put him in an ambulance, he refused the ambulance and saved a lot of money. I think I will at least find out if my local ambulance service is in network. The thing is though, ambulance rides are not going to result in tens of thousands of dollars in bills do this doesn't explain the extremely high non covered healthcare expenses being reported here. Lots of info on how to deal with ambulance billing here: https://www.consumerreports.org/medical-billing/your-ambulance-ride-could-still-leave-you-with-a-surprise-medical-bill-no-surprises-act-a2373503204/
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If actual examples from actual people who have gone through it can't convince you it happens, I don't know what can. No one is trying to convince you that you personally need more coverage than you get through your health insurance. If your coverage is that amazing, then good for you. But insisting it can't happen to anyone just because you don't think it can happen to you feels disingenuous.
^^^This.
I feel like @afox is being willfully obtuse. I'm truly thrilled for them that they haven't suffered significant ill health or injury and that their health insurance has always been generous coverage for their needs. But most people in the US - regardless of even the cadillac insurance plans - have 5 or 6 figure medical bills when they have the misfortune of getting really sick or injured. Yes, balance billing aka surprise bills should become a thing of the past thank goodness. But the insurance plans, not your doctors, determine what is "medically necessary" and they often determine that after the fact. Maybe you don't think you were joyriding in that ambulance when you thought you were having a heart attack, but United or Aetna or Humana or whoever can decide you were when you're sent home from the emergency room with a non-emergent diagnosis.
I was running about $20,000/year in uncovered medical bills before I became Medicare eligible and that was just for routine care and no hospitalizations for my medical condition because the insurance company determined that not a single medical treatment or imaging test that I required qualified under the plan. And that's even with me being a doctor and chasing every billing code.
Was that pre-aca or did you have a plan that got around the ACA requirements (healthcare ministry, temporary insurance, etc)? THe ACA put minimum standards of coverage in place, in hindsight prior to the ACA it was the wild west and many people bought health insurance that was useless.
I think it is necessary to appeal your health insurance rulings when claims are denied and this happens often. Denying valid claims is part of the business model for health insurance companies. I am in the process of appealing a denied claim right now, I consider that just part of the process for dealing with healthcare in the U.S. The more appeals I file, the better I get at the process.
I promise im not being purposefully obtuse, i really am just trying to understand examples of the circumstances in which one could end up with tens of thousands in expenses for medically necessary conventional medicine even after meeting their OOP max.
ALso, if health insurance companies behave this badly and routinely wrongfully deny medically necessary conventional medicine why would an auto insurer behave better and cover those things???
Maybe there is no good answer and the only solution is to work longer and have massive savings for healthcare expenses or move to another country that values human health more than profits.
What now? As I said, I was a doctor. I was also a researcher in health outcomes. I was on state-level advisory councils for healthcare. Are you explaining to me that I perhaps didn't know what to look for in insurance plans (and, yes, all post-ACA)? Or that I don't understand how to appeal a claim? Do you believe that you are smarter than allllllllll the people in this thread that have shared their experiences and so, therefore, are immune to our misfortunes? I thought that you were just being intentionally obtuse. Now I think you're just trolling.
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If actual examples from actual people who have gone through it can't convince you it happens, I don't know what can. No one is trying to convince you that you personally need more coverage than you get through your health insurance. If your coverage is that amazing, then good for you. But insisting it can't happen to anyone just because you don't think it can happen to you feels disingenuous.
^^^This.
I feel like @afox is being willfully obtuse. I'm truly thrilled for them that they haven't suffered significant ill health or injury and that their health insurance has always been generous coverage for their needs. But most people in the US - regardless of even the cadillac insurance plans - have 5 or 6 figure medical bills when they have the misfortune of getting really sick or injured. Yes, balance billing aka surprise bills should become a thing of the past thank goodness. But the insurance plans, not your doctors, determine what is "medically necessary" and they often determine that after the fact. Maybe you don't think you were joyriding in that ambulance when you thought you were having a heart attack, but United or Aetna or Humana or whoever can decide you were when you're sent home from the emergency room with a non-emergent diagnosis.
I was running about $20,000/year in uncovered medical bills before I became Medicare eligible and that was just for routine care and no hospitalizations for my medical condition because the insurance company determined that not a single medical treatment or imaging test that I required qualified under the plan. And that's even with me being a doctor and chasing every billing code.
Was that pre-aca or did you have a plan that got around the ACA requirements (healthcare ministry, temporary insurance, etc)? THe ACA put minimum standards of coverage in place, in hindsight prior to the ACA it was the wild west and many people bought health insurance that was useless.
I think it is necessary to appeal your health insurance rulings when claims are denied and this happens often. Denying valid claims is part of the business model for health insurance companies. I am in the process of appealing a denied claim right now, I consider that just part of the process for dealing with healthcare in the U.S. The more appeals I file, the better I get at the process.
I promise im not being purposefully obtuse, i really am just trying to understand examples of the circumstances in which one could end up with tens of thousands in expenses for medically necessary conventional medicine even after meeting their OOP max.
ALso, if health insurance companies behave this badly and routinely wrongfully deny medically necessary conventional medicine why would an auto insurer behave better and cover those things???
Maybe there is no good answer and the only solution is to work longer and have massive savings for healthcare expenses or move to another country that values human health more than profits.
What now? As I said, I was a doctor. I was also a researcher in health outcomes. I was on state-level advisory councils for healthcare. Are you explaining to me that I perhaps didn't know what to look for in insurance plans (and, yes, all post-ACA)? Or that I don't understand how to appeal a claim? Do you believe that you are smarter than allllllllll the people in this thread that have shared their experiences and so, therefore, are immune to our misfortunes? I thought that you were just being intentionally obtuse. Now I think you're just trolling.
I never said any of those things, typical Strawman b.s. on your part.
I was just looking for examples of services that could be incurred that would not qualify toward OOP max's, that does not make me a troll.
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FWIW I'm with afox in this. I don't think they're trolling, just looking for specifics. Generalized 'someone i know got injured and now has a lot of medical bills' and 'It happened to me it can happen to you too!' isn't super useful. This is MMM, we dig into the weeds on everything, and healthcare coverage in the US is fucked up in every way, so it's a lot of weeds to dig through.
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I think there is some value to UIM even with excellent medical coverage, because it covers pain and suffering, which your health insurance will most definitely not cover you for. True, there's never coverage for pain and suffering for injuries for which you yourself are liable, but you are more able to have an influence on those events than those for which another party is liable.
It's also a false choice to say that if you're exposed to two risks, A and B, you can only either insure against both or none. It's total risk reduction that matters, so eliminating A while deciding the residual risk posed by B is acceptable is perfectly rational.
Insurance is only one facet of personal risk management, so it's a perfectly valid decision to carry UIM to insure against acts of others over which you have little control while simultaneously being satisfied with minimizing risk for injuries you would be liable for by just not doing stupid stuff. There will always be some residual risk and it's up to you to decide what you're comfortable with. Insurance policies have limits and force majeure, too.
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I'm with afox, too. I do not UIM coverage and don't see where I need it. I am lucky to be in Metro Detroit and have mostly had Blue Cross so almost everyone is in-network. I am interested to hear what jac941 was paying for.
I have an example of uncovered claims. I had coverage with BCBS of Alabama until recently. I use a CPAP. Alabama covered CPAP supplies at about 1/2 the rate of every other plan I have ever had (4), and Medicare and Medicaid. I was shocked, and filed an appeal fully expecting to have them covered. The appeal was denied. (This is a relatively small cost, ~$200 a year.)
Afox has contributed to a similar discussion in another thread. He is not a troll.
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Yeah I don't really get the "medical bills will bankrupt you" trope either. I'm sure that was true 20 years ago.
Maybe that was true before my time. Nowadays it seems like every time there is a sob story in the news, there's a very clear reason once you dig in the story.
The article often reads like this:
1. Mr and Mrs Jones were a stable middle class family with two kids and a picket fence
2. Everything is going according to plan
3. Something happens and insurance coverage is lost
4. Let's ride this out lol
5. A really bad thing happens during that coverage gap
6. Bills bills bills
7. A dubious conclusion is drawn
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It's also a false choice to say that if you're exposed to two risks, A and B, you can only either insure against both or none. It's total risk reduction that matters, so eliminating A while deciding the residual risk posed by B is acceptable is perfectly rational.
I don't really agree with this bit. Suppose you have two options for insurance: Option A) a $1,000 deductible in any case, or Option B) $7,000 deductible on Tuesdays but no deductible any other day of the week. If you engage in similar levels of risk every day, you're reducing your total risk the same amount either way, but if you go with Option B you're exposing yourself to a much wider distribution of possible events. The point of insurance is to smooth out this distribution so that no one event will cause you great financial hardship. If a $7,000 loss on a Tuesday is something you can afford to pay without causing undue hardship, then why are you paying the insurance company to assume that $7,000 risk for you on the other days of the week? Surely you'd be better off with Option C: $7,000 deductible every day but lower premium than Options A or B.
I view underinsured motorist insurance in a similar light. You're paying for a policy that limits your risk in one scenario while leaving a pretty big hole in another. The area under your risk curve goes down, yes, but you're not doing anything about the height of the tail end of that distribution. That's a problem.
Insurance is only one facet of personal risk management, so it's a perfectly valid decision to carry UIM to insure against acts of others over which you have little control while simultaneously being satisfied with minimizing risk for injuries you would be liable for by just not doing stupid stuff. There will always be some residual risk and it's up to you to decide what you're comfortable with. Insurance policies have limits and force majeure, too.
Why buy liability insurance at all then? If "just not doing stupid stuff" is good enough to bring the risk from hurting yourself down to a level that you can self-insure, why then would you want to pay for insurance for when you hurt others? Shouldn't "just not doing stupid stuff" be sufficient there as well?
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There seems to be a lot of curiosity on how I racked up $45k in “patient responsibility”. I don’t want to do detailed accounting here - I have 125 Explanation of Benefits statements from last year. So I’ll pull out a few examples with approximate costs.
I do want to start with a few of points of clarification that people seem to be debating:
-I’m in California which has had consumer protection from surprise billing since 2017. The insurance and healthcare companies are well versed in the law and there are loopholes. I’m not sure how things would have been different under the new national law, but I assure you that if there are any loopholes, they will be utilized.
-I filed several grievances, appeals and complaints with the hospital, insurance company, and the CA Dept of Insurance. I won a few, I lost or was denied a few - typically due to some convoluted or unexpected exception in the law.
-The out of pocket maximum is calculated based on the insurance company’s ‘allowed amount’ for the bill. Not based on the actual billed amount. So if the insurance company allows $1,000 for an ambulance ride and pays 80%, they would pay $800 and the amount counted toward the out of pocket max is $200. But if the actual bill was $2,200, then the patient actually pays $1,200 with $1,000 not counting towards the out of pocket maximum.
-The amount I ended up paying was not the $45k that the insurance company calculated. Some bills I negotiated down. Others never hit the insurance list because I had maxed out benefits. I haven’t finished the final accounting, but things that most people would consider medical bills probably landed pretty close to $50k.
-I was extremely lucky to not have a brain injury - in fact my neurosurgeon said that he didn’t want to call it a miracle, but it was kind of unbelievable that I didn’t have a stroke. If I had a brain injury, the costs absolutely would have been more because I wouldn’t have had the cognitive capacity to argue as much as I did.
With that out of the way, here are a few examples.
-Ambulance bills: I had 2 of these. One for the original transport to the trauma center and one for a pre authorized transfer from the trauma center to an inpatient rehabilitation hospital. Between the two, my cost was ~$2,200 with none of that counting towards my out of pocket maximum.
-Neurological monitoring during surgery: By far the biggest cost. Insurance company said the equipment provider was out of network. And this is apparently one of those funny loopholes like the ambulance - somehow doesn’t count as surprise billing. Hopefully that loophole is closed in the national law. ~25k
-Post discharge follow up appointments: 2 surgeons and physician that coordinated inpatient care. This is a little complicated, but while the trauma center was in network, the physicians were not. Even more confusingly, these physicians were in network if seen at a different facility. I was assured each time at check in that there was no copay / insurance covered it. Unfortunately that was wrong. Oops. ~$2,000
-Physical Therapy: Not surprisingly I exceeded my annual limit for this. Now that it’s 2022, I’m back to covered visits again. ~$2,500
-Mental Health: This isn’t in network. My therapist charges a fair price that’s about double what insurance will reimburse. ~3,000
There are a few others as well. Mostly smaller amounts, but they add up. As I mentioned in my earlier post, medical equipment isn’t included in that $45k number - walker, shower chair, ice packs, special pillows and things for positioning at home, home equipment for PT, etc. Nor is the extra private physical therapy I’ve been doing on my own.
And back to the do you need it or not UIM. It’s totally up to you. I walk and bike a lot more than I drive. I think in this scenario I’m much more likely to need UIM than liability. Personally, we insure for very high cost, high impact things and set deductibles pretty high. I’m not insuring against a $20k loss, I’m insuring against a $100k+ loss (which this definitely was). Most other people carry $25k/50k car insurance in CA (the minimum). That’s not enough for what we are insuring against. So for us it makes sense to carry it.
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GEICO is only charging us $2/6mo for Uninsured Motorist coverage, and $7.16/6mo for Underinsured Motorist coverage, at $300K each, the maximum offered in our state. Given what Jac941 is reporting, as well as other nightmare stories I've heard, those small amounts seem more than worth it to me. I get what others in this thread have been bringing up about how if you have enough health insurance, which we do, you shouldn't need to worry about UM/UIM coverage on an auto insurance policy, but for <$20/year for the maximum allowable UM/UIM coverage, it doesn't seem worth it, to me, to scrimp. Every time I read or hear about the ridiculous adversarial system of private, for-profit healthcare/insurance in our country, it makes me feel sick to my stomach. For what possible reason are we allowing this to continue? It makes no sense. I don't even think Medicare for All goes far enough. We should have Medicaid for All. Patients shouldn't have to deal with negotiating with insurance companies, when they're already suffering from an accident or illness. Everything should just be covered. No bills to patients. No OOP max bullshit. Just full coverage for all expenses. Any negotiations should be strictly between the insurance company (Medicaid) and the providers, which should be a complete non-issue for patients and their families.
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There seems to be a lot of curiosity on how I racked up $45k in “patient responsibility”. I don’t want to do detailed accounting here - I have 125 Explanation of Benefits statements from last year. So I’ll pull out a few examples with approximate costs.
I do want to start with a few of points of clarification that people seem to be debating:
-I’m in California which has had consumer protection from surprise billing since 2017. The insurance and healthcare companies are well versed in the law and there are loopholes. I’m not sure how things would have been different under the new national law, but I assure you that if there are any loopholes, they will be utilized.
-I filed several grievances, appeals and complaints with the hospital, insurance company, and the CA Dept of Insurance. I won a few, I lost or was denied a few - typically due to some convoluted or unexpected exception in the law.
-The out of pocket maximum is calculated based on the insurance company’s ‘allowed amount’ for the bill. Not based on the actual billed amount. So if the insurance company allows $1,000 for an ambulance ride and pays 80%, they would pay $800 and the amount counted toward the out of pocket max is $200. But if the actual bill was $2,200, then the patient actually pays $1,200 with $1,000 not counting towards the out of pocket maximum.
-The amount I ended up paying was not the $45k that the insurance company calculated. Some bills I negotiated down. Others never hit the insurance list because I had maxed out benefits. I haven’t finished the final accounting, but things that most people would consider medical bills probably landed pretty close to $50k.
-I was extremely lucky to not have a brain injury - in fact my neurosurgeon said that he didn’t want to call it a miracle, but it was kind of unbelievable that I didn’t have a stroke. If I had a brain injury, the costs absolutely would have been more because I wouldn’t have had the cognitive capacity to argue as much as I did.
With that out of the way, here are a few examples.
-Ambulance bills: I had 2 of these. One for the original transport to the trauma center and one for a pre authorized transfer from the trauma center to an inpatient rehabilitation hospital. Between the two, my cost was ~$2,200 with none of that counting towards my out of pocket maximum.
-Neurological monitoring during surgery: By far the biggest cost. Insurance company said the equipment provider was out of network. And this is apparently one of those funny loopholes like the ambulance - somehow doesn’t count as surprise billing. Hopefully that loophole is closed in the national law. ~25k
-Post discharge follow up appointments: 2 surgeons and physician that coordinated inpatient care. This is a little complicated, but while the trauma center was in network, the physicians were not. Even more confusingly, these physicians were in network if seen at a different facility. I was assured each time at check in that there was no copay / insurance covered it. Unfortunately that was wrong. Oops. ~$2,000
-Physical Therapy: Not surprisingly I exceeded my annual limit for this. Now that it’s 2022, I’m back to covered visits again. ~$2,500
-Mental Health: This isn’t in network. My therapist charges a fair price that’s about double what insurance will reimburse. ~3,000
There are a few others as well. Mostly smaller amounts, but they add up. As I mentioned in my earlier post, medical equipment isn’t included in that $45k number - walker, shower chair, ice packs, special pillows and things for positioning at home, home equipment for PT, etc. Nor is the extra private physical therapy I’ve been doing on my own.
And back to the do you need it or not UIM. It’s totally up to you. I walk and bike a lot more than I drive. I think in this scenario I’m much more likely to need UIM than liability. Personally, we insure for very high cost, high impact things and set deductibles pretty high. I’m not insuring against a $20k loss, I’m insuring against a $100k+ loss (which this definitely was). Most other people carry $25k/50k car insurance in CA (the minimum). That’s not enough for what we are insuring against. So for us it makes sense to carry it.
Thanks for sharing! Those are definitely things that could happen to me, too.
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Thanks for sharing that info @jac941 . I love to hear stories like these because I think it helps others avoid the same pitfalls (such as the neurological monitoring out of network). I think it is analogous to pilots studying accident reports. Pilots learn from each others mistakes and the sharing of information makes everyone safer. In the same way we can use this information to save each other money and have better health outcomes.
In that vein, I really like the NPR "Bill of the month" series and when I searched for information about insurance issues with neurological monitoring, this story came up which sounds like an even costlier experience than yours:
https://www.npr.org/sections/health-shots/2019/06/17/732497053/a-year-after-spinal-surgery-a-94-000-bill-feels-like-a-backbreaker
It does sound to me like the new surprise billing rules would have helped you significantly. Was your surgery an emergency surgery in which you had no opportunity to check to make sure that all providers were in network? If so it is criminal and inhumane that the insurer would not pay the provider or the provider would not accept the insurers rate.
Also, this story is interesting, apparently auto insurers have medical networks as well. I wonder if the surprise billing rules apply to auto insurers as well:
https://www.npr.org/sections/health-shots/2021/04/22/989209329/surprise-the-charge-for-his-spine-surgery-after-a-car-crash-topped-700-000
I do wonder how much complexity having two insurers paying for healthcare adds to an already complex scenario. Of course each insurers has to do everything it can to make sure that the other insurer pays as much as possible. I am concerned that if I used something like UIM to pay for medical bills those costs would not count towards my OOP max and if I had enough medical expenses to meet the OOP max then the auto medical insurance would not have any benefit, I dont know if this is a valid concern or not.
One other note: by law FMLA can be invoked by an employee in the case of a serious accident.
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@jac941 Any chance you would consider naming and shaming the Bay Area hospital that pulled this fast one on you?
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@Paul der Krake I’m not going to name and shame. Too personally identifiable. And I did receive excellent life saving care there for which I will be forever grateful (despite the shitty billing practices). Besides you don’t get to shop around for your trauma center, so it doesn’t help folks avoid the place. I will say that it was NOT SF General who used to be infamous for awful billing practices until they were publicly shamed in Vox. I understand they’ve improved in the last year or two.
It does sound to me like the new surprise billing rules would have helped you significantly. Was your surgery an emergency surgery in which you had no opportunity to check to make sure that all providers were in network? If so it is criminal and inhumane that the insurer would not pay the provider or the provider would not accept the insurers rate.
I got hit by a car. There were no options to shop around or make an informed decision. It was surgery or possibly die and almost certainly have a stroke and be paralyzed from the chest down. I am lucky to be alive - really really lucky. The insurance is a hassle and borderline criminal. But I’d rather be dealing with it that have my kids grow up without me.
I don’t regret carrying UIM or think that coordinating with insurers is worse than having no insurance at all. The biggest benefit to UIM is that if things get really bad you can hire a personal injury lawyer to fight with everyone for you and they only get paid out of what they collect from the insurance company. You can’t get that with heath insurance. That bit alone is with the peace of mind.
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So my auto insurer (state farm colorado) offers several different kinds of healthcare coverages:
-bodily injury: basically healthcare liability for others in the event of an accident you cause, i would never go without this and pretty sure its required.
-UIM bodily injury: we all know what this is but state farm seperates out UIM property and UIM medical/bodily injury.
-Medical Payments: apparently this is medical coverage for the insured (drivers only) in the event that you cause an accident or no other vehicle is involved so you could not make a medical claim via UIM or other drivers liability ins.
So, I assume the proponents of UIM would also have "Medical Payments" coverage by the same logic that you carry UIM coverage, is that correct? Note that "medical payments" coverage does not cover lost wages, there is no option for lost wages coverage for an accident you cause as far as I can tell. Lost wages coverages appear to be a reason for some to carry UIM. So, do people with good health insurance also carry "medical payments" coverage, why or why not?
Medical payments coverage only goes upto 25k coverage and costs about $40 per year per vehicle. I can understand why its cheap, it doesnt cover much.
UIM Bodily(medical) goes upto 500k in coverage and costs about $460 per year per vehicle.
I guess there are no deductibles for these types of auto medical insurance. Sounds like they do have networks, coverage limits by procedure, etc and out of network expenses are a thing with auto insurance medical insurance though. Good luck to anyone trying to go down that rabbit hole to find information.
I still dont understand the case for paying for auto medical coverage (insurance) that overlaps with one's health insurance coverage. I do understand the case for insurance that covers lost wages for those that need/want it. The only coverage for lost wages that you can buy appears to be UIM and that could only be used in the case of an accident with another driver who does not have insurance, for accidents caused by another driver with insurance I assume that the other drivers liability insurance will pay lost wages. Even in @jac941 's unfortunate and terrible ordeal all of the medical services he/she needed with the exception of some physical therapy that went over his plans limits were technically covered by his/her's health insurance, it was just some out of network snafu's (uhm legal stealing from a person at their most vulnerable point in their life) and his/her personal preference for some out of pocket providers (absolutely nothing wrong with that) that caused the high out of pocket costs. All of those out of network excess expenses except the ambulance charge would have had no cost once meeting the OOP/deductibles for the year if the surprise billing rules work as intended.
Maybe its too early to tell how the surprise billing rules will play out in reality but from the personal stories, reporting such as NPR's bill of the month series etc it sounds like the vast majority of the high healthcare costs incurred by patients are coming from surprise billing. This could really change things for the U.S. healthcare situation.
Weird tidbit: if a bad accident or health issue occurs in december/late in the year you're likely to have to pay OOP/deductibles for 2 years vs. possibly one if the accident occurred in january/early in the year.
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@afox The advantage of medical payments over UIM is that it’s no fault, first payer, and immediately available. So it can be used for ambulance bills, copays / meeting your out of pocket expenses, etc. And you can use it for yourself even if you’re liable for the crash.
The UIM has to be settled all at once, so if you’re badly injured and have a complicated settlement, it can take a year or two to see the money. It also only covers you if you’re not liable.
Confirm that’s what you’re looking at with the policy options, but that’s how I’ve always understood it.
I really hope that the US surprise billing law is better than the CA one. The CA one protected me from a lot (but not all) of out of network charges. Especially things like anesthesiologist and radiologists. If the surprise billing law works as intended it would massively reduce the risk of big medical bills.
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@afox The advantage of medical payments over UIM is that it’s no fault, first payer, and immediately available. So it can be used for ambulance bills, copays / meeting your out of pocket expenses, etc. And you can use it for yourself even if you’re liable for the crash.
The UIM has to be settled all at once, so if you’re badly injured and have a complicated settlement, it can take a year or two to see the money. It also only covers you if you’re not liable.
My understanding is that the UIM would only cover you if the accident is the other drivers fault AND the driver at fault did not have liability insurance (they had no insurance). If the other driver had insurance my medical claims would be paid by their liability insurance.
It could be helpful for people to look up percent uninsured for their state to help decide if UIM is worthwhile. In my state (CO) 16% of drivers have no insurance. Mississippi has highest percent uninsured at 30%, NJ has lowest percent uninsured at 3%. Quite a big difference between states. One would assume that UIM would be dirt cheap in NJ. Its shocking to me that all states dont have methods in place to nearly eliminate uninsured drivers from the road as NJ has.
It is nice that MedPay pays coverage towards expenses that go towards health insurance deductibles/OOP max's. In my case my health insurance premiums for family of 4 are $2500, I have a $3000 deductible, and $10k OOP max. Its not likely that I would not have paid any healthcare expenses at the time of a MedPay claim and the coverage is of limited value once the OOP max has been met. Its pretty cheap coverage but its just not a lot of benefit and goes against my philosophy of using insurance to pay for losses that would be catastrophic.
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Yes, you should get both uninsured and underinsured motorist insurance if you’re going to bother at all. Not just uninsured. Having a minimum policy is extremely common - if you combine underinsured and uninsured your percent of drivers in the combined categories is going to be high. Some states have no fault insurance which also changes the equation.
If the other driver provides false insurance information to the police (which happened to me), and you have UIM, I guarantee that your insurance company will find any open policy that applies to the liable party or vehicle on your behalf.
I agree regarding medpay. It’s cheap to get and marginally useful. I was glad to have it, but it’s not nearly as useful as the underinsured motorist coverage. The uninsured / underinsured motorist is definitely the catastrophic coverage.