Corner of Berkshire & Fairfax Message Board

General Category => Personal Finance => Topic started by: Nell-e on December 17, 2019, 01:46:39 PM

Title: Umbrella Insurance Policies?
Post by: Nell-e on December 17, 2019, 01:46:39 PM
What do people think about Umbrella Insurance Policies?  Here's an interesting article.

https://www.financialsamurai.com/how-does-an-umbrella-policy-work-and-how-much-does-it-cost/

Something I'm unclear about is how lawyers evaluate the defendant's net worth.  I can understand how they might be able to guess someone's net worth based on looking at property records but not sure if it's possible for them to guess a defendant's stock portfolio value.

Anyone who can chime in here?




Title: Re: Umbrella Insurance Policies?
Post by: Jurgis on December 17, 2019, 02:40:18 PM
LMSTFY:

https://www.cornerofberkshireandfairfax.ca/forum/personal-finance/umbrella-insurance/
Title: Re: Umbrella Insurance Policies?
Post by: Nell-e on December 17, 2019, 04:37:58 PM
Thanks for the link @Jurgis.  I read through the entire thread but I'm still curious about my 2nd question.

Let's say there's an auto accident and a greedy lawyer who wants to sue a defendant.  The lawyer is going to sue for either the higher of the insurance coverage or the defendant's net worth.  Does anyone know how lawyers evaluate defendants' net worth?  For example, I'm guessing it's pretty easy to research if the defendant has property and also to determine the property's market value.  What other resources does the lawyer have?  Are there resources that allow the lawyer to get info on the defendant's stock portfolio or bank accounts or taxes?

I'm wondering because I got 2nd hand information from a relative that they had an acquaintance who lost a home due to an auto accident.  I don't have very many details about the incident.






Title: Re: Umbrella Insurance Policies?
Post by: DooDiligence on December 17, 2019, 05:38:21 PM
Thanks for the link @Jurgis.  I read through the entire thread but I'm still curious about my 2nd question.

Let's say there's an auto accident and a greedy lawyer who wants to sue a defendant.  The lawyer is going to sue for either the higher of the insurance coverage or the defendant's net worth.  Does anyone know how lawyers evaluate defendants' net worth?  For example, I'm guessing it's pretty easy to research if the defendant has property and also to determine the property's market value.  What other resources does the lawyer have?  Are there resources that allow the lawyer to get info on the defendant's stock portfolio or bank accounts or taxes?

I'm wondering because I got 2nd hand information from a relative that they had an acquaintance who lost a home due to an auto accident.  I don't have very many details about the incident.

It's my understanding that after a settlement or judgement is made,
and the insurer pays out to policy limits, any shortfall will trigger discovery of a defendants assets.

It seems logical that many attorneys would have investigators who may be able to dig past public records,
BEFORE judgement or settlement, by interviewing friends & coworkers of the defendant (unbeknownst to them).

A quick web search will turn up a plethora of articles, some of which describe how attorneys decide whether to take a case or not.
This decision has very little to do with actually helping an injured individual & is usually made based on what can be reliably collected.

These people are predatory scum.

An umbrella policy seems like a cheap way to get a team of free defense attorneys.
Coincidentally, I got a marketing email from GEICO recently for umbrella policies.

www.geico.com/information/aboutinsurance/umbrella/

I'm calling them tomorrow to try & plug any gaps in my coverage.
Title: Re: Umbrella Insurance Policies?
Post by: Cigarbutt on December 17, 2019, 06:33:52 PM
^It appears reasonable to conclude that the plaintiff will (with the help of vested interests) invest in forming an overall evaluation about net worth based on the perceived damage (which comes with a mean and a large standard deviation) and on an initial educated guess about ability to pay. You can assume that people can come up with a reasonable idea during the 'discovery' phase.

So it seems that your decision to 'buy' an umbrella policy should not be based on what others can evaluate but on what you perceive to be a quantifiable number (net asset value and present value of earning power) in terms of a potential liability that you would prefer to transer in exchange for a flow of premiums. It's the same as the decision to buy an excess of loss layer for an insurance business, ie a cost-benefit decision.

A nice side effect of buying a policy like the one DooDiligence refers to is that you can obtain coverage against retaliation from injurious written statements. ☂  :)
Title: Re: Umbrella Insurance Policies?
Post by: Jurgis on December 17, 2019, 07:57:39 PM
Coincidentally, I got a marketing email from GEICO recently for umbrella policies.

www.geico.com/information/aboutinsurance/umbrella/

Just FYI Geico is not directly writing umbrella insurance in a bunch of states. They will agressively refer you to the insurance agencies they work with. These insurance agencies may or may not be good/cheaply priced/etc. Geico gets referral fees, but provides no guarantee for the product.

Similar situation exists with "Geico" home insurance, etc.
Title: Re: Umbrella Insurance Policies?
Post by: Nell-e on December 17, 2019, 09:43:30 PM
Thanks for the link @Jurgis.  I read through the entire thread but I'm still curious about my 2nd question.

Let's say there's an auto accident and a greedy lawyer who wants to sue a defendant.  The lawyer is going to sue for either the higher of the insurance coverage or the defendant's net worth.  Does anyone know how lawyers evaluate defendants' net worth?  For example, I'm guessing it's pretty easy to research if the defendant has property and also to determine the property's market value.  What other resources does the lawyer have?  Are there resources that allow the lawyer to get info on the defendant's stock portfolio or bank accounts or taxes?

I'm wondering because I got 2nd hand information from a relative that they had an acquaintance who lost a home due to an auto accident.  I don't have very many details about the incident.

It's my understanding that after a settlement or judgement is made,
and the insurer pays out to policy limits, any shortfall will trigger discovery of a defendants assets.

It seems logical that many attorneys would have investigators who may be able to dig past public records,
BEFORE judgement or settlement, by interviewing friends & coworkers of the defendant (unbeknownst to them).

A quick web search will turn up a plethora of articles, some of which describe how attorneys decide whether to take a case or not.
This decision has very little to do with actually helping an injured individual & is usually made based on what can be reliably collected.

These people are predatory scum.

An umbrella policy seems like a cheap way to get a team of free defense attorneys.
Coincidentally, I got a marketing email from GEICO recently for umbrella policies.

www.geico.com/information/aboutinsurance/umbrella/

I'm calling them tomorrow to try & plug any gaps in my coverage.


Thanks, that's good info @DooDiligence.  Given that peoples' profiles are listed on LinkedIn, it's probably easier than ever to estimate someone's net worth/earning potential. 
Title: Re: Umbrella Insurance Policies?
Post by: boilermaker75 on December 18, 2019, 05:50:59 AM
Coincidentally, I got a marketing email from GEICO recently for umbrella policies.

www.geico.com/information/aboutinsurance/umbrella/

Just FYI Geico is not directly writing umbrella insurance in a bunch of states. They will agressively refer you to the insurance agencies they work with. These insurance agencies may or may not be good/cheaply priced/etc. Geico gets referral fees, but provides no guarantee for the product.

Similar situation exists with "Geico" home insurance, etc.

We had our home insurance with Liberty through a GEICO referral for years. The premiums went up every year. This increase was high, but any individual year's increase wasn't worth the hassle of calling about. We were like the proverbial frog sitting in water that is slowly heated. We finally called GEICO and complained. They quickly had us with Travelers. Our annual insurance fee went from $3,200 to $1,300.
Title: Re: Umbrella Insurance Policies?
Post by: oddballstocks on December 18, 2019, 07:04:43 AM
We have an umbrella with Erie Insurance.  It's cheap, maybe $150/yr for $1m?

If you're worried about personal asset liability I'd look into placing your house into a trust, or some corporate vehicle.  There are lawyers who specialize in this sort of a thing.  The downside is if you're looking to finance it you lose a lot of options.  But if it's paid off this might be worth considering.

Of course there's another argument.  If you're so worried about some loss scenario and spending tens of thousands to break apart your estate then maybe it's worth off loading the car accident risk by hiring a company to drive you around and let them assume the risk.  Or maybe purchase a tank or armored vehicle.

Back to the subject... when I spoke to our agent he said the one benefit of the umbrella combined with homeowners and auto is that the lawyers covered by the umbrella are available for all home/auto situations.  So in a way it's $150/yr to enhance our coverage.

For us the umbrella makes sense because we have four boys, we have a pool, and we love to throw big parties (50-100 people) regularly combining all three things.  And at those parties there are often 30+ kids all running going nuts.  The risk factor of someone getting injured accidentally is high.  I'm always worried and keep an eye out.

The good thing is with today's helicopter parents I think the risk is lower.  Some parents barely leave their kid's side.
Title: Re: Umbrella Insurance Policies?
Post by: Cigarbutt on December 18, 2019, 08:17:00 AM
^There seem to be specific risk factors versus personal liability and insurers may not use a granular approach to underwriting which means that you may end up with a very good deal in terms of risk sharing. The deal is even better if you own a dog or a trampoline.

A big risk factor though is related to driving (including having teenage drivers in the household). There are firms specializing in 'recruiting' plaintiffs and they are quite good at spotting opportunities. Because of the different legal environment and because I live in a jurisdiction where there is a public mandate for 100% no-fault coverage related to motor vehicle accidents (this may seem unbelievable to some and I'm not saying this is the way to go but, under this system, the individual 'victims' do not have the possibility to initiate legal proceedings against the person responsible for a traffic accident) {this is like applying the universal basic income principle to car liability litigation}. So, when we go to the US, we call our insurance company and ask for a temporary multiplication of our umbrella protection.

I would be careful with helicopter parents and their over-protected kids as the 'injury rate' may not be all that different but their propensity to sue surely is.
Title: Re: Umbrella Insurance Policies?
Post by: Jurgis on December 18, 2019, 09:09:33 AM
Of course there's another argument.  If you're so worried about some loss scenario and spending tens of thousands to break apart your estate then maybe it's worth off loading the car accident risk by hiring a company to drive you around and let them assume the risk.  Or maybe purchase a tank or armored vehicle.

Go Oddball!  ;D



Screw Tesla. My next car is a tank.  8)
Title: Re: Umbrella Insurance Policies?
Post by: DooDiligence on December 18, 2019, 09:35:37 AM
^There seem to be specific risk factors versus personal liability and insurers may not use a granular approach to underwriting which means that you may end up with a very good deal in terms of risk sharing. The deal is even better if you own a dog or a trampoline.

A big risk factor though is related to driving (including having teenage drivers in the household). There are firms specializing in 'recruiting' plaintiffs and they are quite good at spotting opportunities. Because of the different legal environment and because I live in a jurisdiction where there is a public mandate for 100% no-fault coverage related to motor vehicle accidents (this may seem unbelievable to some and I'm not saying this is the way to go but, under this system, the individual 'victims' do not have the possibility to initiate legal proceedings against the person responsible for a traffic accident) {this is like applying the universal basic income principle to car liability litigation}. So, when we go to the US, we call our insurance company and ask for a temporary multiplication of our umbrella protection.

I would be careful with helicopter parents and their over-protected kids as the 'injury rate' may not be all that different but their propensity to sue surely is.

That's it, I'm getting a dog & a trampoline.

https://youtu.be/rvLMcBzF-Mk

 ;D
Title: Re: Umbrella Insurance Policies?
Post by: Cigarbutt on December 18, 2019, 10:10:05 AM
That's it, I'm getting a dog & a trampoline.
...
Nice videos.
We've had a trampoline for about 15 years and the annual incidence of injuries (all relatively minor until now) is, on average 2 per year. Before you call the child protection agency, let me emphasize that we use a net around the device and basic instructions have been laid out to all potential participants. Incidentally, last fall, we had some kind of a mini-tornado and the trampoline ended up vertically stuck in the electric wiring, lining the back of our yard.

In the US, in 2015, there were more than 295,000 medically treated trampoline injuries, according to the Consumer Product Safety Commission. So, don't underestimate the potential liability from trampoline use!  :)
Title: Re: Umbrella Insurance Policies?
Post by: Spekulatius on January 04, 2020, 01:10:30 PM
Quote
An umbrella policy seems like a cheap way to get a team of free defense attorneys.

Thatís exactly what the crux of wisdom is. Get an umbrella policy is ~ to your assets and you should be ok. Actually most are Ok with $2M umbrella policy because attorneys wonít know your assets in most cases and go for the easy settlement first.