We currently have a $2M umbrella policy for $920 per year, but our carrier is not going to renew it because they insist on a bundle, which we can’t do (see below). We have well more than $2M in assets, but at this point we can’t even find a $2M umbrella policy for less than $1100/year. Our auto liability limit is $250K and homeowners goes to $300K.
My questions: (1) how much of an umbrella limit do we actually need? The premium for coverage up to our actual level of assets, over $10M, seems like it would be astronomical, if we could get that kind of coverage at all. (2) any suggestions on carriers? I feel like we’re already paying an excessive premium for the umbrella policy we have now, given what I have paid in the past in other locations and what others on this sub are reporting. We are working with a broker whom we like, but this is the best he’s finding.
(We are not able to do a bundle because our homeowners policy is a specialty policy covering only fire & liability—the price of wind/weather coverage, combined with the gigantic deductible that would come with it, does not make sense for us. We have no mortgage and have financial ability to self-insure for wind/weather damage.)
Umbrella limit for someone with substantial assets?
byu/tm478 inInsurance
Posted by tm478
9 Comments
Find an independent broker / agent in your area who caters to high net worth clients. They should have no issues finding coverage for you. But do try to be a little less resistant to price as that may get you reduced coverage when just a little more premium would get you substantially better coverage.
So the news for umbrella is only sort of based on your assets. Just because you have 2m in assets doesn’t mean you need 2m in limits. What it does mean is you have 2m to lose if a claim exceeds your limits.
I personally would try to insure to 95% of a probable maximum loss. A good broker will probably have the claims data to tell you roughly what that number is for personal auto and GL. Take the higher of the two.
An umbrella policy covers your liability exposure beyond the limits of your home and auto policy. I don’t know why a lack of wind and hail coverage on the house would impact umbrella eligibility.
There are companies that do standalone umbrellas as long as you can provide proof of your home and auto policies. You may have to find another broker if yours doesn’t have access.
You supposedly have over 10m in assets but are balking at $1100 a year for an umbrella? Call an indy agent, they can get you a stand alone umbrella for whatever amount you want. You’re not going to like the price. The most reasonable prices come with bundling.
You’re severely underinsured for that kind of net worth/assets. I’d bump up your underlying Auto and Home liability to the max, which typically lowers the cost of the Umbrella policy more than it increases the Home/Auto (not in all cases but often and it’s still a good idea anyway). Then, as others have said, get a standalone $10M Umbrella and pay whatever it cost to protect yourself. You’re going to wish you paid whatever it cost if you hit and injure someone and they sue for everything you have. Verdicts are astronomical in most jurisdictions so protect yourself.
When you do these asset calculations are there things you exclude? House value? 401k, pension? Are any of those “protected”? I’ve been trying to calculate how much I need.
At $10M+ in assets, you might want to work with some sort of private client group/high net worth broker who offers highly tailored coverage across all exposures – home, auto, umbrella plus some things you may not think of that the wealthy may have to deal with. When you have substantial assets, you have a target on your back if something bad happens (like hitting a school bus or being involved in an accident that leads to paralysis, brain injury, or anything requiring lifelong care, significant loss of future earnings, etc.).
Do you need $10M in liability limits? Probably not, but at only $2.3M in combined liability limits, you’re leaving the bulk of your assets exposed, all to save maybe a grand or two a year. Easy for me to say – it’s not my money – but I know I’d sleep a whole lot better spending an extra $5-$10 a day for enough limits to keep my assets safely out of reach. Besides, it’s the first million or two in umbrella limits that cost the most, each additional million gets cheaper.
Even if you take only the $2M umbrella for $1,100/yr, that’s practically nothing compared to the peace of mind it should provide. If I’m you, I’m considering at least doubling that even it it means paying $2K+ in premium. A few seconds of distracted driving, a slick road, etc. could suddenly put almost everything you have at risk, and you’ll wish you spent the price of a daily cup of coffee on more limits. Good luck.
I know of at least 2 programs that are stand alone personal umbrellas, that offer up to $5,000,000 limits, quoted instantly, online, by participating brokers. Premium in California is about $1300. Higher limits available, subject to submission and review.
$10M is around $2300 here in NC. Depending on the number of cars and drivers. So it doesn’t seem that steep to me. I can’t understand the logic of wanting to self insure your home against storm damage. Seems like quite the losing proposition to me. I see it all the time, people not wanting to insure property because they can afford the repairs. But why would you want to when you can have someone else do it for much much less? Stepping over dollars to pick up dimes.