What are your thoughts on Umbrella Insurance?

[aida2003]

Hi,

Since people in this forum seem to be not an ordinary crowd (meaning that you plan your future), I wonder what you think of Umbrella Insurance and how many of you actually carry it.

We don't have it (at least yet), but I requested a quote. I got the following response "A personal umbrella policy would be only about $2.19 a week for you--$114.00 a year for $1,000,000 in extra liability coverage.. Your auto liability limits would have to raise to meet the guidelines of the umbrella, though, at an increase of $71.92 per year. We strongly recommend the umbrella to our clients like you owning several vehicles and a home. Our "I'm gonna sue!" culture continues to cause the frequency of liability cases and pay outs to its claimants to rise."

I don't know exactly why our auto-policy would become more expensive. I emailed our agent to inquire. My guess is that one of our autos has only liability coverage (11y.o. Corolla) and would need to be bumped up to have a comprehensive insurance.

Another thing that I always find annoying about insurance companies is the last sentence. It seems that all insurance co. have to play with people's weak side. E.g. you must get a life insurance because you might die and you must get as big coverage as you can. But then they don't specify the difference in coverage when you have 1 kid, 2 or more. Their pitch is always 8-10 times your gross income. Sure, I got scared, so my DH has a large life insurance since he's a bread winner. I just have a small one thru my co. I bet if I told our agent, he'd tell me another sad story .

So what do you do? Do you carry an ubrella insurance?
Can you get an umbrella insurance from a different company instead? But then their premium might be higher that would pretty much include the increase of our auto insurance.

[sweeps]

I don't have it, but I think it can be a good idea for certain situations. As with any insurance product, you really have to do the math for yourself to see if it's worth it. Don't rely on your insurance agent's insistence that you need it.

Keep in mind that some of your assets may be protected by law from lawsuits. Depending on state law, your house and your retirement plans may be safe.

You shouldn't need to add comprehensive coverage to get umbrella coverage. Umbrella refers strictly to liability -- so you will have to make sure your liability coverage is at a certain level, usually 250/500.

[Janey]

We are strongly considering an umbrella policy. My husband is a professional, and he is checking with his company to see if they carry an umbrella policy for him, and if so, what it covers. This may change whether or not we purchase one on our own or not.

I'm glad to know it's not a lot of money to do it. $114/year seems very reasonable. Would you mind telling me which company gave you the quote? I don't think my home/auto insurer (Allstate) offers umbrellas.

[sweeps]

Janey, Allstate definitely offers umbrella policies. Your agent will be more than happy to sell a policy to you. Again, you may have to raise the liability limits on your house/cars so the actual price may be higher than just the $100-$200/year.

[aida2003]

Would you mind telling me which company gave you the quote? I don't think my home/auto insurer (Allstate) offers umbrellas.

We're with ERIE, but it's not licensed to sell its insurance in all states. You'd need to go on its website to find out whether they cover your state.

[QueenOphelia]

I have a $1 million dollar umbrella policy. I believe it is around $250 a year

[flatrock]

Umbrella

I have a million it cost $214 per yr. from State Farm. Had to raise the autos to higher coverage to get it. Took an accident that was my fault & threatened with a major lawsuit including threats of wage garnishment & forced sale of real estate to turn me around (eventually settled out of court for much much less). I had an accident & thought everything was taken care of and right before the statute of limitations expired almost a year later a lawyer started after me. If you are in an accident you will get sued and you will want lots of insurance at that time. I used to go cheap with minimal insurnace never again.

[dfeucht]

My million dollar policy through State Farm is $144 annually (premium differences due to geography?). We got it because we have pets and I think that is an added risk should they happen to bite somebody. They definitely require a minimum libility level on your cars - so that is what they were talking about on increased auto insurance.

[InDebtInDC]

This is a loaded question. You need to consult a financial planner to help you decide the appropriate level of coverage. Consult a planner before you meet with an insurance agent.

As far as umbrella policies go, you may or may not need it, depending upon your situation. If you work a regular job and own a small home, several cars, etc., I would seriously consider what kind of liability you may cause.

If you own your own business, or have a sensitive job, you may want to consider it.

For me, since I don't currently own a home and I'm covered against malpractice at my job, I don't really need that kind of coverage. If I ever went to private practice though, I would pick up professional liability insurance and umbrella coverage on top of that.

[vsjhoc]

I am constantly losing umbrellas or breaking them when there's a very windy storm, so I would love to have some umbrella insurance.

[aida2003]

I just got a quote from Liberty Mutual. They want $1,130/year. What a huge difference with our ins. co. $190/year.

Hmm, I'm surprised D.Steve didn't pitch in. He seems to have all insurances, investments, what about an umbrella ins.??

[sweeps]

I just got a quote from Liberty Mutual. They want $1,130/year. What a huge difference with our ins. co. $190/year.

That does seem high, but part of the reason for the difference is (a) the $190/year is based on a multi-policy discount with your existing insurance company, and (b) standalone quotes naturally cost more because LM would have to work with your existing insurance company in the event of a claim. In other words, there is more risk for them.

[kilcher]

If you are in an accident you will get sued and you will want lots of insurance at that time.

I've been in many accidents and never been sued, nor do I know anyone who has ever been sued as a result of an auto accident.

Just not a fan of blanket statements that aren't always true. Like when the state says "If you drink and drive you WILL be caught." Um... No, not necessarily true.

Back on topic, I've always viewed umbrella coverage as a way for insurance companies to squeeze more money out of existing customers.

[tripods68]

Back on topic, I've always viewed umbrella coverage as a way for insurance companies to squeeze more money out of existing customers.

You made a good point!

Insurance companies are "fear mungers". That how I still view them. But for all practical purposes they do served an important roles in our society. I mean, I don't have a million dollars to pay out in case I get sued by my neighbors. So in the end, I have to protect my asset that I'd worked my entire life and all lose it in a blink of an eye. No way! In the end, it's all about living your lives to the fullest and managing your risk at the same time.

[LivingAlmostLarge]

I honestly don't really know what it's for. BUT we have $1M umbrella policy in place along with large car insurance. I think we carry $250/500 or $500/$1M. I was told that if we are sued and we don't carry adequate insurance they can come after your assets. Which are small right now, but are growing so we also want to protect future earnings.

I figure for $300/year it's fine. Why not? And my DH has gotten in 3 car accidents by 28, so I might be hedging our bets more than necessary.