Author Topic: Umbrella insurance  (Read 10312 times)

Spekulatius

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Re: Umbrella insurance
« Reply #20 on: July 08, 2017, 01:29:35 PM »
An insurance agent explained umbrella insurance this way - you want to make sure that the insurance is large enough, such that the insurance company fights tooth and nails legally to prevent an adverse outcome. Beyond that, the total sum does not play such a significant role, since the lawsuit amounts can be totally arbitrary anyways.

In most cases, the counterparty will look for a settlement.
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MikeTheCannon

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Re: Umbrella insurance
« Reply #21 on: July 09, 2017, 05:43:55 PM »
Some things to keep in mind.

2. If you are an average risk insurance is almost always negative expected value.

Ah but don't forget expected value =/= expected utility!

cherzeca

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Re: Umbrella insurance
« Reply #22 on: July 09, 2017, 06:46:36 PM »
utility v value is a good concept to keep in mind re insurance.  if you are newly retired, you spend alot of time thinking about how to grow nest egg but maybe should spend more time how to protect nest egg.  protecting the downside always has high utility.

boilermaker75

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Re: Umbrella insurance
« Reply #23 on: August 30, 2017, 03:04:23 PM »
An insurance agent explained umbrella insurance this way - you want to make sure that the insurance is large enough, such that the insurance company fights tooth and nails legally to prevent an adverse outcome. Beyond that, the total sum does not play such a significant role, since the lawsuit amounts can be totally arbitrary anyways.

In most cases, the counterparty will look for a settlement.

Exactly, having an insurance company to defend you in court is the primary benefit.

You want at least $1 million to cover nuisance lawsuits.

If you have a net worth of $1 million, have a $1 million umbrella and loose a $2 million lawsuit you are wiped out.

So I have a $5 million policy with GEICO, which costs $756 per year. It is unlikely I will ever need this amount of coverage, but the probability is not zero.

DooDiligence

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Re: Umbrella insurance
« Reply #24 on: September 19, 2017, 08:46:05 AM »
An insurance agent explained umbrella insurance this way - you want to make sure that the insurance is large enough, such that the insurance company fights tooth and nails legally to prevent an adverse outcome. Beyond that, the total sum does not play such a significant role, since the lawsuit amounts can be totally arbitrary anyways.

In most cases, the counterparty will look for a settlement.

Exactly, having an insurance company to defend you in court is the primary benefit.

You want at least $1 million to cover nuisance lawsuits.

If you have a net worth of $1 million, have a $1 million umbrella and loose a $2 million lawsuit you are wiped out.

So I have a $5 million policy with GEICO, which costs $756 per year. It is unlikely I will ever need this amount of coverage, but the probability is not zero.

Brilliant, I never thought of it that way!

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mranski

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Re: Umbrella insurance
« Reply #25 on: November 30, 2017, 10:42:32 AM »
In Canada, I haven't been able to convince myself it is worth buying. In BC, you can easily get $5 million limits on auto and home quite inexpensively. All business related activity is excluded to my knowledge. So it doesn't seem worth it to buy it just to increase these limits?

Spekulatius

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Re: Umbrella insurance
« Reply #26 on: February 24, 2018, 04:30:15 PM »
In the US, with  those frivolous lawsuits for damages, 500k can just be as insufficient than $10 million. I had a great insurance agent in CA that answered  the question for sufficient coverage that way:

You just need sufficient coverage that the insurance company fights tooth and nails with good lawyers for settlement. The counterparts knows that it is way easier to get a settlement from the insurance company than a cash payment from an individual. I settled for $1Mill umbrella. I donít think  her $1mill or $2mill makes much of a difference.

You should never disclose your insurance, much less your limit to the counterparty.
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Brice

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Re: Umbrella insurance
« Reply #27 on: February 27, 2018, 12:50:56 AM »
A bit of an uncommon issue but since we're dealing with ~2bp risks here I'll throw it out: higher limits don't always increase an insurer's desire to defend you and can be counter productive if damages are clearly above the limits of the policy but odds of culpability being assessed are <100%.  In these cases, the insurer is inclined to litigate all the way to judgement knowing that it's max loss is capped at limit+costs while a favorable judgement will limit its payout to just costs.  Some states have rules that can expand insurers' liability beyond limits if they refuse to settle within the limits due to just this issue but many states don't have such rules.

Oregon, my old home state, doesn't have such rules and it caused a couple of strange mediation moments in a case I was involved in last year.  We emphasized the cost of the litigation itself as opposed to the desired damages as the policy limits were ~30% of the expected damage award range and the case was probably a toss-up in front of a jury.

You should never disclose your insurance, much less your limit to the counterparty.

Often comes out early in the disclosure process.  If not, I always see mediators guide the parties to a small range.  I've got a small sample size (and hope to keep it that way) but ir's been 100% thus far.

KJP

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Re: Umbrella insurance
« Reply #28 on: March 28, 2018, 12:06:58 PM »
A bit of an uncommon issue but since we're dealing with ~2bp risks here I'll throw it out: higher limits don't always increase an insurer's desire to defend you and can be counter productive if damages are clearly above the limits of the policy but odds of culpability being assessed are <100%.  In these cases, the insurer is inclined to litigate all the way to judgement knowing that it's max loss is capped at limit+costs while a favorable judgement will limit its payout to just costs.  Some states have rules that can expand insurers' liability beyond limits if they refuse to settle within the limits due to just this issue but many states don't have such rules.

Oregon, my old home state, doesn't have such rules and it caused a couple of strange mediation moments in a case I was involved in last year.  We emphasized the cost of the litigation itself as opposed to the desired damages as the policy limits were ~30% of the expected damage award range and the case was probably a toss-up in front of a jury.

You should never disclose your insurance, much less your limit to the counterparty.

Often comes out early in the disclosure process.  If not, I always see mediators guide the parties to a small range.  I've got a small sample size (and hope to keep it that way) but ir's been 100% thus far.

On this point, google Federal Rule of Civil Procedure 26(a)(1)(A)(iv).  Many U.S. states have similar rules in civil cases.

I can't speak for Oregon, but many states provide insureds with statutory or common law remedies against their insurers in the event an insurer's unreasonable refusal to settle a lawsuit results in the insured being hit with a judgment that exceeds his or her remaining policy limit.  Google "insurance bad faith," or more specifically "third-party bad faith".

redhots

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Re: Umbrella insurance
« Reply #29 on: May 15, 2018, 10:04:58 AM »
Quote
I just did a quick quote on USAA.   $43.58/month for 1 million.    $65.36/month for 2 million. 

A year later.  I did another quote on USAA.   $30.46/month for 1 million.    $45.70/month for 2 million.