It is tied to your personal net worth. Max out on what you

It is tied to your personal net worth. Max out on what you
by btd (2019-04-22 20:57:55)

In reply to: Auto insur. quest: 100K/300K/100K vs. 300K/500K/300K. posted by G.K.Chesterton

can afford. 250/250/500 is what I could get. Most people also need an umbrella policy. 1 million is the starting point and is about $275 per year for most people.

I have two use cases for you on why net worth matters and cause and effect of not having enough.

1) Guy near me had a daughter get into an accident with a semi truck. She was deemed at fault and caused the truck to wreck. It was hauling horses.

The truck company sued for $4 million of damages.

My friend was worth 10's of millions. He had to write a check for $2.9 million. Why? He had 100/100/300 and 1 MM of umbrella liability insurance. They took that 1.1 million from insurance and went after him for 2.9 more.

His point was he should have had at minimum 3 MM umbrella and 5 MM was the correct value for him.

His other point was in modern times, 1 MM is peanuts in an accident. Just about any accident gets into the 1 MM range for damages.

Now -- if you are worth 100k -- this doesn't matter. The auto insurance would have been all the other side got -- because their lawyer would have stopped them from going after someone with no money to pay. Same if you were worth 1 MM total. Still covered.

Case #2. Another neighbor of mine. Daughter hit someone and killed them. Criminally charged. 19 years old.

He had no umbrella policy. He was worth several million dollars. He just settled for about 1 million and he had to write a check for 900k. He's 55 years old. He's wiped out now. Has no idea how he will retire. Just lost his job recently too.

Last night he was all over me to get my umbrella policy set to 5 MM. It's about 2k per year for that level -- but if you have something to lose, you need it. That level covers you for 99.x% of whatever can happen. Basically 3 MM is the new 1 MM. 250/250/500 is the new 100/100/300. Like 40 is the new 30.

how are they suing the parent of a 19 year old? *

"Just about any accident gets into the $1 MM range"

for damages.

This is not even close to true.

You can make the point about appropriately protecting your assets without absurd hyperbole.

I laughed at that

If that were true no one could afford auto insurance. As someone who has been in the business several decades and managed an auto claim dept of over 100 adjusters I can attest to the fact that 1 mill in damages is very rare. 90% are probably under 20k. Not to say that an Umbrella policy is not wise.

This family member is just starting out, but I do have an

umbrella policy (1MM).

My question, as I asked the poster below, is whether or not IRA/401(K) assets are reachable via litigation.

Ira assets depends on the state

Generally some portion is unreachable by creditors, but how much is protected varies by state