resolution
Junior Associate
Joined: Dec 20, 2010 13:09:56 GMT -5
Posts: 6,937
Mini-Profile Name Color: 305b2b
|
Post by resolution on Apr 30, 2019 14:01:02 GMT -5
How do you decide how much insurance do you need?
I replaced my car this month and have scheduled an insurance check up to go over all of our various insurance and look at different companies prices. I haven't really found a good method for deciding how much insurance we actually need.
Our deductible is $1000 to keep prices low. The insurance agent is pushing a new policy where we pay $36 per year, and every year without an accident will lower our deducible by $100, but that sounds like a gimmick so I keep declining it. They are also pushing life insurance really heavily, but I don't think we need any.
A lot of our policy limits are driven by the requirements of the umbrella policy, but we don't really have a rationale for the amount of the umbrella policy. I was thinking as our net worth goes up we should be raising the liability coverage? Or leave it the same since our behavior isn't really changing?
I googled a bit on how to decide how much umbrella insurance is needed, but all of it seemed really subjective. I am leaning toward doubling it since our net worth is approaching the current limit, but there is really nothing stopping anyone from suing us for any amount, so maybe I shouldn't be coupling it to our net worth?
|
|
jd2005
Established Member
Joined: Mar 15, 2011 14:16:37 GMT -5
Posts: 411
|
Post by jd2005 on Apr 30, 2019 14:50:12 GMT -5
Bought a house and got my first big boy job = $250/$500 k car insurance. Don't want people to come after me because they "think" I have money.
|
|
justme
Senior Associate
Joined: Feb 10, 2012 13:12:47 GMT -5
Posts: 14,618
|
Post by justme on Apr 30, 2019 15:19:31 GMT -5
A decent amount depends on your state - namely are there homestead laws? Meaning is house safe from any lawsuit? Are retirement-specific moneys safe? If they're not safe or you have large sums of money or property elsewhere you'd want to do what you can to keep people from going after them.
When you cause an accident, once a lawyer is involved they will immediately pull your limits. If your limits are decent for the injury's they're likely to ignore anything else and just focus on the policy limits and do the song-and-dance to try and get as much of it as they can.
Once they file suite though, they can start asking for assets...trying to see if they only have insurance to deal with or if there's deeper pockets. Be aware that if it does go to trial - the lawyer your insurance uses only cares if they can get an amount under what their client (the insurance company) is liable for. If your policy limit is $100k there's no difference to the lawyer if the final amount is $101k or $300k - end result to him is a $100k loss for client. Mine never made it to depositions, I'm trying to remember if I had to disclose any assets on the first discovery questions...I'm not sure. It was 9 years ago.
I believe I've had $100/300 since I got my first job and the same amount on UM. Most of my wealth is still in protected assets so I haven't upped it. The stuff not in it is small enough that I can call it my 'last vacation in a while fund' if I ever need to. That's what I called the few grand I had in my savings when the suit was filed against me. If it looked like they would get more than what my insurance had my happy little ass was going to go to Europe before I had to file bankruptcy.
|
|
resolution
Junior Associate
Joined: Dec 20, 2010 13:09:56 GMT -5
Posts: 6,937
Mini-Profile Name Color: 305b2b
|
Post by resolution on Apr 30, 2019 15:39:41 GMT -5
Do they ask about assets before or after they figure out how much they want to sue you for? Maryland protects retirement accounts, but we have a good amount outside of retirement in a taxable brokerage account and a rental house. I was thinking of raising the umbrella policy since our assets are close to the limit, but then couldn't people just raise the amount that they ask for in a lawsuit? These are our current policy limits. - Auto we have comprehensive, collision, and liability is 100k property damage/500k medical per incident
- Home we have guaranteed replacement cost and 500k liability
- Rent house we have replacement cost and 300k liability
- Umbrella coverage is $1,000,000.
- Life insurance - not much to speak of since we both work and have no dependents.
|
|
mollyanna58
Junior Associate
Joined: Jan 5, 2011 13:20:45 GMT -5
Posts: 6,652
Member is Online
|
Post by mollyanna58 on Apr 30, 2019 16:06:04 GMT -5
Please raise the liability coverage on the rental house to agree with your homeowners; the cost should be minor.
I don't like the policies that reduce your deductible each year if you pay extra. I just bank the extra money instead of giving it to the insurance company. I do like auto policies that offer replacement cost on the car. If my 2016 Subaru gets totaled, my insurance company would pay for a 2019 Subaru instead of the depreciated value of the 2016. But it does depend on the cost of this feature. I found it to be reasonable on my policy.
As for the umbrella, I have enough to cover my assets in case I cause a horrible accident. These policies go up in million $ increments.
I had an insurance client who made a left turn in front of a motorcyclist. The bike hit the car, and the motorcyclist's leg was crushed. He underwent several surgeries, and was still in danger of losing his leg. I don't know if he did or not. However, the insurance carrier offered him the full policy limits of $500,000. on the car policy and $5mil on the umbrella.
Life insurance: could one of you afford your house without the other's income? Some couples without dependents buy enough term life to cover the mortgage.
|
|
justme
Senior Associate
Joined: Feb 10, 2012 13:12:47 GMT -5
Posts: 14,618
|
Post by justme on Apr 30, 2019 16:11:53 GMT -5
I don't recall them asking before they filed. But I don't think they have to specify a certain amount when they first sue you, beyond stating that the claim is within the allowable ranges of the court (and there is a level where it's just $X+) swamp might know better though. Most lawyers won't go after more than your policy unless there's significant injuries to warrant it. PI lawyers only get paid as a % of what they win, but if the person can't pay that amount 33% of $0 is $0. The insurance money is "easy" money in that once the settlement is reached the insurance will pay it. But I also believe that higher limits do make people see $$$ to a certain extent and increase the likelihood of them going after you. The ones that sued me were pretty much nuisance suits (had no problem yelling and flailing at me on the scene, didn't call an ambulance, they didn't see a doctor until almost a month after the accident, only saw the doctor a handful of times, but then 6 months later had to go to the ER for pain in the middle of the day saying it was from the accident - my state has since put a time limit on how long after an accident you have to see a doctor) and my insurance was only offering them a pittance to make it go away, they sued as a strong arm tactic but settled before they had to put out any more money (they kept pushing out my deposition which their lawyer would have had to drive over 2 hours for $$$).
|
|
resolution
Junior Associate
Joined: Dec 20, 2010 13:09:56 GMT -5
Posts: 6,937
Mini-Profile Name Color: 305b2b
|
Post by resolution on Apr 30, 2019 22:06:05 GMT -5
I will talk to the agent about the rental again. The insurance for everything else (Erie) won't cover it because it's out of their area. So the rental is with Allstate, and I will call them about raising the limit if our agent can't find a good deal with a company that will cover everything for us.
We owe around $30k on the house, so it shouldn't be an issue if anything happens to me or DH. If I die, I expect he will pay it off, since I have been the one insisting on investing the money instead of paying it off. We have been shopping for a more expensive house, so I will revisit life insurance if we buy one.
|
|
Deleted
Joined: Mar 29, 2024 9:58:41 GMT -5
Posts: 0
|
Post by Deleted on May 1, 2019 7:24:17 GMT -5
I've got a $2 million umbrella, which doesn't totally cover my assets. I just checked and my state lets you keep only the portion of an IRA that's necessary for reasonable support in the case of a lawsuit. I'm sure that won't be interpreted to include my typical travel patterns. And I can keep $15K in equity in my home, although the house is in a Revocable Trust so that may give me some protection. Wow. That's pitiful. I should probably get another million. I agree with justme; they're most likely to take the insurance proceeds and run. If I run over someone they've won the friggin' lottery. As for her point that insurers have no skin in the game once a claim exceeds your policy limits- true, although they can be hit with a lawsuit for Bad Faith claims settlement if they do a lousy job and you get stuck with a giant shortfall as a result. It's always best to have the same insurer cover the underlying policies and the Umbrella; that way, if the worst happens, they have an interest in settling for the lowest they can within the policy limits PLUS the umbrella and you're not dealing with two sets of lawyers. You're also more likely to have coverages that mesh together with no gaps. Life insurance: had it through employers but really didn't need it after DS got out of college. DH was 15 years older and unlikely to survive me, and there was enough in the investments that he would have been OK. On fact, when I saw the "imputed value" of the employer-provided life insurance at my last job ( the value of anything over $50K is taxable income), I asked if I could cancel it. I had to wait till the next Open Enrollment but was gone by then. I have no life insurance now.
|
|
resolution
Junior Associate
Joined: Dec 20, 2010 13:09:56 GMT -5
Posts: 6,937
Mini-Profile Name Color: 305b2b
|
Post by resolution on May 1, 2019 7:59:48 GMT -5
I was surprised that Maryland doesn't have a homestead exemption from creditors, although it does completely shield retirement income and accounts. It is such a blue state, but a lot of the laws are very conservative.
I am going to go ahead and double the umbrella policy just in case.
|
|
HoneyBBQ
Junior Associate
Joined: Dec 27, 2010 10:36:09 GMT -5
Posts: 5,395
Mini-Profile Background: {"image":"","color":"3b444e"}
|
Post by HoneyBBQ on May 1, 2019 10:22:20 GMT -5
Huge amount of life insurance, huge amount of umbrella. Purpose: protect my family, protect my assets.
high deductibles to keep prices low for house and car. Cheap bastard, never had a car accident.
I don't have earthquake insurance which is recommended here, but my home is newer and EI is ridiculously expensive.
|
|
azucena
Junior Associate
Joined: Jan 17, 2011 13:23:14 GMT -5
Posts: 5,114
|
Post by azucena on May 1, 2019 10:57:10 GMT -5
Umbrella insurance is probably something I need to buy. How do I figure out how much I need and how much does it cost? Do I go through my home/car carrier which is american family?
|
|
tskeeter
Junior Associate
Joined: Mar 20, 2011 19:37:45 GMT -5
Posts: 6,831
|
Post by tskeeter on May 1, 2019 11:31:48 GMT -5
Umbrella insurance is probably something I need to buy. How do I figure out how much I need and how much does it cost? Do I go through my home/car carrier which is american family? I’m sure that American Family can sell you umbrella liability insurance. I base our our umbrella on our net worth. While IRA’s are protected from some legal claims, what happens once money is withdrawn from an IRA? Is the withdrawal subject to garnishment or other legal claims on your income? My bottom line is that I want my insurance carrier to have at much at risk as I do, so that the insurance company has an incentive to provide me a vigorous defense against any claims.
|
|
resolution
Junior Associate
Joined: Dec 20, 2010 13:09:56 GMT -5
Posts: 6,937
Mini-Profile Name Color: 305b2b
|
Post by resolution on May 1, 2019 11:57:38 GMT -5
Umbrella insurance is probably something I need to buy. How do I figure out how much I need and how much does it cost? Do I go through my home/car carrier which is american family? Umbrella insurance is cheap, but in order to buy it we had to have high levels of coverage on our home and auto. We are currently paying $200 per year for $1,000,000.
|
|
TheOtherMe
Distinguished Associate
Joined: Dec 24, 2010 14:40:52 GMT -5
Posts: 26,962
Mini-Profile Name Color: e619e6
|
Post by TheOtherMe on May 1, 2019 15:25:37 GMT -5
I am paying $120 per year for an umbrella policy for $1,000,000 of coverage.
Yes, it requires higher coverage on the house and auto.
|
|
Bonny
Junior Associate
Joined: Nov 17, 2013 10:54:37 GMT -5
Posts: 7,434
Location: No Place Like Home!
|
Post by Bonny on May 2, 2019 10:08:35 GMT -5
Umbrella insurance is probably something I need to buy. How do I figure out how much I need and how much does it cost? Do I go through my home/car carrier which is american family? Umbrella insurance is cheap, but in order to buy it we had to have high levels of coverage on our home and auto. We are currently paying $200 per year for $1,000,000. Sort of. I looked into increasing our Umbrella Insurance from $1M/$2M to $5M. It was surprisingly expensive, not at all proportion to the first $1M. I spoke to our insurance agent and it turns out the higher the # the more risk the actuaries think you have. In other words if you have a $5M NW, the more likely they think you will be sued.
I always thought the highest risk we had was with our rentals that were suitable for families. While we tried to stay on top of everything, I know from working at the Transit Agency juries are very sympathetic to parents who have lost or have a child who gets injured or killed even if the accident is a direct result of the child's or parent's actions or negligence. No one wants to tell a grieving parent that they raised a stupid kid. They feel sorry for them and agree to hitting someone with the biggest pockets "because they can afford it".
|
|
tskeeter
Junior Associate
Joined: Mar 20, 2011 19:37:45 GMT -5
Posts: 6,831
|
Post by tskeeter on May 2, 2019 14:51:05 GMT -5
Umbrella insurance is cheap, but in order to buy it we had to have high levels of coverage on our home and auto. We are currently paying $200 per year for $1,000,000. Sort of. I looked into increasing our Umbrella Insurance from $1M/$2M to $5M. It was surprisingly expensive, not at all proportion to the first $1M. I spoke to our insurance agent and it turns out the higher the # the more risk the actuaries think you have. In other words if you have a $5M NW, the more likely they think you will be sued.
I always thought the highest risk we had was with our rentals that were suitable for families. While we tried to stay on top of everything, I know from working at the Transit Agency juries are very sympathetic to parents who have lost or have a child who gets injured or killed even if the accident is a direct result of the child's or parent's actions or negligence. No one wants to tell a grieving parent that they raised a stupid kid. They feel sorry for them and agree to hitting someone with the biggest pockets "because they can afford it".
I think your’e right. The more you’ve got, the bigger target you are for attorneys taking a percentage of the settlement and the less sympathetic the judge or jury will be for a wealthy defendant. Just another hidden cost of having the discipline to become financially successful.
|
|
justme
Senior Associate
Joined: Feb 10, 2012 13:12:47 GMT -5
Posts: 14,618
|
Post by justme on May 2, 2019 21:34:35 GMT -5
I've got a $2 million umbrella, which doesn't totally cover my assets. I just checked and my state lets you keep only the portion of an IRA that's necessary for reasonable support in the case of a lawsuit. I'm sure that won't be interpreted to include my typical travel patterns. And I can keep $15K in equity in my home, although the house is in a Revocable Trust so that may give me some protection. Wow. That's pitiful. I should probably get another million. I agree with justme; they're most likely to take the insurance proceeds and run. If I run over someone they've won the friggin' lottery. As for her point that insurers have no skin in the game once a claim exceeds your policy limits- true, although they can be hit with a lawsuit for Bad Faith claims settlement if they do a lousy job and you get stuck with a giant shortfall as a result. It's always best to have the same insurer cover the underlying policies and the Umbrella; that way, if the worst happens, they have an interest in settling for the lowest they can within the policy limits PLUS the umbrella and you're not dealing with two sets of lawyers. You're also more likely to have coverages that mesh together with no gaps. Life insurance: had it through employers but really didn't need it after DS got out of college. DH was 15 years older and unlikely to survive me, and there was enough in the investments that he would have been OK. On fact, when I saw the "imputed value" of the employer-provided life insurance at my last job ( the value of anything over $50K is taxable income), I asked if I could cancel it. I had to wait till the next Open Enrollment but was gone by then. I have no life insurance now. That's good to know. When I was sued my insurance sent me a letter saying that I might want to hire a lawyer to protect my interests with something like we won't throw you under the bus but this lawyer is for us first.
|
|
Deleted
Joined: Mar 29, 2024 9:58:41 GMT -5
Posts: 0
|
Post by Deleted on May 3, 2019 7:25:58 GMT -5
I think you're right. The more you’ve got, the bigger target you are for attorneys taking a percentage of the settlement and the less sympathetic the judge or jury will be for a wealthy defendant. Just another hidden cost of having the discipline to become financially successful. I know- my parents were broadsided years ago by some bozo driving a van over-packed with passengers and with open containers of beer visible. Parents went to the ER and were checked out; fortunately nothing major. The driver was uninsured and was probably judgment-proof (no assets to go after). My parents' bills were taken care of- either Medicare or their own Uninsured Motorists coverage. If I were careless enough to broadside a sedan with two senior citizens while enjoying a brewski, the lawyers would be all over me.
|
|