Umbrella coverage - Worth it?

[amdda01]

Gang,

What's a better solution for a renter?

* $1M Umbrella + Renter's insurance + $300k auto liability, or
* $1M auto liability

I don't have much valuable stuff in my apartment and drive a beater - Just trying to protect assets in lawsuits.

[moda0306]

You still want renter's insurance I think... especially because you can be sued if you do damage (leave your stove on causing a fire)... at least I think you can.

Plus the $ you get will help stomach the hassle of having to go buy new/used stuff.  It's a PITA no matter what and it's nice to get reimbursed for all that time you put into buying more cheap furniture if that's the route you take.

[Storm]

I don't know much about umbrella coverage, to be honest.  I just have auto at 100/300 on both our cars and renters insurance.  The renters insurance also has a rider in case my wife loses her wedding ring, which is the only thing we own that's worth more than 10k.

Does anyone else know much about it?  I guess as we start to build our savings we should look at protecting it from crazy lawsuit behavior.

[moda0306]

10k wedding ring?  My wife's was 1/5 that.

[fnord123]

10k wedding ring?  My wife's was 1/5 that.

My wife actually despises DeBeers as much or more than I do, as a result her wedding ring was quite reasonable as well.  The whole "wedding rings must be 1/4 your salary" (or whatever) is quite interesting to me, given it seems to be a reversal on the old custom of women bringing a dowry into the marriage.

On topic: I have home insurance, auto liability, and separate umbrella coverage. I've never had to use any of them, and the umbrella only kicks in once one of the others is used.  However, it is nice that it covers pretty much everything, and is reasonably priced as well.

[LifestyleFreedom]

Umbrella insurance is for peace of mind for middle class and wealthy people (http://www.nytimes.com/2008/03/18/busin ... wanted=all).

I've had it for many years and the cost is not that much relative to the costs of my other insurance policies.  I've never had to use my policy.

As your wealth builds in the coming years, you will become a more attractive target for lawsuits.  People who have few resources never get sued because the legal community knows you can't get blood out of a stone.

You should always be extra careful and not cause injury to others; but if things go really wrong and you seriously injure someone, you'll be glad you have umbrella coverage.

[Storm]

My wife still complains that I didn't get her a Tiffany ring.  What I got her would have cost about $25K from Tiffany - you pay for the name, but I did a lot of research online and found a great place to buy it and saved a lot of money.

I'm going to get an Umbrella policy - you're right, my net worth is not that much yet, but I will increasingly become a target as it grows.

[smurff]

My wife still complains that I didn't get her a Tiffany ring.  What I got her would have cost about $25K from Tiffany - you pay for the name, but I did a lot of research online and found a great place to buy it and saved a lot of money.

I'm going to get an Umbrella policy - you're right, my net worth is not that much yet, but I will increasingly become a target as it grows.

Storm, you can surprise her with a nice Tiffany ring for her birthday or anniversary.  They have some at every price point, from $150 and up.  Be sure to present it to her in the blue box.

I'm glad you decided to get umbrella insurance.  Your stuff may be worth more than you realize, and one million dollars is a small sum these days when it comes to being sued.  A settlement of a $1 million dollar lawsuit might be $50,000 or $300,000--but that's still more than you want to have to pay out of pocket, along with lawyer's fees.

[Lone Wolf]

Thanks, this has brought umbrella coverage back onto my radar.  If we're building our finances to hedge against all realistic possibilities, this is an area that can't be ignored.

[amdda01]

Thanks gang.

What do you think is a smart amount? $1M? $2M?

[Storm]

What I'm reading in the article is that you should start at $5M... I guess that makes sense because people can easily win $2-3M in a jury award.  I just imagine a worst case scenario like your neighbor slips on your icy sidewalk and sues you for pain and suffering, winning $3M...