I got my auto and home insurance bills for the year. I was shocked at a 20% increase (I have 0 claims - ever). So I started looking at why its expensive and part of it is my high liability limits (300k/600k for auto, 500k for home...).
I've received a few quotes that are about the same amount, but one allowed me to decrease my auto and home liability and get an umbrella policy as well.
Even with the umbrella, I'm still not covering all my assets. This make me a little nervous, but should I spend all my money insuring that I keep my money?
I know its a gamble, so its really up to me and what I feel comfortable with. But what are others doing?
cbslc, thanks for starting this discussion thread. I look forward to seeing how others respond. In the meantime, you may find this similar thread helpful: I resent being schnookered!!
Insurance liability limits are a very personal decision. It depends on how much you need to protect terms in of your assets, on your risk factors for encountering a lawsuit some day (i.e., do you own an Irish Setter or a pit bull?), and on how deep are your pockets (i.e., you can't get blood from a stone). I've been thinking about the same issue just recently and I decided that: 1) we don't have many assets to protect, 2) we don't have any unusual risk factors, and 3) our pockets are very shallow. I also realized that no matter how much liability insurance we have ($100k, $300k, $500k), a plaintiff's attorney could take all of it and STILL go after all of our private assets. So I decided that rather than try to buy enough insurance to cover every and any eventuality, I would purchase enough insurance to pay reasonable medical expenses for an injured person plus enough to pay for a really good attorney who would keep the litigation wolves from our door. And that is what I did.
Good point. Since most law suits are settled out of court. I keep my liability coverage high enough that it is to my insurance company's lawyers interest to negotiate a settlement within my liability limits.
I ended up getting a few more quotes. The chosen company was able to reduce my individual policy limits and provide an umbrella to pickup the slack. All for only $40 more than my previous insurer w/o the umbrella. My previous insurer forced me to have the highest limits, even with an umbrella, so it got expensive and a 20% increase this year!
This won't cover all assets, but hopefully enough.
As Chrysalis pointed out, on another post, continued patronage of an insurance company does not appear to be rewarded. So shop around whenever you feel dissatisfied.
For our particular Umbrella, the coverage must be $300,000 and then we have (so far $3 M umbrella and as of last year that also includes vacation (second) "home" in addition to Residence (owned) and auto - one ten-year-old Prius).
It has been my understanding that my retirement accounts (401A, 403B, IRA, Roth IRA, etc.) and home are usually not included in one's assets in a liability lawsuit unless there are some gross misconducts that lead to the liability.
Therefore I have left my liability insurance at fairly standard levels for both home and auto.
I live in Michigan and have been told this by a Michigan attorney. What do others think?
kefinaa, I live in NY State and my situation is the same, 98% of my assets are in my IRA. FYI, I converted my 403b to an IRA when my spouse and I separated. With a 403b, even though she renounced her rights, I could not withdraw money without her signature and she could still claim 30% of my 403b upon my death.
pleading ignorance in the matter. We live in Virginia (beginning summer 1984).
Like you, cbslc, my auto insurance premiums jumped by 20% this year, so I got a quote from AARP's carrier and they were offering a $600 savings over my carrier. Being hard of hearing, I did not want to deal with anyone over the phone, I wanted to stay with my agent of many years. Like you I had zero accidents or speeding tickets for the last ten years. I was in a quandary.
I told my agent about this AARP deal, and he went to work and found another carrier, same limits, PLUS an accident forgiveness rider for (Now get this!) almost a $1000 less than my carrier wanted for 2015. Needless to say, I grabbed it, and took the lady at his office out to lunch. I had asked my agent previously each time my premiums had gone up dramatically, but he always came back with my carrier having the lowest premiums. This time, however, it was a nice surprise.
Frankly, I disagree with you, higher insurance limits do not necessarily dramatically increase your insurance premiums. I suspect age has a lot more to do with it. I was turning 80 this year and my former carrier probably thought I would be a higher risk. I further believe my new carrier does not discriminate on age, just on your driving record.
While I have not had an accident, I still feel better with my new accident forgiveness rider. Finally another reason my auto insurance was high is that I rent my place, and do not have a homeowner's policy. People around me who have both policies pay a lot less for their auto insurance.
We have both - auto and homeowners. However, when we reduced from multi-car (discount) to one of the two cars (giving the other away) I don't think what we get charged really went down at all - one vehicle instead of two.
Thirty years ago I was an insurance agent and broker. I take my own medicine even now.
If you have not protected your assets from liability suits, do it now!
Upgrading your home. auto, second home, boat, RV, etc. to minimums required by an umbrella policy costs literally pennies a day. Ask your agent. (The more toys the more likely an accident, damages and injury.)
Amounts sought in suits are not based on your financial statements, they are based on your visible consumption and/or the severity of the damages/injuries.
Once the base policies are upgraded get that Umbrella Liability policy. (I read mine.)
The cost of the umbrella will vary by where you live and how many toys you have. I'm in Pittsburgh and the first million was $200. The second million cost less. Pick a number at or in excess of double your household net worth.
As an old insurance agent, can you comment on the above post that states: "... my understanding that my retirement accounts (401A, 403B, IRA, Roth IRA, etc.) and home are usually not included in one's assets in a liability lawsuit ..."? Are there any other assets that might be excluded from a liability suit that would reduce the amount of insurance one needs?
I have tried several times to get a proposal from my major insurance carrier for an umbrella policy that was acceptable and have failed to get a reasonable one. Perhaps you can also provide an opinion on whether it is cost-effective or even possible to get an umbrella policy from a second company to cover items insured by a variety of other companies.
Thank you in advance. :-))))
My understanding is that the liability limits are set at a state level. I found a decent site that has info, you can put your state into the search box to see what it has for your state.
For example I searched for Utah Utah State Asset Protection Laws — Asset Protection Society Unfortunately the links back to revised statute don't work for me, but it does give the statute # so I can search on that as well. In Utah Property exempt from execution: (xiv) except as provided in Subsection (1)(b), any money or other assets held for or payable to the individual as a participant or beneficiary from or an interest of the individual as a participant or beneficiary in a retirement plan or arrangement that is described in Section 401(a), 401(h), 401(k), 403(a), 403(b), 408, 408A, 409, 414(d), or 414(e), Internal Revenue Code; and
At your suggestion, I did a Google search and came up with a decent web site that lists one's asset protection in 4 areas BY STATE. Here is what I found:
Thanks JerryD, should have done this grunt work myself, I notice that in most states IRA's and such are no man's land for creditors, however homestead exemptions are a pittance, the numbers must date back to the fifties. Thanks again, great job!
Trying to get my major insurer to quote an umbrella policy since I found out that the Supreme Court denied IRA's a liability suit exclusion. Lots of our assets are involved in this type of asset and would be subject to a suit.
We have an RV that we insured elsewhere because their coverage seemed out of line at the time and the coverage inflexible. However, the price of the umbrella policy goes up by the amount necessary to cover the RV whether we choose to insure it by them or not. In addition, the coverage on the cars also goes up to a higher limit than we have before they will issue an umbrella policy with an associated increase in premiums. And any other persons living in the house also effect the cost of the umbrella policy even thought they may be over any age limit that would otherwise affect our premiums.
OMG!!!! I think that I hate insurance companies almost as much as I hate cable TV companies! I told the agent to submit a formal written quote explicitly describing coverage included in an RV policy. :-((((
PS; I also asked the RV insurer if they would quote an umbrella policy. The answer was that it would not be practical unless I had THEM cover all of our other insured items. GOTCHA!
Thanks for your input JerryD. This means that Kefinaa (earlier post) needs to update the information presented, thanks for clarifying that point about denial of IRA liability suit exclusion. Will therefore keep my policy as is, I think a $1M umbrella policy will imply that my insurer will put its best lawyers before they shell out that kind of money.
One must still go to the web site that I referenced above in order to see how YOUR specific state handles IRA 's in liability suits. Mine does NOT give them protection so significant assets are at risk in any liability suit against me.
JerryD, as an engineer I get confused by all this legal arcane gobbledigook but my state opted out of the federal exemptions, however, it does not mean a plaintiff or debtor can seize your assets willy nilly. A lot of it depends on the judge presiding and like I said, a good lawyer can make a huge difference between contesting the lawsuit and reducing the award.
frankly like I said, my insurance company will gladly get the best lawyers to avoid paying a Million dollar liability claim,
Looking at the web site for an example that looks kind to IRA's I found this one for Alaska: "Exemption for Tax-Qualified Retirement Plans, IRAs & Roth IRAs (Note 2): 100% -- Alaska Stat. § 09.38.017"
Unfortunately, my state excludes only a pittance in their asset protection exclusion. I saw a number of others with confusing exclusions based on needed support, etc. I agree with you that a substantial obligation on one's insurer would most likely aggressively engage their lawyers for one's defense.
Just another point that I discovered in my duels with the insurance agent is that an umbrella policy sits on top of one's car liability coverage and further they insist that you raise that limit to a substantial amount before selling you the umbrella policy. For my insurer in my state, I would have to raise my base liability per car accident, for instance, to $300,000. So, basically, a $1,000,000 umbrella policy would raise my liability coverage to $1,300,000 (whether I want it or not). LOVE 'EM! :-))))
JerryD, thank God I already gave my kids and grandkids for the past 25 years more than I ever expected to leave them, so the way I see it, let them take it, after my insurance company pays a Million, and no judge is ever going to leave me totally broke. Let them eat cake!
Have a wonderful retirement and have no regrets whatsoever, whatever happens.
I was only able to get one insurer (State Farm) to reduce my limits before adding the umbrella.
Just got off the phone with the major insurer agent. Magically, he got underwriting to accept another insurer for the RV AND he also told me that they would apply the umbrella policy to the RV!
Although he said that they don't normally do this, it is yet another example where "pushing" DOES pay off. We have been with this company for years and the total house, cars, umbrella cost along with a number of the kids policies with him comes to a considerable sum. As I have taught the spouse (and found out myself): Escalate! Escalate! Escalate! Until you find somebody with authority to agree with you. :-)))))
Retrieving data ...