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Author: alan81 Big gold star, 5000 posts Old School Fool CAPS All Star Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 78890  
Subject: Thoughts on insurance Date: 2/5/2007 5:33 PM
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In the earlier thread we discussed insurance a bit, and it sounds like there is general agreement to NOT buy insurance to cover the routine things, but only for catastrophic events. We do this by purchasing high deductable policies that are much cheaper than lower deductable policies. This question is basically about the other end, or the high limits. I have always assumed you want an umbrella policy with a limit about equal to your net worth... under the assumption that for most liability events the policy will protect your assets.

For instance, lets say you have $1M in assets, and a $1M umbrella. If somebody wins a $2M judgement they collect $1M from your insurance, and you get to keep your $1M. I believe there are cases where this is not true, but those generally involve criminal conduct rather than simple liability. Is this consistent with what others (experts if available) believe or know? If not, is there some reasonable sources or beliefs about how much insurance one should have to protect themselves from liabilities?
Thanks in advance,
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