How to calculate net worth for umbrella insurance

[Anonymous]

Anonymous wrote:Your net worth doesn’t have that much to do with how much umbrella insurance you should take out.

You’re an idiot and have no idea what umbrella insurance even is.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I would think you exclude retirement savings and college savings because a creditor can't reach those things. But I'm guessing. I am a lawyer, though, so it's not an entirely uneducated guess!

This is OP and that’s my guess too but I can’t find any definitive confirmation of it.

I don’t think it’s a hard fast rule. You need to have enough insurance that whoever is suing you is happy to take the max amount without going after you personally.

If you have a 2 million dollar policy and 2 million in liquid assets and two million in retirement assets a 4 million dollar verdict puts you on the hook for 2 million.

That being said verdicts like that are rare (and attorneys who will turn down a 2 million insurance payout to try to chase down money from an individual is also going to be rare). Of course the rareness is why it’s so cheap but I know you don’t want to hear about that.

It’s not cheap as far as I’m concerned. $800 a year is still a lot of money to me as while it network is relatively high our income is not.

$800 for how much coverage? Generally you can get $2m for less than $300. It’s actually the only insurance that I know of that gets more expensive per million as you go up. I pay $2088 for $10M

Actually it’s not $800. It’s $671 for $2m, and no I can’t get it any less expensive. Or $895 for $3m. So no $2m is not available for $300 for me.

Op again, also we have one 15 year old car, two adult drivers with 30 year clean records, no pets, one house. But apparently they consider spouse’s occupation “risky”, which is plainly ludicrous but nothing I can do about it.

[Anonymous]

I did a deep dive on this last month after seeing a neighbor lose a ton of money due to a slip-and-fall on his property. The assets that you should include are your home equity (home value minus remaining mortgage), savings, investments, and other large personal property. ERISA prevents lawsuits from claiming a 401(k), so you don't need to include that. Some states offer limited protection for other types of retirement accounts, but it really varies. And some states shield some of your home equity, but that also will depend. I could not find any good information about whether college savings accounts could be seized, so I included that in an abundance of caution.

When I calculated it, our net assets were just over $2 million. I debated between getting $2 million or $3 million (my insurer only offers in million-dollar increments), but it was only about $100 more so I went with $3 million. Hopefully I'll never need it, but it's totally worth the piece of mind, especially because DH is quite honest in his Yelp reviews, and umbrella insurance protects against personal defamation claims.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Your net worth doesn’t have that much to do with how much umbrella insurance you should take out.

You’re an idiot and have no idea what umbrella insurance even is.

Clearly you want to protect your net worth, but it's true that the amount you are likely to be sued for doesn't really depend on this number. It's not as if you immediately tell the opposing lawyer how much money you have, and they then sue you for this amount. Your job, public status, and visible assets are what how they are going to decide whether to go after you. As others have noted, if you have a decent umbrella policy (let's say $2 million), most lawyers are going to take this and run as opposed to take you to trial. Your precise net worth isn't so important.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Your net worth doesn’t have that much to do with how much umbrella insurance you should take out.

You’re an idiot and have no idea what umbrella insurance even is.

I may be an idiot, but I do know what umbrella insurance is. Can you explain to me the exact mechanism linking your net worth to the size of potential judgments against you, aside from the general point that if they know you are rich they are more likely to come after you?

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I would think you exclude retirement savings and college savings because a creditor can't reach those things. But I'm guessing. I am a lawyer, though, so it's not an entirely uneducated guess!

This is OP and that’s my guess too but I can’t find any definitive confirmation of it.

I don’t think it’s a hard fast rule. You need to have enough insurance that whoever is suing you is happy to take the max amount without going after you personally.

If you have a 2 million dollar policy and 2 million in liquid assets and two million in retirement assets a 4 million dollar verdict puts you on the hook for 2 million.

That being said verdicts like that are rare (and attorneys who will turn down a 2 million insurance payout to try to chase down money from an individual is also going to be rare). Of course the rareness is why it’s so cheap but I know you don’t want to hear about that.

It’s not cheap as far as I’m concerned. $800 a year is still a lot of money to me as while it network is relatively high our income is not.

If you don't understand that income that net worth is money you can spend, and that income contributes to net worth, you probably shouldn't be the person making financial decisions in your life.

You can cash out or borrow $50K from your net worth, to cover $800/year for the rest of your life.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I would think you exclude retirement savings and college savings because a creditor can't reach those things. But I'm guessing. I am a lawyer, though, so it's not an entirely uneducated guess!

This is OP and that’s my guess too but I can’t find any definitive confirmation of it.

I don’t think it’s a hard fast rule. You need to have enough insurance that whoever is suing you is happy to take the max amount without going after you personally.

If you have a 2 million dollar policy and 2 million in liquid assets and two million in retirement assets a 4 million dollar verdict puts you on the hook for 2 million.

That being said verdicts like that are rare (and attorneys who will turn down a 2 million insurance payout to try to chase down money from an individual is also going to be rare). Of course the rareness is why it’s so cheap but I know you don’t want to hear about that.

It’s not cheap as far as I’m concerned. $800 a year is still a lot of money to me as while it network is relatively high our income is not.

If you don't understand that income that net worth is money you can spend, and that income contributes to net worth, you probably shouldn't be the person making financial decisions in your life.

You can cash out or borrow $50K from your net worth, to cover $800/year for the rest of your life.

I guess you don’t understand that the reason my net worth is relatively high compared to my income is because I look after my money and don’t frivolously spend more than I need to. Sheesh!

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Your net worth doesn’t have that much to do with how much umbrella insurance you should take out.

You’re an idiot and have no idea what umbrella insurance even is.

I may be an idiot, but I do know what umbrella insurance is. Can you explain to me the exact mechanism linking your net worth to the size of potential judgments against you, aside from the general point that if they know you are rich they are more likely to come after you?

It is what you said.

Most if not all plaintiffs’ attorneys will be looking at who you are. Most don’t want to go to trial but settle. Easier money. Sometimes you have to go to trial.

A 30 year old with a house with a little equity and a Mc or UMC job will get one settlement. They will want the policy limit and move on.

A 55 year old big law partner with 2 houses will not get out so cheap. If there is umbrella coverage at 3, 4, or 5 million you most likely can get out. Your net worth may be 20 million but it would take a crazy plaintiff lawyer to pass up 5 without trial.

[Anonymous]

We started with $2M now upped it to $4M. The relationship to net worth is if you kill somebody in a car accident because you have a medical incident and pass out and it's your fault and they sue you the insurance covers the first $4M of damages awarded.
Your house and jewelry and assets don't get liquidated until after the $4M. FFS it's worth several hundred a year to avoid that

[Anonymous]

Anonymous wrote:We started with $2M now upped it to $4M. The relationship to net worth is if you kill somebody in a car accident because you have a medical incident and pass out and it's your fault and they sue you the insurance covers the first $4M of damages awarded.
Your house and jewelry and assets don't get liquidated until after the $4M. FFS it's worth several hundred a year to avoid that

But if they win $8 million then you still owe $4 million.

[Anonymous]

Anonymous wrote:

Anonymous wrote:We started with $2M now upped it to $4M. The relationship to net worth is if you kill somebody in a car accident because you have a medical incident and pass out and it's your fault and they sue you the insurance covers the first $4M of damages awarded.
Your house and jewelry and assets don't get liquidated until after the $4M. FFS it's worth several hundred a year to avoid that

But if they win $8 million then you still owe $4 million.

Yes but no self respecting plaintiffs’ lawyer will bet on getting 8 at trial where they might get 1 or 2 when they have 4 to settle. No way it goes to trial 98% of the time. That is the protection you buy.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I would think you exclude retirement savings and college savings because a creditor can't reach those things. But I'm guessing. I am a lawyer, though, so it's not an entirely uneducated guess!

This is OP and that’s my guess too but I can’t find any definitive confirmation of it.

I don’t think it’s a hard fast rule. You need to have enough insurance that whoever is suing you is happy to take the max amount without going after you personally.

If you have a 2 million dollar policy and 2 million in liquid assets and two million in retirement assets a 4 million dollar verdict puts you on the hook for 2 million.

That being said verdicts like that are rare (and attorneys who will turn down a 2 million insurance payout to try to chase down money from an individual is also going to be rare). Of course the rareness is why it’s so cheap but I know you don’t want to hear about that.

It’s not cheap as far as I’m concerned. $800 a year is still a lot of money to me as while it network is relatively high our income is not.

$800 for how much coverage? Generally you can get $2m for less than $300. It’s actually the only insurance that I know of that gets more expensive per million as you go up. I pay $2088 for $10M

It became less expensive incrementally as we increased, with the first million being the most expensive. We ended up with $5m. Weird how much people's costs vary.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I would think you exclude retirement savings and college savings because a creditor can't reach those things. But I'm guessing. I am a lawyer, though, so it's not an entirely uneducated guess!

This is OP and that’s my guess too but I can’t find any definitive confirmation of it.

Literally everyone. And we have multiple houses, multiples cars, multiple rentals, multiple drivers. Geico insured us when we had $2M (it actually was less than $200 at the time) but once we needed more than $5M we switch to State Farm.





I don’t think it’s a hard fast rule. You need to have enough insurance that whoever is suing you is happy to take the max amount without going after you personally.

If you have a 2 million dollar policy and 2 million in liquid assets and two million in retirement assets a 4 million dollar verdict puts you on the hook for 2 million.

That being said verdicts like that are rare (and attorneys who will turn down a 2 million insurance payout to try to chase down money from an individual is also going to be rare). Of course the rareness is why it’s so cheap but I know you don’t want to hear about that.

It’s not cheap as far as I’m concerned. $800 a year is still a lot of money to me as while it network is relatively high our income is not.

$800 for how much coverage? Generally you can get $2m for less than $300. It’s actually the only insurance that I know of that gets more expensive per million as you go up. I pay $2088 for $10M

Wow! Where did you get that insane rate? You must have no pets and no drivers on your cars. I was quoted much higher for 1 M. We had 2 teen drivers at the time and a dog. We don’t have a huge net worth so 1 M is plenty for us.

^^to clarify, I was referring to $2M for less than $300.

[Anonymous]

I would relate it to the size of judgements rather than your net worth. Once you have assets over a million or so I would just get 2 million of coverage, which would cover 98 percent of all judgements.

There is no relationship between the size of a judgement and your net worth.

If you have coverage of 1 million and an NW of 1 million you would still be wiped out by a 2 million judgment. If you are the subject of a 2 million judgement then a 2 million policy would protect you whether your net worth is 2 million or 10 million.