Do you have umbrella insurance? If so, how much, with what company, and how much does it cost you for coverage?

[Anonymous]

I was once told that juries often look at how much insurance there is when making a judgement...no insurance, victim gets 1 million dollars. $1 million in insurance victim gets 2 million. You are still in trouble for the 1 million. Just thinking about it makes me never want to drive again.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:What accounts aren’t shielded? Is it your net worth outside of retirement that is exposed?

Just to be clear here, the purpose of umbrella insurance is not to "shield" accounts, and it is a fallacy to secure umbrella insurance simply in the amount of one's net worth. For example, assume you have 2mm in net worth that is subject to judgment enforcement, and 2mm in umbrella coverage. Suppose you cause a car accident with one or more serious injuries, even a fatality. If a jury awards a 5mm judgment, the plaintiff is taking *both* your 2mm in umbrella coverage plus your 2mm in net worth.

The basis to over-insure here is so that, if you are involved in a catastrophic loss, you can settle within limits of the policy, so that the loss is held solely by the insurer and not by you.

You misunderstood the question. Some assets are protected from creditor claims, often retirement and primary home. But it is state by state.

Your example is ridiculous though. You would have to have insurance of $5 million to protect your net worth of $2 million. And suppose the judgment was for $10 million? Then you would need coverage of $10 million.

I agree that the idea is to settle within limits of the policy. But please tell me how many times umbrella insurance of $2 million has been insufficient to cover a claim.
There is no need to overinsure. And overinsuring would in any case do almost nothing at the margin to make your assets safer.

The homestead exemption in Virginia is so minimal that it might as well not exist. I carry 1M because that's about what my liquid assets are. I've worked in personal injury and know that there are few circumstances where you would go to trial to improve on a 1M settlement offer when the total upside is only another 1M. Ff the facts and damages were bad enough that the other party was willing to go to trial, they'd expect the judgment to be enormous, so another 1M in coverage likely wouldn't help much