Umbrella Insurance of $1M or Auto/Home Policy coverage of $1M

Hi Guys,

Need some advice. I don’t have an umbrella insurance coverage. Recent events with a co-worker have me looking at my personal liability coverage. I use Geico and online quotes shows that raising my personal liability on existing auto & home insurance policies to $1M will cost 1/3rd of purchasing a $1M umbrella insurance policy.

I am trying to figure out what exactly are the use cases where an umbrella insurance of $1M will provide coverage that an auto/home policy with $1M will not and then evaluate if those use cases apply to me. Hope that makes sense.

Any advice/anecdotes/personal experiences are welcome. Thanks for sharing.

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One thing you didn’t give any details on is what you own other than your primary residence. Presumably, you have rentals?

For myself, I have the usual auto and home policies for my primary residence and rentals and added an umbrella policy to cover everything even more. I actually got my umbrella through Geico since our cars’ insurance is through them. Can never be sure a tenant won’t try to sue you for everything and more especially these days. Frankly, 1M in damages is not a lot these days to hit so you need the extra protection.

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Unfortunately, nothing else except home and auto. And not a costly home at that!

Hmm, then not sure if an umbrella is really useful in your situation as opposed to maybe just seeing how much an additional 1M in coverage is via both auto and home policies if allowable. The thing is, let’s say you get into an auto accident and it is your fault unfortunately and the other party sues you. Will 1M be enough these days? Maybe not. First of all, the umbrella policy wasn’t too expensive at all and I can’t imagine adding 1M to your current policies will be that much more expensive anyway. Let’s see what others suggest.

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My insurance agent told me a long time ago that you only need an amount to cover your assets. For example, if your net worth is $500,000, that is the amount of insurance to get. If you are sued for more money, say $1 million, the insurance company could offer up to a 1/2 million settlement. The plaintiff would be unlikely to refuse the settlement (which is quick and easy money) vs. taking you to court and trying to get more (which you don’t have anyway). If they accept the insurance money, you are waived from liability for the claim.

I would recommend talking to an insurance agent about your coverage to confirm what is covered/not covered.

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Definitely get umbrella insurance, over increasing the liability on your auto/home. It’s a lot cheaper. I also use Geico for umbrella and auto. Geico has good rates.

As for amount, yeah, as other posters mentioned, you just need enough to cover your net worth. You can always increase your umbrella policy anytime, when your net worth goes up in the future.

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Lots of good advice posted.

All primary homes in California are covered partially by homstead. You can’t be forced to sell but a lien can be placed that gets paid when you sell. Filing the homestead paperwork allows the owner to sell and have the lien ignored for a period of time to buy another property. There were other details that I can’t recall.

The longer you own a home the more equity you have and the more you have to lose.

When I was first self employed one of the tech agencies I worked through required liability insurance and I believe the umbrella policy covers personal liability outside of something to do with your home or auto policy. Maybe you dump a beer on the person in front of you at the ballpark and they are allergic to hops so they sue you. People sue for stupid things.

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Nanomug is right. But you don’t even have to homestead to have some protection.

The state will not let a civil matter make you become a ward of the state. i.e. taking the home and car of someone else in a lawsuit won’t be granted by the court because you’d become homeless and out of work and the state would have to support you.

Retirement accounts in CA are generally off limits for civil settlement. The same logic at play.

And, this is why I DON’T have an umbrella policy. The more you have that they can go after, especially something relatively liquid like an umbrella policy, the more likely their attorneys are to pursue it.

I learned a lot by sharing an office with a personal injury attorney. Not from any advice he gave me but from watching him work and listening to his arguments. The first thing he did whenever someone was referred to him with a potential case was 1) feed their greed and sell them on the potential riches they would receive if they hired him as their attorney and 2) have his investigator go out and gather all the information and evidence against any potential targets.

By potential I mean even if the plaintiffs said they tripped on their neighbor’s sidewalk and planned to sue them the investigator would find out about the city, the PG&E truck that was parked there that day, etc. They were looking for deep pockets that would be easy to extract money from.

Large umbrella policies are in fact exactly such targets.

As a public agency, are targeted for at least two claims a week this way. You’d groan and scream if you read some of the ridiculous claims. The attorneys are amazing Charlatans. But many take small payouts to go away. They seek $2M in “damages” and we offer $20,000 to leave us alone is cheaper than us litigating with insurance and attorneys. You taxpayers take it in the shorts of course.

Did I mention how much we NEED tort reform in this country? :persevere:

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Well, be mindful that in today’s world everyone is out to try to make a buck and that includes tenants. There obviously are legitimate lawsuits/concerns but a lot of it is frivolous stuff. And keep in mind that as rents surge higher, people get more desperate and some ambulance chaser lawyer may recruit “victims” to be clients against their landlords. Why do I say this? Because I was in my very first lawsuit awhile ago and that was exactly what happened. The case had no merit yet we wasted everybody’s time and I am glad for my insurance company who arbitrated it out to a low amount. Even my insurance company’s lawyer said that I was very lucky to not have any lawsuits in over 20+ years of owning property until now. Technically, was the umbrella policy used? No, but next time someone sues you, you don’t want to worry about whether you have enough insurance or not. Just have it.

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Guys - thanks a lot for taking the time to share your opinion. I have come to rely on you for good advice and you rarely let me down :slight_smile:

I don’t buy this argument. People can estimate your net worth and income. But there is no way for them to find out if you have umbrella insurance and what is your coverage.

Plus, insurance companies are in business not to give their money away. They have lawyers that will fight for their money. In fact, if other side knows, I would say someone with umbrella insurance would be less prong to frivolous lawsuit than someone who doesn’t.

I have never being sued, so I don’t have direct experience.

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Oh, yes there is. And, you’ve certainly heard of “discovery” in a legal case?

My coworker’s husband is one of those insurance company attorneys. He doesn’t “fight for their” money. He negotiates settlements. It’s all based on the statistical odds of what a jury award might look like if the case goes to trial.

Well, keep in mind that people out to make a crooked dollar are simply going for deep pockets. They don’t know what you have or don’t have. Doesn’t mean they won’t try right?

In my actual case, how is it that you initially sue for hundreds of thousands of dollars and end up with 10k at best in your pocket (remember, attorney got I believe 1/3 or 2/3). Once the b*stard attorney saw me, he knew he wouldn’t have a case if it went to jury and he quickly negotiated down so fast just to get out of there and on to the next case. As I left the arbitration with my lawyers, we visually saw the former tenant arguing violently with that attorney. I HATE lawyers!!!

Your earlier statement is that having umbrella insurance will result in more lawsuit and detrimental to the insurance holder. I don’t see your argument.

With insurance, insurance company can decide whatever they want to do. Spend the effort to fight, settle, pay out, whatever. That’s their choice. To the insurance holder, this costs $100+ per year for $1M coverage.

If no insurance, then have to pay settlement/verdict and lawyer fees.

So what is better? Like all insurance, the premium paid is more likely than not “wasted” fee. But in the small chance of getting sued (or maybe not so small in US), insurance protects against potential financial ruins.

You are point blank correcto, @jk88cal!!! Exactly what went down in the arbitration meeting. I wanted the insurance company to fight it all the way to court. I would win, in front of a jury. Insurance rep doesn’t disagree but it comes down to relative cost. The pathetic thing about this country and court system is that it made financial sense to settle so the insurance company did. $10-20k to them was nothing. Next, as far as they were concerned.

So, the next time someone arbitrates it is NOT an admittance of guilt. Far from it.

Landlords: Be careful and do everything to the letter of the law, and the sad thing is you may still be sued. Desperate times call for desperate measures by some folks…

Now you guys are scaring me. I will tell my agent to increase my umbrella coverage. $1M is just that big a deal no more.

I don’t think the discovery phase can possible discover your umbrella coverage, but it for sure can discover all your assets. That is why my insurance agent suggests my umbrella coverage to be the same as my assets. At the beginning, I don’t get it as the jury could still award 2X my assets and wipe out both umbrella coverage and my assets altogether. His point turns out to be you ultimately just want to have a lawyer to protect your assets. Buying the same amount, insurance’s lawyer will protect the coverage as hard as he supposes to protect yours, no more and no less. If the crime you were to commit deserve reward of 2x your assets, let it be. At least you did not protect the amount more than you odd to…
By that measure, yes, manch, you need a bigger umbrella. :grin:

It would be “discovered” long before discovery. That’s what investigators do for attorneys. They seek out the deep pockets. I can’t point to the details, because I am not that familiar with them. I am not an investigator. But, I know they do it. That PI attorney I leased office space from, would know within two or three weeks of speaking with a potential client what insurance coverage was available from all potential targets…err, defendants.

Your insurance coverage is not difficult to find out. I know you can be compelled to provide such information with a simple subpoena. And, attorneys can issue subpoenas almost at will. I have experience with being subpoenaed in both civil and criminal matters, where I had literally no connection to the matter other than the mention of my name! And this was without any formal legal claim having yet been filed by the prosecutor or plaintiff’s council.

You can be a complete third party not involved in any way. And yet, you are compelled to give testimony whether you like it or not. I’ve had a judge issue a warrant and a heavy fine when we simply ignored a subpoena in a contractor’s divorce. We - the company I was the finance officer at - had provided a record of all payments made to that contractor and didn’t see where we could be forced to be deposed by his wife’s attorneys.

We were wrong. We paid the fine and met with her attorneys. Other than the travel to and from the deposition site, it involved less than five minutes. I was just forced to answer some questions about how much we paid the contractor and that he wasn’t an employee in their presence and the presence of a recorder.

There is no “right of privacy” that so many believe they have. You can be compelled to answer questions with only limited protection from self-incrimination.

And, if you are around when a crime goes down and you speak to police or anyone else, they can and will subpoena you to testify even years later. BTDT. Both my stepson and my wife! They had nothing to do with what happened other than their names ended up on the crime reports as potential witnesses for the prosecution because it had been recorded that they were within 200 feet of where the crimes occurred.

Lesson learned: Don’t ignore a subpoena for because you think it doesn’t involve you in any way. You might find yourself on the receiving end of a judge’s warrant.

It’s a simple question in discovery, what insurance polices do you have in effect and who is the carrier? You will be compelled to answer.

By the way, I am required to provide a standard, ACCO form detailing my agency’s insurance coverage to a requesting concern - person, business or other agency - upon their request if we wish to participate in any business transaction with them. And, visa versa.


The meaning of “umbrella” as in any umbrella is to cover all what you want to be protected. I have long forgotten all about P&C but the reason you don’t under cover yourself is pretty obvious. Any damage beyond your coverage is on you. And one of the scary tactics on the P&C industry is to show you that just one kid being bitten on the face by one of your dogs amounts to $600K very easily. Imagine how much scaring and mental problems develop after you are attacked by a dog?

So, to me, umbrella all your way in. Anything beyond that is for the vultures to eat.

You’re assuming the insurance company will be compelled to actually defend. In my own experience, the first thing they try to do is to find a reason to get out of coverage. To pass the buck back to you.

Simple example.

In the mid 1970s, my little sister cut school snuck home while my parents were at work and went joy riding in dad’s beloved Buick. She was licensed and covered as an additional driver in the household on my parents policy.

Well, she ran a stop sign and broadsided a van. Totaled both my dad’s beloved Buick and the van.

Van driver files claim for $800,000 with our insurer. Says he is disabled and can no longer work and wants lifetime disability.

I come to my parent’s house a few weeks later to find trespassing stranger in their gated side yard, looking in the garage window. When I confront him he identifies himself as being an investigator FOR MY PARENT’S INSURER and demands to know where their car is, who drives it, how often they take it work, etc. etc.

A few days later my father receives a letter from his insurer saying that coverage was not in effect when my sister had her accident because she did not have WRITTEN permission from my father to be driving the Buick.

After the near heart attack my father has and months of go back and forth, his insurer settles with plaintiff for some undisclosed amount and doubles my father’s premiums!

So, how is it you are so sure that if a claim is filed and you have an umbrella policy it’s as simple as turning it over to your insurer and they’ll take care of it?

Insurance companies make great commercials with lots of catchy sayings about how they will look out for you, their policy holder. They just forget to tell you they are not in the business of paying out and will look for any and every way to void their contract. They even have special regulations that allow them to conduct business in a way that would result in anti-trust prosecutions for any regular business. The CA Insurance Code.

Insurance like police forces, are a necessary evil. But don’t think they are your friend or that you are their benefactor.

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