as you point out the cost is pretty reasonable, especially for the added coverage.

As part of being eligible for the umbrella - which tends to be much cheaper than auto. Keeps you from under insuring on auto and leaning on the umbrella to make up that difference.

Which varies by state. My states max out at 250/250/500. The umbrella then adds on top of that level -- if an auto accident is the trigger for the event, and pays the entire amount if it is a different type of event that's covered.

As I noted above -- if you have a net worth over 1 MM (house equity, savings, earning potential also factored in) then you really need to step up to 3 MM which is in the 1k per year range (+/- depending on what all you own, your profile, etc).

As I pointed about in my post above -- 1 MM isn't a lot anymore for damages. Many accidents with property damage are going to rapidly get over 1 MM.

"Many accidents with property damage are going to rapidly get over 1 MM."

Lot of McLaren vs McLaren head-on collisions where you live?

Property damage is hardly ever the primary expense in an accident. The cost of the car is going to be $30-40,000 for almost every car on the road. It's the cost of medical that's the driver (pun intended).

The potential downside is creating more room for debate over the value of the claim by providing more collectible assets.

If you live in a debtor-friendly state, umbrellas can invite litigation instead of protect against it.

but if you've got assets auto generally isn't close to enough to deal with the ambulance chasers for whom every accident derails the career of the next Bill Gates.

sue. If you have a net worth over 250k you absolutely need an umbrella policy. As I described in my top post -- one event can ruin your entire life if you don't have one. $250 per year covers that use case.

If you have over 1 MM of assets combined with ability to pay -- you need 3 MM to 5 MM policy. Don't forget ability to pay. If you are working and making 100k per year and are young-ish (below 40) they will factor that in and will sue for more than you have, get a judgment and then put a lien on your future earnings. Ultimately driving you into a settlement above what your assets are but below what a 20-30 year payment plan would have been.

I know this first hand from people that have been sued for what their kids have done -- car accidents of adult aged kids.

a negligent entrustment theory of liability, but as a rule, no, you're not liable for your kid's tort.

In Texas, for example, your entire homestead, one car for each licensed driver in the household, $30K in personal property, retirement accounts, 529 accounts, most insurance, annuities, pensions, and a smorgasborg of farm animals. And your wages can't be garnished.

There's plenty of people in Texas with million dollar homes who would be pretty difficult to collect on.

That being said, the downside of being kept in a suit where your insurance company is defending you is low compared to the downside of having your assets taken from you. If you're unsure, the extra couple hundred bucks a year for an umbrella policy is probably not a bad decision.

I just don't think there is any firm rule to go by for this stuff, and reject the idea that anyone can say what sort of product is a "must" without getting that fuller picture.