Umbrella Policy

[RMBin303]

We added $1mm of umbrella coverage many years ago at the advice of our agent. $2mm of coverage isn't very much more, but the umbrella also requires higher limits of liability on all policies, which is the reason I stayed at $1mm.

And to answer the second question, I have my coverage re-evaluated every couple years. Both from the Independent Agent I use, and about every 5 years or so I have gone through the trouble of re-quoting the policies with the captive agents.

I'd highly recommend shopping coverages every few years. Savings can be in the thousands of dollars.

[bubba800]

Originally Posted by stout93

Maybe stupid question, but do you guys review your home coverage and increase it each year as your property values rise? Just thinking I have $40k on my pole barn and it's probably $60k now replacement cost. Same with the house too..

Make sure it is worded for replacement cost

[bubba800]

Originally Posted by RMBin303

We added $1mm of umbrella coverage many years ago at the advice of our agent. $2mm of coverage isn't very much more, but the umbrella also requires higher limits of liability on all policies, which is the reason I stayed at $1mm.

And to answer the second question, I have my coverage re-evaluated every couple years. Both from the Independent Agent I use, and about every 5 years or so I have gone through the trouble of re-quoting the policies with the captive agents.

I'd highly recommend shopping coverages every few years. Savings can be in the thousands of dollars.

Good advice, I just went back to our prior agent/company after 4 years. I compare every year and tell the agents straight up; it isn't personal it's business. Increasing my homeowners I understand but creeping rates on depreciating assets like autos I'll cut the cord quick.

[MN_Moose]

I've looked at it. I was informed by insurance company that they would not write an umbrella liability coverage unless they also carried auto insurance.

I was told to look at maximizing auto liability coverage before adding an umbrella because it is cheaper.

I've had one for many years, probably 30+ or so. Its $1M coverage and it is an umbrella for anything that I have an existing policy on. Boat, cars, 4-whlrs, etc. However, if there's no current policy on it, the umbrella doesn't cover it.

It started at about $175/year for $1M. When the kids started driving it went up to about $600/yr. When they got their own cars/policies, it went back down and is now about $250/yr. State Farm, BTW.

[Aspencreek]

As someone who deals in this everyday.....an umbrella policy for liability coverage is a very good idea, don't leave home without it. And it is cheap!
Reviewing your coverage every 3-4 yrs is also a good thing to do. Replacement coverage is also the way to go, but insurance companies will also set policy limits to the extent that they will not replace your $400K house with a $880K just because. A good agent will help you thru the jargon and guide you to what's needed. Shopping every 3-4 yrs is also a GOOD idea. You don't get discounts for being longer term clients, if you haven't shopped, you are paying too much, I guarantee it.

You are not married to your insurance company, you can change, and making a legit claim is not a black mark on your history, that's why you buy insurance. Making lot's of claims is.

And finally, for you guys and gals with a man/women cave, a well stocked gun cabinet, or well stocked fishing garage, wood working, metal working, quilting, anything, make sure your policy has you covered in case of any kind of disaster. Your agent NEEDS to know about all of your stuff and make sure you are covered for it. Think of it this way, in case of a total loss in a fire, what would it take to buy all of this STUFF. I'm talking about additional riders for property that are either scheduled or just an addition to the policy limits.

I just visited a guy who lost everything in a fire, all he had was his truck and the clothes on his back. His policy limit was $250K on his house and a limit of $100 for contents, so he is going to get a check for $350K plus temp. living expenses. To rebuild his home to what it was is going to be around $345K. He and his wife and kids still have no furniture, no clothes, no toys, no kitchen appliances or pots and pans. And his well stocked gun and fishing stock is gone, including his grandfathers WWII pistol and Browning auto rifle. This is just an example of NOBODY wins in a fire. It pays to be vigilant and stay on top of this, as much as nobody wants to take the time to do it.

[Ozark Bob]

I use a rain jacket! No umbrellas in the boat! They get in the way JMO Bob

[Spartuna]

Regarding LLC and protection: Some protection if your employee(s) screw up. Not much if you are the only employee or if you are the one who screws up. Imagine your LLC owns a store. Your employee leaves the mop sticking out in the aisle and someone is hurt. The employee is sued and the store/LLC is sued. Same scenario but you are the one that leaves the mop, you are sued personally (because you were the negligent party) and your LLC is also sued. No substitute for adequate insurance.

[Baseline]

Umbrella coverage will only cover a specified amount if a liability claim against you is awarded in an amount in excess of your base liability coverage of your auto, home owners, boat or other coverages you have. The insurance company will also have stated amounts of base insurance you have to purchase. It is unlikely you will find a carrier to cover you unless you purchase the base coverage from them. However, there are companies that do sell coverage only with a high deductible, but they mainly play in the business coverage market.

One thing to consider is 99% of all liability claims settle out for less than the coverage amount in base required policy. Offering this coverage is also a way for the company to sell package coverage. That is why the premiums are inexpensive. This coverage is a high profit sales item for the consumer insurance market. It is rare excess coverage would be needed, but it might be worth the $15 to $20 per month added premium just to have this base covered should something really go wrong. After all that is why people buy insurance. It just depends on the level of risk you are comfortable living with.

[yarcraft91]

Originally Posted by bubba800

We have always maintained an umbrella policy. Make sure you have enough coverage to protect your real estate, personal property and especially retirement funds. After taking a lump sum for my pension I found out I was seriously under insured at 2.5m and had to up the policy. I think I pay about $500 a year.

I have never understood this. No matter how much insurance coverage you have, a plaintiff can still sue for all your liability insurance coverage AND your entire personal net worth. How does an umbrella policy "protect your net worth"? Seems to me it just gives a plaintiff a bigger pot of money to go after.
FWIW, I understand that retirement assets may not be subject to lawsuit claims.