re: Personal Umbrella

$1MM through state farm costs me about $110/yr.
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I have,not seen a price like this is 10 years.

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The point that I've tried to make with my posts in this thread is that you cannot equate the value of an umbrella policy to the value of your assets.

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Well, you can't get blood from a turnip. If I don't have it to lose then I don't need to cover losing it. If I have something to lose, then I might want coverage to limit losing those assets. So, they're not unrelated. What everyone needs to determine for themselves is if their toys, hobbies, affiliations, assholiness, etc. puts them in a position where they could be sued and are they concerned with the assets they may lose if they lose the case.

EDIT: After reading the rest of the replies I see the discussion has put things in perspective.

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They are easy targets to blame, but they aren’t charities.. at the end of the day they have to take in enough premium to offset these massive claims coming in.

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No need to state the obvious; of course they’re in business to make money. But how do you explain the giant delta in quotes? Again, I pay $408/year currently with ASI for $1MM coverage, and got a quote of $1,900 for that same level of coverage. I have friends— also in my area— who are paying less than I do for more coverage. But, yes, I’m sure the poor insurance companies are barely scraping by.

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But how do you explain the giant delta in quotes?

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This is the main issue for me. They have lost their minds because with the same risk criteria I have quotes that are $2,500/yr apart. Really? Apparently the insurance company does not have an industry standard to assess the risk, or they just use this product to get excessive profit from those who obviously care to be insured more than most folk. I told my State Farm agent that I would have loved to stay with him, but I'm not paying that extra premium on the umbrella -- so, goodbye.

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$1MM through state farm costs me about $110/yr.

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Just to correct this. That was my price from about 3 years ago as I didn't realize the old statement I found was REALLY old. I just got my new annual statement and it is now $140/yr.

There are quite a few things you can do, none of which I'm really comfortable anonymously advising a message board. Some general thoughts, though, are that it somewhat depends on your debt/asset ratio and it really depends on your personal situation (i.e. the amount and type of assets you're trying to protect). Asset protection is a bit simpler if you have minimal debt/no transfer restrictions on assets and obviously much simpler, albeit less necessary, if you have fewer assets or a smaller variety of assets.

On the debt issue, if you have a mortgage on your home, your mortgage agreement most likely prohibits you from transferring your home to an LLC. That's a change in ownership and would require a refi/re-underwriting. If your home is not encumbered, then it's very easy to transfer ownership. This is just an example and not meant to suggest that an LLC is a bulletproof way to shield assets, because your personal interest in that LLC is an asset in and of itself and is subject to Louisiana's charging order statute and other laws. That being said, many folks effectively use corporate entities and/or trusts for asset protection.

My best advice would be to find an estate planning attorney who has both asset protection and tax experience. There are many of these, as the various practices go hand-in-hand. If it's something you are truly interested in or concerned about, it's definitely worth paying for an hour of his/her time to sit down and chat about what may make sense for your particular situation.

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Insurance coverage is a cost/benefit. Prior to performing that cost/benefit, you have to calculate exposure. I feel like a bit of a broken record saying that.

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I’m not arguing just to argue at all. I truly do not understand what you’re trying to argue when on one hand you say you have to calculate your exposure, and on the other you argue that net worth is irrelevant.


That implies you should have to calculate your risk at an individual level, which is inherently difficult to do, if not impossible, on something so incredibly unlikely as an umbrella payout.

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I’m not arguing just to argue at all. I truly do not understand what you’re trying to argue when on one hand you say you have to calculate your exposure, and on the other you argue that net worth is irrelevant.


That implies you should have to calculate your risk at an individual level, which is inherently difficult to do, if not impossible, on something so incredibly unlikely as an umbrella payout.

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I feel like this should go without being said, but yes, if you want to make a determination as to whether you are adequately insured, then yes, you have to calculate your risk/exposure at an individual level. Are you honestly telling me that it is impossible to calculate risk at an individual level? You can't sit down, think about your life, habits, family, etc., and evaluate the likelihood of having to defend a lawsuit? I gave an example of this earlier in the thread.

The position you've taken in this thread is that you should only purchase an umbrella policy with limits that cover your assets that are uninsured by your current liability policies, and in recent posts (in response to one of mine), you've switched that position to net worth. Regardless, you have yet to give a logical reason for that position, because there isn't one. I've heard people say that umbrella coverage correlates to asset value for years, but I've never heard any logical reason for it.

The reality is that it's just an easy rule of thumb for the layman and the most common rationale is "why not?" That said, correlating your asset value to umbrella coverage no real basis and IMO is generally bad advice, because it suggests that you can't face an excess judgment, which would ultimately require you filing bankruptcy and significantly affect your life going forward.