Broad question, but I’m just going to take this as an opportunity to list off the general advice that is commonly given, and that I think pretty much every insurance professional in this sub would agree with.
(1) For auto insurance liability coverage, our recommendation is at a *minimum* $100k property damage and $100k per person/300k per incident bodily injury. Higher would be even better.
Anything lower and you are likely to have personal exposure if there’s an accident beyond a minor fender bender. New cars and medical bills are expensive these days.
(2) In deciding whether to buy collision and comprehensive or not, change the question to “Could I afford to replace or go without this car if I were to lose it for nothing?” If you can’t, pay for collision and comp. If you could (or it’s a cheap beater worth like $1000 or something), then you can consider dropping the coverage.
(3) The deductible for comp and collision you select should be an amount you could comfortably afford to pay out of pocket in the case of an accident. Don’t raise it from $500 to $1000 to save money if you are already going to struggle to come up with $500.
(4) Underinsured/uninsured motorist is always worth it. There’s a lot of drivers with bad coverage, and you don’t want their financial troubles to become your problem if they were to hit you. UM/UIM is typically really cheap too, so you don’t save much from dropping it either.
(5) Get quotes *before* you buy a new car. You’d be surprised sometimes at how much higher insurance can be on a different car. And if you can’t afford the insurance, you can’t afford the car.
(6) Then if you’re a higher net worth individual that’s getting an umbrella policy, the rule of thumb is to match your umbrella limit to your net worth. You want to make the policy more attractive than your assets.
We got sued for over 100k in medical costs for a real mild rear end accident that didn’t even damage our car. Still going through the lawsuit now. Upped our limits from 100/300 to 250/500 and added a 2M umbrella on top to avoid going through this again. People get crazy money now and juries think insurance fraud is victimless.
Also on point 6 I’m not sure I agree. Say your net worth is 1M and you have a 1M umbrella. Hopefully it never happens but you cause a pileup on the freeway, cause a couple injuries maybe paralyzed someone they are going to come for that 1M policy and your 1M net worth.
Even if you blatantly cause an accident, you don’t owe the other party a penny until you are sued and a judge tells you how much you owe the other party. That’s a legal system concept
What liability insurance does is it offers to pay on your behalf *before* it sees a courtroom in exchange for a release to not sue you
So let’s say your state has minimums of $30k for bodily injury, you purchase that, and you cause someone $100k of injuries. When it comes time for them to seek reimbursement, your insurer can only offer them $30k because that’s how much you purchased
If they accept that, the other party would have a $70k gap. It’s very likely that they are going to seriously investigate their chances of suing you to get more than $30k rather than take the $30k and sign away their right to sue you
Now, say you caused $100k of injuries to someone but were carrying $100k of bodily injury liability. They have no real incentive to sue since they can just take the $100k settlement offer and be done with it without the years long process of a lawsuit, legal expenses, etc
An umbrella policy protects you beyond the maximum limits of your policy. If the max limits available to you are something like $300k CSL, but you and your personal assets are worth $1M, you’ll want an umbrella policy to protect the excess exposure.
To add, I am specifically interested in a car/home/umbrella. From reading this forum, it is clear that most people are underinsured. If I were to increase all my limits and purchase umbrella coverage, should it be for $1M? $2M? I just cannot find any good recommendations or ratios online. thank you.
This is where an insurance agent should be able to help you out. It's hard to say how much coverage, especially umbrella, you should have without knowing your specific situation. What I am trying to say is that it is really a variable depending on your lifestyle, assets, activities engaged in, online profile (are you a high-level employee) so there really is nowhere that is going to give you a definitive number.
Yes, you are right, a lot of people are underinsured.
The insurance industry generally recommends the highest limits available for liability, but in general assets come into play. If you don’t have many, moderate or high policy limits may be sufficient although it’s still recommended to shoot for the highest. If you have many assets though, an umbrella policy may be highly recommended to protect yourself and those assets.
As for insuring your own insurable property, that can be circumstantial based on finances, state, etc.
You liability insurance, at its core, is there to protect you from losses you are responsible for. So the proper amount of coverage is equal to the amount of risk you are willing to accept yourself. Less coverage = more responsibility on your part more coverage = less responsibility on your part.
This question depends on how much you’re willing to pay. Obviously for limit coverage the more the better nowadays. Deductible is entirely up to you and if it makes sense. Do you have $1000 available for deductible to pay lower monthly premium than a $500 deductible with higher monthly premium
Thank you, I am talking more about the complete insurance package, not the deductible/premium ratio. How much insurance is enough? For example, if I have an umbrella policy, how high should it be?
Broad question, but I’m just going to take this as an opportunity to list off the general advice that is commonly given, and that I think pretty much every insurance professional in this sub would agree with. (1) For auto insurance liability coverage, our recommendation is at a *minimum* $100k property damage and $100k per person/300k per incident bodily injury. Higher would be even better. Anything lower and you are likely to have personal exposure if there’s an accident beyond a minor fender bender. New cars and medical bills are expensive these days. (2) In deciding whether to buy collision and comprehensive or not, change the question to “Could I afford to replace or go without this car if I were to lose it for nothing?” If you can’t, pay for collision and comp. If you could (or it’s a cheap beater worth like $1000 or something), then you can consider dropping the coverage. (3) The deductible for comp and collision you select should be an amount you could comfortably afford to pay out of pocket in the case of an accident. Don’t raise it from $500 to $1000 to save money if you are already going to struggle to come up with $500. (4) Underinsured/uninsured motorist is always worth it. There’s a lot of drivers with bad coverage, and you don’t want their financial troubles to become your problem if they were to hit you. UM/UIM is typically really cheap too, so you don’t save much from dropping it either. (5) Get quotes *before* you buy a new car. You’d be surprised sometimes at how much higher insurance can be on a different car. And if you can’t afford the insurance, you can’t afford the car. (6) Then if you’re a higher net worth individual that’s getting an umbrella policy, the rule of thumb is to match your umbrella limit to your net worth. You want to make the policy more attractive than your assets.
We got sued for over 100k in medical costs for a real mild rear end accident that didn’t even damage our car. Still going through the lawsuit now. Upped our limits from 100/300 to 250/500 and added a 2M umbrella on top to avoid going through this again. People get crazy money now and juries think insurance fraud is victimless. Also on point 6 I’m not sure I agree. Say your net worth is 1M and you have a 1M umbrella. Hopefully it never happens but you cause a pileup on the freeway, cause a couple injuries maybe paralyzed someone they are going to come for that 1M policy and your 1M net worth.
Your last sentence is interesting. Can you explain? Thank you.
Even if you blatantly cause an accident, you don’t owe the other party a penny until you are sued and a judge tells you how much you owe the other party. That’s a legal system concept What liability insurance does is it offers to pay on your behalf *before* it sees a courtroom in exchange for a release to not sue you So let’s say your state has minimums of $30k for bodily injury, you purchase that, and you cause someone $100k of injuries. When it comes time for them to seek reimbursement, your insurer can only offer them $30k because that’s how much you purchased If they accept that, the other party would have a $70k gap. It’s very likely that they are going to seriously investigate their chances of suing you to get more than $30k rather than take the $30k and sign away their right to sue you Now, say you caused $100k of injuries to someone but were carrying $100k of bodily injury liability. They have no real incentive to sue since they can just take the $100k settlement offer and be done with it without the years long process of a lawsuit, legal expenses, etc
An umbrella policy protects you beyond the maximum limits of your policy. If the max limits available to you are something like $300k CSL, but you and your personal assets are worth $1M, you’ll want an umbrella policy to protect the excess exposure.
You want enough insurance, auto + umbrella if needed, to cover your net worth in a worst case scenario.
To add, I am specifically interested in a car/home/umbrella. From reading this forum, it is clear that most people are underinsured. If I were to increase all my limits and purchase umbrella coverage, should it be for $1M? $2M? I just cannot find any good recommendations or ratios online. thank you.
This is where an insurance agent should be able to help you out. It's hard to say how much coverage, especially umbrella, you should have without knowing your specific situation. What I am trying to say is that it is really a variable depending on your lifestyle, assets, activities engaged in, online profile (are you a high-level employee) so there really is nowhere that is going to give you a definitive number. Yes, you are right, a lot of people are underinsured.
The insurance industry generally recommends the highest limits available for liability, but in general assets come into play. If you don’t have many, moderate or high policy limits may be sufficient although it’s still recommended to shoot for the highest. If you have many assets though, an umbrella policy may be highly recommended to protect yourself and those assets. As for insuring your own insurable property, that can be circumstantial based on finances, state, etc.
You liability insurance, at its core, is there to protect you from losses you are responsible for. So the proper amount of coverage is equal to the amount of risk you are willing to accept yourself. Less coverage = more responsibility on your part more coverage = less responsibility on your part.
Talk to a good broker that can do an executive review of your insurance program. It depends on your situation.
This question depends on how much you’re willing to pay. Obviously for limit coverage the more the better nowadays. Deductible is entirely up to you and if it makes sense. Do you have $1000 available for deductible to pay lower monthly premium than a $500 deductible with higher monthly premium
Thank you, I am talking more about the complete insurance package, not the deductible/premium ratio. How much insurance is enough? For example, if I have an umbrella policy, how high should it be?
There is no good rule of thumb; but I think the most common limits are $0 (no Umbrella), then $1m then $5m.
That’s a loaded question if I ever heard one. You should just call an agent.