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Insurance Gurus: Umbrella Policies?

Gonzo

Gonzo

Well-Known Member
Mar 10, 2009
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Long story short, when our older daughter started driving years ago I purchased an umbrella policy to go along with our comprehensive auto coverage. I'm a peace-of-mind guy and teens do stupid things. Then a handful of years ago, younger daughter got into a car accident, more than a fender-bender but everyone walked away fine, no one was taken to hospital or anything, I actually drove her car home. Maybe 6-12 months later, I'm being sued and they're going for my coverage limit, well over $1 million, possibly more according to their attorney.

This thing hung over me for 2+ years and was a daily source of anxiety. My question... in your experience, do umbrella policies just make you a target for stupidly large lawsuits if/when something like this happens and you're liable? I understand if something happens and I'm liable and the damages are clearly over the $250k bodily injury liability that an umbrella protects me beyond that. But how common is it for people like me... not wealthy, don't have significant assets beyond some home equity and retirement savings... to be sued above and beyond their coverage limit? Maybe it is. I don't know. I've just wondered if my stress levels would've been better off without the umbrella.
 
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How do they know you have an umbrella policy? No snark, I don't know when/how that would be revealed.

For what it's worth, I have a $2M umbrella policy.
 
gypsyroad said:
How do they know you have an umbrella policy? No snark, I don't know when/how that would be revealed.

For what it's worth, I have a $2M umbrella policy.
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Pretty sure plaintiff's counsel has easy access to all the details of my insurance coverage. They initially came in right at my coverage limit and said it may go higher.
 
Gonzo said:
Pretty sure plaintiff's counsel has easy access to all the details of my insurance coverage. They initially came in right at my coverage limit and said it may go higher.
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If everyone was fine, and I am sure your insurance paid for their damages, what exactly are the suing for?

No one had pain and suffering, damages would be minimal, loss of income minimal. This seems like a prime example of frivolous, unless there is more to the story?
 
Gonzo said:
Yeah, it just settled, I'm not yet sure what it settled for but it was within my coverage. It was just a lot of stress while it kept dragging on.
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So if you dont know the details, I assume they sued your insurance directly, not necessarily you? Although you would be liable beyond your coverage?
 
2speedy1 said:
If everyone was fine, and I am sure your insurance paid for their damages, what exactly are the suing for?

No one had pain and suffering, damages would be minimal, loss of income minimal. This seems like a prime example of frivolous, unless there is more to the story?
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Surgeries, lost wages, lost future wages, emotional distress...
 
2speedy1 said:
So if you dont know the details, I assume they sued your insurance directly, not necessarily you? Although you would be liable beyond your coverage?
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Essentially they sue the insurance company but if you hold the policy you're the one named in the suit. If they go above and beyond the coverage you're responsible for it, if they try for punitive damages your insurance doesn't cover that.
 
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Gonzo said:
Surgeries, lost wages, lost future wages, emotional distress...
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Ah so, there were more injuries than I originally thought reading your initial post. That makes more sense then.

Your initial post said, no injuries, everyone walked away and no hospital. So a bit confusing.
 
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2speedy1 said:
Ah so, there were more injuries than I originally thought reading your initial post. That makes more sense then.

Your initial post said, no injuries, everyone walked away and no hospital. So a bit confusing.
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Well, according to the other side. He was fine at the scene of the accident. Then later on apparently needed multiple surgeries, couldn't work, etc.
 
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Lawyers go where the money is. Umbrella policy, or large bank accounts definitely put a target on you. You can probably thank an alumnus of your school. That being said, doesn't sound like there is a good chance they will get what they are asking if your description is correct. It still will be costly even if you win and you never know especially if a jury is involved. I understand not an option in this case but for this reason I switch registration and insurance over to my kids name as soon as they are 18. No one is going to suit a young kid with no assets and low limits.

Edit: If there are alleged injuries get your own lawyer not just the insurance companies. Maybe there are legal things you can do to protect your assets.
 
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Gonzo said:
Long story short, when our older daughter started driving years ago I purchased an umbrella policy to go along with our comprehensive auto coverage. I'm a peace-of-mind guy and teens do stupid things. Then a handful of years ago, younger daughter got into a car accident, more than a fender-bender but everyone walked away fine, no one was taken to hospital or anything, I actually drove her car home. Maybe 6-12 months later, I'm being sued and they're going for my coverage limit, well over $1 million, possibly more according to their attorney.

This thing hung over me for 2+ years and was a daily source of anxiety. My question... in your experience, do umbrella policies just make you a target for stupidly large lawsuits if/when something like this happens and you're liable? I understand if something happens and I'm liable and the damages are clearly over the $250k bodily injury liability that an umbrella protects me beyond that. But how common is it for people like me... not wealthy, don't have significant assets beyond some home equity and retirement savings... to be sued above and beyond their coverage limit? Maybe it is. I don't know. I've just wondered if my stress levels would've been better off without the umbrella.
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I'm no longer in the insurance business, but I'm a huge believer in umbrella policies. In 10 years as an agent, I had two clients who had their asses saved by having one.

In my experience, your insurance company may tell the other party they are willing to pay out the umbrella immediately IF they agree to not sue you over and above the limit. The prospect of a quick payout vs. a drawn-out legal process may be enough to encourage them to settle. I hope that is how it works out for you. Best wishes.
 
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Just to be clear, my case has settled. No harm to me above my coverage. Insurance company and lawyers did a great job advocating for me. I was just unsure if having the umbrella policy created a target and more stress than not having one, but from the sounds of it, it's a good idea.
 
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Don’t know the answer to your question about if it makes you a target, but would still favor getting an umbrella overage.
 
The average settlement is far less than $100K, according to Forbes Magazine.
 
Tbh as sue-happy as our culture is now, umbrella is always a good idea IMO. Super inexpensive for the coverage you get.

Just upped mine to $5m last year
 
Gonzo said:
Just to be clear, my case has settled. No harm to me above my coverage. Insurance company and lawyers did a great job advocating for me. I was just unsure if having the umbrella policy created a target and more stress than not having one, but from the sounds of it, it's a good idea.
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My feeling is your net worth makes you a target. The umbrella is to protect your worth, which it sounds like it did.
 
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Gonzo said:
Just to be clear, my case has settled. No harm to me above my coverage. Insurance company and lawyers did a great job advocating for me. I was just unsure if having the umbrella policy created a target and more stress than not having one, but from the sounds of it, it's a good idea.
Click to expand...
I think one advantage of the umbrella policy was that it was handled by the attorneys for the insurance company. You wonder if you would have been sued if you didn’t have the policy. Alternatively, you might wonder how much stress you would have been under if they sued and you didn’t have the coverage. I had a friend whose parents were sued after his brother was in an accident. They did not have an umbrella policy and their auto insurance immediately cut a check for the liability limit and left the parents to hire their own attorney to defend against the excess. My friend was evangelical about buying umbrella coverage so the insurance company would defend the suit.
 
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