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Author: Foolferlove Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 17953  
Subject: Auto liability and umbrella coverage Date: 7/9/2004 9:02 PM
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This could have gone in the thread that rsprang started, but oh well, here is a new one.

I have liability insurance for my wife and me at $300,000 per person and $300,000 total. That really doesn't seem like a lot, if god forbid something happens and I/she are sued for being involved in the deaths of an SUV full of kids. Ug, I hate to think about it. But if we HAD the money, juries might award significanly more than that. So I started thinking about umbrella coverage.

Currently, our entire net worth is less than $300,000. Does that mean I shouldn't worry about it? At what point should one consider umbrella coverage? Is there EVER a time when it is helpful to get umbrella coverage if assets are lower than auto liability limits?

Also, the majority of our assets are in a combination of ROTH IRAs, and SIMPLE plans. I assume that these assets are not protected, but 401(k)s may be. Is that true?

FFL
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Author: missash Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 12070 of 17953
Subject: Re: Auto liability and umbrella coverage Date: 7/9/2004 9:06 PM
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IRAs are protected assets, as I recall

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Author: GADawg Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 12071 of 17953
Subject: Re: Auto liability and umbrella coverage Date: 7/12/2004 9:05 AM
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Is there EVER a time when it is helpful to get umbrella coverage if assets are lower than auto liability limits?

The issue would not really be one of protecting your assets, but protecting your potential victims. $300,000 isn't that much when considering a serious multiple victim accident. You would be glad that you had $1 million in umbrella coverage if you caused $600k in hospital charges.

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Author: rosewine Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 12072 of 17953
Subject: Re: Auto liability and umbrella coverage Date: 7/12/2004 10:23 AM
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In addition to protecting current assets, you also need to consider protecting future assets. If you were responsible for damages of more than your limits, and the other person obtained a judgement against you they would be able to collect on that judgement for many years to come. If your assets are low now, do you expect them to increase in the future? As an example, if you are a starving student now, but will be entering a high paying profession those future earnings could be at risk.

Personally, I want to keep my liability limits as high as possible. The additional cost is fairly small in comparison to a lower limit.

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Author: rael4mozo Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 12073 of 17953
Subject: Re: Auto liability and umbrella coverage Date: 7/12/2004 10:26 AM
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""The issue would not really be one of protecting your assets, but protecting your potential victims""


You can expand that to "protecting yourself as well"....

An endorsement is available on most umbrella policies that can extend the $1 million to your uninsured/underinsured motorist coverage. Should someone with little (or no) insurance cause major injury to you (or passengers/family), you can file a claim under the umbrella to recoup damages.

I have a client who was struck while riding their motorcyle by a driver that "never saw them". The driver of the car had 100/300 for liability, but the injuries to my client were far beyond that (they spent 13 days in a coma and 8 months in therapy--imagine those costs). The driver of the car simpy walked out of the car unharmed. The driver was sued under two auto policies ("stacking" was allowed"), and the umbrella picked up a majority of the balance, and to this day, has made all the difference to that family.

Don't always think of umbrella coverage in the sense of "what if I am liable for damages to someone else"--remember that the repercussions of "the other guy's" actions can impact you as well.

FYI--I keep a $2 million with the UM/UIM coverage on it--costs about $245/year. Truly the most important policy I own.

Regards (and safe driving)


Sfs

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Author: NoIDAtAll Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 12074 of 17953
Subject: Re: Auto liability and umbrella coverage Date: 7/12/2004 11:16 AM
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Currently, our entire net worth is less than $300,000. Does that mean I shouldn't worry about it? At what point should one consider umbrella coverage? Is there EVER a time when it is helpful to get umbrella coverage if assets are lower than auto liability limits?

In addition to what's been mentioned, the insurance company's assets go on the line in defending liability suits. If they feel that an award of policy limits is, more or less, a matter that will be awarded, they can (often will) offer the policy limits with little or no contest - If they do so, they're done with the matter - They no longer have to provide and pay for defense. If they should contest and fight a request under a claim, they can/may, under certain circumstances, run the risk of "dealing in bad faith". If a court should find that an insurer has dealt in bad faith, policy limits come off - See this rather well known case for what can transpire and be awarded in damages if an insurer is found to have dealt in bad faith:
http://www.acrsnetwork.com/acrs/New_Hampshire_News/News/More_Headlines/State_Farm_Cambell/state_farm_cambell.html

http://www.lallaw.com/newsbulletin/statefarmVcamp.html

so, you might some day face a situation where your insurer will not contest, voluntarily pay a policy limit and discontinue defense of a suit for damages over the policy limit. An insurer doesn't have to provide defense to try to contain an award within your policy limits. Competent defense attorney fees to represent you and your remaining exposed $300,000 in personal assets (plus future income), alone, can quickly surpass the moderate premiums for an Umbrella Liability policy. Generally, insurers retain some of the very best defense attorneys and they pay them well, when and to the extent that their assets are on the line.

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Author: Foolferlove Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 12075 of 17953
Subject: Re: Auto liability and umbrella coverage Date: 7/12/2004 12:15 PM
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If your assets are low now, do you expect them to increase in the future? As an example, if you are a starving student now, but will be entering a high paying profession those future earnings could be at risk.

Yes, exactly. I AM a student and expect significantly greater income/assets in the future.

As as people have pointed out, umbrella coverage is cheap...


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Author: Foolferlove Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 12076 of 17953
Subject: Re: Auto liability and umbrella coverage Date: 7/12/2004 12:24 PM
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Don't always think of umbrella coverage in the sense of "what if I am liable for damages to someone else"--remember that the repercussions of "the other guy's" actions can impact you as well.

Another good point! Hadn't thought of that.

So in general, are umbrella policies written very specifically, meaning an AUTO umbrella policy, that would be separate from say, one that might cover me if someone dies from slipping on my newly mopped floors, or if I'm riding my bicycle and swerve into traffic causing a wreck?

Where does one START to look into umbrella coverage?

I think umbrella insurance is a very good idea. I'm going to have a hard time convincing my wife though. At the moment we are living off of her income...I just don't think she is going to see the need. I think she will look at an umbrella policy as a necessity of the 'rich', and not see the need, even by her definition we will indeed be 'rich' someday with two professional salaries. She also will take the 'what are the chances?' approach. Well, very very small, which is why the insurance is very very cheap! I'll have to work on her for a bit. She's not the one that likes to talk about things like this....beneficiaries for our retirment accounts, life insurance, wills, etc...she tends to change the subject.

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Author: Foolferlove Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 12077 of 17953
Subject: Re: Auto liability and umbrella coverage Date: 7/12/2004 12:30 PM
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so, you might some day face a situation where your insurer will not contest, voluntarily pay a policy limit and discontinue defense of a suit for damages over the policy limit. An insurer doesn't have to provide defense to try to contain an award within your policy limits. Competent defense attorney fees to represent you and your remaining exposed $300,000 in personal assets (plus future income), alone, can quickly surpass the moderate premiums for an Umbrella Liability policy. Generally, insurers retain some of the very best defense attorneys and they pay them well, when and to the extent that their assets are on the line.

So if I have auto insurance with State Farm (heh heh) and an umbrella policy with someone else and I get sued. Could both companies work together to defend me and/or reduce the damages? Because both companies would have assets on the line.

I've always assumed one would get an umbrella policy with a different insurer than the underlying policies. Would I ever want to get an umbrella policy from the same company as my auto liability?

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Author: NoIDAtAll Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 12078 of 17953
Subject: Re: Auto liability and umbrella coverage Date: 7/12/2004 1:11 PM
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So in general, are umbrella policies written very specifically, meaning an AUTO umbrella policy, that would be separate from say, one that might cover me if someone dies from slipping on my newly mopped floors, or if I'm riding my bicycle and swerve into traffic causing a wreck?


Umbrellas are broken down between Personal and Commercial/Professional. A Personal Umbrella covers your personal exposures, including auto, home, recreational vehicles, etc., but does not cover exposures you may have in a business or profession. A dollar limit of coverage on underlying auto, home, recreational vehicle (if you have a recreational vehile) policies is required.

Some umbrellas only extend the dollar amount of coverage that underlying policies provide. Others add coverage for some things that aren't covered in underlying policies - usually with a self-insured retention that may be $10,000 - perhaps more, perhaps less.



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Author: NoIDAtAll Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 12079 of 17953
Subject: Re: Auto liability and umbrella coverage Date: 7/12/2004 1:15 PM
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Would I ever want to get an umbrella policy from the same company as my auto liability?

Often they're priced lower and the underlying coverage required in one or more lines with some companies. Also, in my experience, an umbrella is tough to get if the underlying company is rated B or lower by AM Best.


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Author: dimdem Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 12126 of 17953
Subject: Re: Auto liability and umbrella coverage Date: 7/27/2004 12:30 PM
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I called my auto insurer last night to remove a vehicle I had sold from my policy. They tried to talk me into an umbrella policy, and I figured it was a ripoff. I checked here to see what people had to say about them, read this thread, and called back today to sign up for one. I wasn't absolutely thrilled with the way Geico's policies work, but I think it is okay. Their umbrellas don't carry a UM/UM rider. What I did was increase my liability and UM/UM coverage to $1,000,000, and then added a $1,000,000 umbrella on top of that. I have to admit that once I raised the auto coverage, I was less sure I still needed the umbrella. BUT raising those limits above $1M is only possible if you get the umbrella along with it. I guess that if I weren't willing to say "better safe than sorry" then I wouldn't have insurance at all.

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Author: NoIDAtAll Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 12128 of 17953
Subject: Re: Auto liability and umbrella coverage Date: 7/27/2004 2:36 PM
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I wasn't absolutely thrilled with the way Geico's policies work, but I think it is okay. Their umbrellas don't carry a UM/UM rider. What I did was increase my liability and UM/UM coverage to $1,000,000, and then added a $1,000,000 umbrella on top of that.


That is wierd. I think I'd shop it around.

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