[USER]

When do I need umbrella insurance? Dual income 35 yo couple, no kid, have a duplex that we live on one side and rent out the other side, have half a million asset in 401k, IRA, and brokerage account.

Appreciate any inputs you might have

[Kelly]

I’m an insurance agent. Your liability limits need to be slightly more than your assets to protect you in an accident.

You should be able to increase your underlying auto and home liability limits before you need umbrella policy.

[Erica]

When you have more than you can afford to lose in a lawsuit. It’s insurance, so what risk would you rather pay someone else to carry.

We decided young driver’s was our threshold, but that isn’t a factor for you.

[Michael]

Couple of thoughts…you rent out a portion of your duplex, I’d want some liability protection there.

While your assets are partially protected (401k, maybe IRA depending on your state) your taxable account and your investment property is not.

I would likely get an umbrella based solely on being a landlord.

[Stephanie]

Umbrella insurance is ridiculously cheap for the peace of mind it provides.

If you have anything to lose financially it’s worth having

[Ashley]

Always worth it. And you want it high enough that someone is likely to be satisfied with an easy settlement vs suing for personal assets.

[Ronil]

I tend to get umbrella insurance to cover above our net worth with the assumption that our net worth will take some time to get to the covered amount and then change the amount every few years.

So, for example, if your net worth is 500K, get the lowest insurance amount which I believe is $1 million and once you net worth is at that, then change it to $2 million in coverage, etc…

[Anna]

Delivery drivers slipping on ice, random kids running in your yard and trip on a hole, so many reasons to have umbrella insurance.

[Ron]

If you rent a place out, for sure you’ll need it (IMO) as you are operating a business. I discussed extensively with my insurer to try to find out situations for which I needed it.

I am single with my adult kids independent and living far away. I already have $2 million liability coverage on my $300K-ish house.

I don’t own or drive a car or an other motor vehicle. I don’t have a bike nor a pool at my house. I don’t have an online presence or own a business.

I very rarely drive my brother’s car (last time September 2024).

I decided to renew it mainly because of the latter and because in my situation, but not everybody’s, it’s super cheap.

I discussed at length with an agent for my insurer. They asked all kinds of questions. They didn’t ask about the value of my taxable or retirement accounts though.

I believe in some, if not most, states retirement accounts tend to be protected, but I assume taxable cash and investments won’t be.

I thought that perhaps the main reason I would need umbrella would be to protect my taxable liquid assets, which aren’t huge, but who wants to be sued and lose $50K?

Also, I’m expecting main area of future growth will be in my taxable holdings so I’m expecting them to be much higher in the future.

I can no longer contribute significantly to retirement accounts.

If you risk losing either taxable or retirement assets if sued I have always wondered why I wasn’t asked for an approximate value of those?

They’ll ask about jewelry, pianos and other valuable household assets, but seem to have no interest (in my experience at least) in the level of liquid assets.

If you find you are asked about your level of liquid holdings in your discussions with potential insurers, please update me/us here if you can

[Alice]

We got an umbrella when we hit $500K in net worth. It is very cheap insurance.

You may need to change your coverages on home and auto insurance.

[Author]

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