Umbrella Insurance Policy

[billethkid]

If one has the proper liabilities covered in their home owners, auto, golf cart, boat and ATV policies why have an umbrella policy too?

[CFrance]

I thought it was for extra coverage, like up to $1M, in case you get sued.

Don't quote me, though. We had one when our kids were in high school, driving. Haven't bought one down here yet, but we're thinking about it.

[Cedwards38]

One can be sued and held liable for a host of reasons beyond home, auto, and cart. If you open a door and hit someone, you could get sued. If you hit a golf ball that hits someone, you could get sued. If you make an error of any kind that causes someone else to realize a loss of any sort, you could get sued. It just gives you a blanket to cover the rest of your life experiences.

[784caroline]

If one has the proper liabilities covered in their home owners, auto, golf cart, boat and ATV policies why have an umbrella policy too?

All depends on how much you have to lose. For example, do you have 100/300 liability on your golf cart and auto? It is probably the most recommended policy limits BUT what if your net worth is $1 million plus and in a flash....you are responsible for very serious accident causing death to a young professional or injury to one or more that would require long term medical care. (You dont need to be recless for this situation to occur..it could result from a medical emergency or you just black out while driving etc)

The first thing the injured parties counsel would do is to quickly deterime your net worth or "style of living" and believe me they will sue you for the Max they could. Most likely they would not get it but while you are waiting for the case to settle (which could be up to 2 years) you may be sued for up to $1 Million while you only have insurance covering you up to $300K. That would be a tough 2 years while you are waiting to settle.

So to answer your question, Not everyone needs an Umbrella policy, but if your individual financial situation is such and you dont have an umbrella policy, your could be at risk.

Umbrella policies are relatively reasonable in price ($200 range+/- $50) and it would typically cover you for auto, home golf cart boat etc. Cost depends upon your exposure (# of cars/boats/CG's) as well as exisitng limits on current policies.

[rubicon]

First in order to secure an Umbrella Polcy most companies require sufficient limits under your Auto and Homeowners Policies, us usually 100/300/100

Second considering an Umbrella consider what you have the potential to lose the higher the amount the more likely the need for an Umbrella Policy.

Third an insurance company is obligated to pay underlying losses and will do its best to keep you from being exposed

Most situation are settled within the underlying limits.

However, I have been in the insurance business my entire career and a student of insurance for as long and I have had n umbrella policy that entire time . The cost to add an Umbrella is minimal considering the reduction of financial risk

I opine you decide

Personal Best Regards

[Abby10]

We just recently purchased an umbrella policy based on the same reasoning that 784caroline and rubicon mention in the above posts. One other reason that we chose to do it is because we are currently putting some of our investments into rental properties and felt an even greater need to cover the possible risks. We're keeping our fingers crossed that nothing like that ever happens, but if it did, it does give you greater peace of mind to know that your entire life savings would not be wiped out. Just as the others mentioned, it really didn't cost that much more to be able to sleep better at night.

[kittygilchrist]

This has doubtless been said, but put simply: The reason for an umbrella policy is that one worth more than one's homeowners policy offers to pay.

[jmvalcq]

The umbrella policy is an excess liability policy, that is it is used after your auto and homeowners liability is exhausted. It also covers the cost of your defense if your sued for amount that is above the auto or home liabilities. Your assets can be taken, but it's not just your assets they can go after, they can also attach your income. The 100/300 liability that some people have is very outdated. A lot of insurance companies have a minimum of 250/500 before you can get a personal liability policy.

[rubicon]

Perhaps 100/300 is outdated and perhaps the 250/500 is a decision by the Underwriting Dept for some carriers. I am with a major writer and they have never requested that I increase underlying limits in order to renew my Umbrella Policy and they can so request prior to the renewal period.

Having said that it would do no harm for me to inquire with my agent as to limits, etc


Personal Best Regards:

[GatorFan]

There are certain assets in Florida that are judgement proof and other assets that are not. There is no one size fits all. A professional insurance agent would have discussed this with you when you purchased your insurance.

[784caroline]

There are certain assets in Florida that are judgement proof and other assets that are not. There is no one size fits all. A professional insurance agent would have discussed this with you when you purchased your insurance.

Can you clarify what you mean when you say "Judgement Proof" ?? Examples would help!

[GatorFan]

Pensions, social security, annuities, Ira & 401K's are some of the judgement proof assets in Florida.

CDs, Stock, Bonds, Savings & Checking Accounts, Rentals are some of the assets that are not judgement proof in Florida.

This is a conversation you should have with a professional financial agent or your property casualty agent to determine what your liability exposure is and how much coverage you should purchase.

Judgement proof means they can not be touched if someone gets a judgement against you. Unsafe investments can be taken.

[784caroline]

Never heard the term "judgement proof" before.

Interesting concept. Sort of like what included in probate .... everything except what you can put a beneficiary on ie... life insurance, ira, 401K etc.

[zummy]

My suggestion is you get under insured coverage here in Florida because of so many uninsured and underinsured cars and golf carts

[GatorFan]

Uninsured/Underinsured motorist coverage is another important coverage. Find an agent who talks coverage not premium. We all buy insurance to protect our investments and assets.

[bimmertl]

Pensions, social security, annuities, Ira & 401K's are some of the judgement proof assets in Florida.

CDs, Stock, Bonds, Savings & Checking Accounts, Rentals are some of the assets that are not judgement proof in Florida.

This is a conversation you should have with a professional financial agent or your property casualty agent to determine what your liability exposure is and how much coverage you should purchase.

Judgement proof means they can not be touched if someone gets a judgement against you. Unsafe investments can be taken.

You are most likely referring to the bankruptcy exceptions available in Florida. These items are "protected" from seizure by creditors if you file for bankruptcy. If a large judgment is granted against you, you'll need to file for bankruptcy to protect those exempt assets. Most likely something you wouldn't want to do.


Florida Bankruptcy Exemptions, Ruff & Cohen (http://www.bankruptcylawhelp.com/Bankruptcy/Florida-Bankruptcy-Exemptions.aspx)

[l2ridehd]

For me the value of an umbrella was to lower overall insurance cost while increasing the coverage. Rather than having a 1 million liability on auto and home liability coverage, I was able to drop those to 300K and 500K and purchase a 3 million umbrella policy. Total cost was less and total liability coverage moved from 1 million to 3 million. How much coverage you need is subjective, but having rental properties, an LLC for the golf carts, a motorcycle and probably other exposures it made sense to improve coverage for less cost.

[bonrich]

We have carried a one million dollar umbrella policy for years. Cost is minimal in the possibility of losing so much since there are now two properties that are involved, primary and secondary homes, etc, etc.
There is so much to be said for peace of mind, just in case. You do not want to have that shoulda, woulda, coulda moment.

[rubicon]

The discussion of "being judgment proof" is a big issue of discussion in lawsuits. essentially the courts do not want to see people who otherwise are self sufficient end up on the dole.

the bigger issue sometime are punitive damages ( punish the defendant) rather than compensatory( expenses , wages, physical/psychological injury)
creating a trigger for an Umbrella

[bimmertl]

The discussion of "being judgment proof" is a big issue of discussion in lawsuits. essentially the courts do not want to see people who otherwise are self sufficient end up on the dole.

the bigger issue sometime are punitive damages ( punish the defendant) rather than compensatory( expenses , wages, physical/psychological injury)
creating a trigger for an Umbrella

Most policies do not coverage for punitive damages and in addition, they exclude providing a defense for claims alleging punitive damages. In addition, in Florida it is against public policy to provide coverage for such damages. See paragraph 4 in the link.

“Damages” Does Not Include Punitive Damages; Insurer’s Duty to Defend Ends Where Complaint Seeks Only Punitive�*Damages - Executive Summary - Wiley Rein LLP (http://www.wileyrein.com/publications.cfm?sp=articles&newsletter=1&id=4053)

[TrudyM]

Pensions, social security, annuities, Ira & 401K's are some of the judgement proof assets in Florida.

CDs, Stock, Bonds, Savings & Checking Accounts, Rentals are some of the assets that are not judgement proof in Florida.

This is a conversation you should have with a professional financial agent or your property casualty agent to determine what your liability exposure is and how much coverage you should purchase.

Judgement proof means they can not be touched if someone gets a judgement against you. Unsafe investments can be taken.

Florida's laws on protected assets are one reason some people move to Florida. I know people with ex-spouses who have moved to Florida to protect their current spouses if they should die from greedy ex's and kids from first marriages.

We have an umbrella policy and it is worth the small amount it costs for my piece of mind. It is not just assets if you have a place in another state and get a judgement against you some states allow garnishment of payments you are getting like pensions.
I was advised to deposit the max in Roth ira's each year as the money we withdraw is protected from such judgements in places like Florida and they are after tax dollars that can grow tax free. We can still invest it in whatever we like and take out money when we need it but it is an additional layer of protection. I could be wrong but at least that is my understanding.

[sandybill2]

We just got an umbrella policy through our auto insurer (AARP-Hartford)---In these days of so many law suits, we did it for peace of mind. Had to increase our liability on auto to the 250/ and also on our golf cart. We just have an electric Club Car- with insurance through Foremost. Found out that there is coverage for an uninsured (driver) cart - Never heard of that but cost was so minimal we added it as well.

[Jim 9922]

The way I view umbrella coverage is that it buys you much better legal defense/coverage. Say you ARE at fault for some damage, are being sued for an overly large amount, say $1,700,000 and you have a $3,000,000 umbrella. If you had only $300,000 of coverage the insurance company may decide it is cheaper to pay the claim and walk away leaving you to fight the remainder of the claim, $1,400,000. But, you can bet they will stay in your corner if they are on the hook for the full claim. The potential loss of millions buys much better and many more lawyers' fees.

If you are going the umbrella route, my suggestion would be to consider using the same insurance group to insure all the basic risks and of course use a compentent agent to make sure all risks are covered and scheduled in the umbrella policy. If disaster happens, you want everything to be seamless and not have different insurance companies fighting among themselves.

[Bavarian]

If you have a $1 Million umbrella can they still get your assets over the umbrella limit? Or can they get both?

[784caroline]

If you have a $1 Million umbrella can they still get your assets over the umbrella limit? Or can they get both?

From a technical point, the answer is YES....if you have $2 million in unprotected assests, any lawsuit could go after the $2million and that would include your assests above the $1milion coverage. That said in reality it is very unlikely it would ever get to that point. It would have to be a fairly major incident that you were involved in for any judgement to reach that level..

[784caroline]

Believe it or not at this stage of life for most of us, having an umbrella policy is more critical in protecting your estate than life insurance.....although it would be wise to have a certain amount of both. Each individuals needs are different.

If you have substantial assests and need an umbrella policy but dont have it and then you are involved in a bad liability lawsuit, you can lose everything you have, whereas when (not if) you die and have no or little life insurance, your estate just doesnt have as much!

[JourneyOfLife]

You might check your local library for books on "Asset Protection".