My house is in a personal asset trust and most of my money is in retirement accounts, 401K and Roth IRA. My trust lawyer says my house is protected from lawsuits and I believe my 401k is and maybe or maybe not my IRA is I live in CA. Do I really need an umbrella policy to protect these assets? Clark only mentioned that it wouldn’t hurt just to be on the safe side.
Thanks for any input.
It’s cheap insurance. I pay something like $150 per year for a 1 million dollar policy. Your homeowners insurance agent can add it.
same here, $150/yr
If you mean $1,000/yr @ 150 per mil you probably are over-insuring by getting $6M+ in liability insurance. Once you pass $3M or so you probably are better off self insuring the balance of your net worth exposure. $2M buys a lot of lawyer time.
BTW: My Liability Umbrella from USAA went up to $254 per mil this fall.
I had I $2 million in umbrella coverage. Then I discovered in my State, many assets can never be awarded in a lawsuit… your house, car, tools, firearms, a certain amount of agricultural land & livestock, and RETIREMENT ACCOUNTS. My assets at-risk were much less than $1 million, so this year I cut my umbrella policy in half.
Mine is $200/year for $1 million. Here’s a different way to think about it. No matter what your assets are, large or small, if something happened and you were at fault, don’t you think it’s fair to pay for your negligence?
For example, if you backed your car into the street without looking and ran over a toddler, are you saying “Tough luck. I’m going to declare bankruptcy and you’re not getting a dime”?
USAA’s liability umbrella coverage was between $150 & $175 for ten years or so. Then, this October it jumped to $254.
Well…if the attorney declares that they are suing me for way more than the assets that I have…I am definitely declaring bankruptcy.
That’s a good reason to update the car you drive with automatic emergency braking (AEB) and an auto-braking system that detects things in your path and brakes automatically when you are backing up.
I was convinced of their value when four weeks after I bought my 2017 Santa Fe a guy made a turn right in front of me and when I hit the brake pedal it was already depressed and stopping the car. I missed hitting him by less than a foot.
That sounds like good advice, I paid around $850 for a 3 mill policy recently and decided enough is enough. After talking to RLI I don’t really trust them since I get conflicting information on some questions I had but the underwriter did give me the answers I wanted to hear. I am replying to H200h but I still don’t know how to use this darn site since changed it years ago. Oh well.
That was just a quick example off the top of my head. What about if you had a tree on your property that was dead or had dead branches, and on a windy day it falls on your neighbor’s house or car and causes extensive property damage.
Not all lawsuits are frivolous, not all lawyers are crooked, and in a fair world we should pay if our negligence causes harm to others or damage to property. We can pay for our mistake, or have insurance to cover it, or shirk our responsibility and just say “Go ahead and sue me. I don’t have any assets.”
Also think if you were the victim of someone else’s negligence. Say they have a nice house, nice car, maybe they’re a doctor or business owner, and then they refuse to pay for your damages. Would you get a lawyer and sue? Pretty sure most of us would.
I have a 9 acre farm which is leasehold (I own what is above ground and the lessor owns the land). I was required to get an umbrella policy to ensure that I and the lessor are covered for a minimum of $1 million dollars. This is because there are laborers and visitors who might be injured.
Really, you think a court would let you declare bankruptcy to avoid paying a suit judgment? Don’t hold your breath on that one!
You have to remember liability is based on the principle of negligence, not the extent of the damage. There is an issue the insurance industry wrestles with, what’s enough coverage? Done say protect your assets which can take a lot of limits. There is the issue of being insurance poor. Or, is having higher limits just a target for a plaintiff’s attorney to shoot for. As you buy more limits the cost per million dollar layer does go down. If you have millions to protect, you need to be talking to a lawyer that handles trusts and investment accounts. While you may bd correct that in your state certain assets are protected, I doubt you could protect your car. Just ask Ruddy Giuliani. I have a $1 million umbrella bc I had a pool. Liability is assessed differently for things like that. I don’t have a pool now but I kept the umbrella. Stuff happens and a million dollars isn’t what it used to be. You can hit some cards around Atlanta and just the property damage could be $250k and damage that MLB passenger trip and coming rapper and $1 million may not hold it. And most people don’t carry over $300k in liability anyway.
What do you think bankruptcy is?
California (22,721 businesses), Florida (17,214 businesses) and Texas (13,652 businesses) are the States with the most number of Personal Injury Lawyers & Attorneys businesses in the US.
We are the most litigious society in the world…which is certainly a factor in how much things cost…especially in healthcare.
It’s the price we pay for living in a free enterprise Democratic Republic, I think it’s worth it. 
My USAA umbrella went up 40% for 2025 renewal - when I complained they said - “wow, that’s a big increase! Hope you can stay with us, but that’s the price!”
Your home and 401k are protected - is my understanding. You need to have at least enough additional liability protection to cover all other assets. If you have $4m in assets outside of home equity - cash, retirement accounts outside a 401k - you need at least that much coverage in an umbrella that protects you above and beyond the liability insurance of your home/auto policy. Good luck!