Has anyone ever made a claim on their Umbrella Liability Insurance? The policy covers a certain amount of liability above underlying coverage (home and auto, etc). So what is a typical lawsuit event that may occur and trigger this?
In other words, if a maximum judgement is close to $1 million, there wouldn't be much value in carrying $2 million worth of umbrella coverage. This seems even more important or at least as important as the value of the assets you are trying to protect.
Along the same lines, even if you only have ~$300,000 of net worth to protect, it might be worth carrying a $1 million umbrella policy.
For what it's worth, my policy carries $1 million of liability protection beyond underlying home/auto insurance and only costs $201 per year. It's been so long that I don't even remember my reasoning for selecting this amount of coverage.
At the mid-sized agency that I worked at, we had multiple claims on umbrella policies in the 4 years I was there.
imagine you hit a guy hit on a MC and permanently disable him or kill him, leaving a family behind. You'd want the $1.25mm or $2.5mm of coverage. Especially if you are a public figure or someone in a high-paying field.
Thank the Good Lord that I have never had to make use of our umbrella coverage! Just like my disability income coverage, I pray it never has to be used. That said, protect your assets, to iclude your income from garnishment, and maintain a high level of excess liability coverage.