Umbrella Insurace Policy

If you accidently slide on the ice and hit and kill a lawyer, how far do you think $300,000 will take you. Will that even be enough to hire attorneys to defend you in court, let alone a settlement to cover the guy's lifetime earnings? It boils down to the question if $200 a year is too much to protect you in the event of a one in a million disaster that wipes out your life's earnings. I took the insurance, one of the very few insurances that I do carry.

-john-

I think you should be sued for at least as much as you have to lose... i.e., at least for the total value of your assets. Think of it not only as insurance to pay a lawsuit if you lose, but also to defend you.

Dave

If I am not mistaken, the insurance company takes care of all the court proceedings, including payment of the lawyer. Only if the judgment is against him and it exceeds $300,000 does he have to worry about payment.

First off, accidently killing a high income earning person is certainly going to lead to a judgment that far exceeds $300K. A good attorney might earn that much in a single year. Second, the insurance company is likely to throw in the policy (ie, write a check for the $300K and cut the client loose). As a result, I still advocate that $200 a year is a good way to help keep the insurance company in the game.

-john-

But high income people like lawyers don't walk along icy roads!

No, seriously, I agree that $300,000 is far too little. He should have

Well, I suppose, yes, if you're stupid enough to be driving on icy roads.

But while you're looking at insurance, be sure to look at your uninsured/underinsured motorists insurance. If the guy who hits you has $50k, and your underinsured insurance is $50k, you'll get the $50k from his, but your insurance company will pay nothing. If you're really hurt, how far do you think $50k will go?

Elizabeth Richardson

True but you can bet that the insurance company will put a better lawyer on the case if they have $1M to lose than if they only have $300K to lose

I'm reading the original message to say that instead of the umbrella policy, he would increase his auto insurance coverage only to be above the current 300k.

Brian

Don't you live in Alaska?!

Does this presume that the insured does not have health insurance?

-Will

william dot trice at ngc dot com

Another thing to keep in mind is that liability coverage is not too expensive, relative to other kinds of coverage. One million coverage does not cost a whole lot more than $300,000 coverage costs, and 5 million is not a lot more than 1 million. For some reason that I have never quite understood, insurance agents do not often mention that fact. Some agents have written up policies for me for $300,000 (both auto and homeowner policies), and when I asked for 1 million or more, they seem to beat around the bush and make out that $300,000 liability coverage is enough.

All the better to know when the roads are unsafe.

Well, if you're relying on your health insurance, what happens if you need plastic surgery, and you might if your face gets cut, or you find you need a scar revision to increase mobility of an arm or leg. Most health insurance would not cover such procedures. That's one example where I think you might want to have additional underinsured coverage. I'm sure there are others.

Elizabeth Richardson

In my opinion, an umbrella policy makes sense for everyone except two classes of people. One class is those with little or no attachable assets. The other class is those with enough assets that any likely judgment would not hurt them.

-- Doug

Actually, I believe most insurance policies will pay for reconstructive plastic surgery, especially if a result of trauma or if needed for mobility.

Thanks for all the advice. Being MLK day I can't contact my insurance agent.

Guess I'll see which premium is more practical between increasing auto "bodily injury" to 1 mil. on the 4 cars, or getting umbrella policy.

Doug said it best: "an umbrella policy makes sense for everyone except two classes of people. One class is those with little or no attachable assets. The other class is those with enough assets that any likely judgment would not hurt them."

Reminds of a black joke in a large Asian country that goes as if you are in a accident, be sure the victim is dead. The courts int that country would just make you pay funeral expenses rather than more expensive recovery costs. And there are ancedotal stories about cars returning to run over the victim a couple more times to be sure.

In a state where I used to live, I was told this: If a burglar tries to break in your house and you shoot him dead, you should be sure to pull the body in the front door or somehow get it inside the house before the police arrive. The law says it is OK to kill an intruder who has actually entered the house, but not one who is still outside in the process of trying to get in. I do not know whether this is really true or in how many places it applies.

Its not an apples to apples comparison. Umbrella policies are not confined to automobile related incidents only (hence the name "umbrella").

I worked for several years as a claims adjuster and still maintain an ownership interest in an independent claims adjusting office. I've seen it all. If you seriously think that $300,000 is enough coverage, then you'd better start thinking what you're gonna do when you hit the coverage limits.

There's a recipe for a bad-faith lawsuit if I ever saw one. I've heard of this happening, but was never involved in a claim where this was done.

The following site lists some things where you'd likely have a good chance at a "Bad Faith" cause of action against your insurance carrier:

"50. Insurer refusal to settle a third party claim against an insured within the limits of the insured's policy thereby exposing the insured to additional liability."

At least, on the surface, they have to attempt to settle within the limits of the policy. They can't just cut a check and say "See ya, wouldn't want to be ya!" and let you deal with the mess they've left behind.

If some carrier tried that with me, you'd be for sure that I'd be slappin' 'em with a *huge* Bad Faith suit.

Anyway, back to the point: We're off by at least an order of magnitude -- no way, no how, would I be without at least $3,000,000 in coverage. 10 times the above discussed $300,000.

It's cheap.

Do it.

My State Farm agent suggested a $1 million umbrella policy when I asked to extend my liability coverage on my automotive and homeowners policy.

A seminar I attended on setting up a small business recommended that when forming an llc, that a million dollar policy should be in place, because without it, the llc may not protect your personal assets.

-- Ron