What is your opinion on umbrella insurance. I saw in one comment (I did search your blog) that at least one of you has it. My current quote [in CA] is $184/yr for $1M of coverage (deductible not clear right now).
Umbrella insurance is something you get if you have substantial assets someone could potentially take from you if they pursued a frivolous lawsuit against you (or even a not so frivolous lawsuit! but we assume our readers will only be pursued by frivolous suits). It also fills in some of the gaps from your other insurances, but in our opinion the lawsuit thing is the big thing. $184/year for $1M seems reasonable.
The insurance is nice because you won’t go broke if you lose one of these suits and because the insurance company has skin in the game, they will often go to bat for you and help you out with the lawsuit itself (so I’ve heard, anyway).
If you are the type who thinks that a potential lawsuit may not be a random act of chance, then be sure to read the fine print on your policy. Many things that could be your fault are excluded from the insurance plan, and if one of those is your particular vice, the umbrella policy isn’t going to help you if you get sued. You also may be excluded if you run a home daycare, and I’m sure there are other exclusions for other higher risk (of lawsuit) occupations.
We got ours at the point that we had “real” assets that we were willing to pay something under $200/year to insure that we didn’t lose them. We also thought at that point our assets might be attractive enough for someone to bother going through a lawsuit to get them if given the opportunity. We bought umbrella about 3 years after getting real jobs, but I don’t know what our net worth was at the time, just that it was high enough that $200/year seemed worth it to our loss averse selves.
So that’s our thoughts on umbrella insurance. Grumpy readers, what are your thoughts on umbrella insurance? Do you have it (and why or why not)? When did you get it?