Here’s Why You Need An Umbrella Policy (And How Much To Buy)

[@tonysellers7937]

Ari - good illustrations. One epiphany for me was that insurance companies will offer a "reasonable" price for the Umbrella but they REQUIRE that you max out the comprehensive coverage on EVERY vehicle in your fleet which raises your overall insurance cost more dramatically than you probably realize.

[@earlyretirementari]

An important consideration!

[@mumap5]

Thanks, Ari. It was a great video, and it helped motivate me to get umbrella insurance for my wife and me. Can you do a video on putting assets into a trust and the pros and cons of doing so?

[@hm51008]

Thanks for the great content. Very timely, as we are re-evaluating how much umbrella insurance we need to carry

[@earlyretirementari]

You’re so welcome!

[@Mary-tj5qx]

this is information i have been looking for you. you guys rock!

[@earlyretirementari]

You’re welcome!!

[@Faben202]

Great topic and recommendations. One more reason to have a decent limit is because if you don’t, wage garnishment becomes a possibility. This varies by state, but in my state they can garnish up to 20% of your income until the other party has been paid in full.

[@earlyretirementari]

Well said!

[@kaytee1617]

Good topic. Thank you for this.

[@earlyretirementari]

My pleasure!

[@Engineers_Shred_Too]

Umbrella policies AND Curb?!? Best video! Helpful insight on limits, thanks.

[@earlyretirementari]

Best show ever??

[@Engineers_Shred_Too]

@@earlyretirementari too close to call vs Seinfeld, but Curb is a great show not everyone knows about!

[@earlyretirementari]

@@Engineers_Shred_Too well said. Underrated

[@bills.4573]

Remember umbrella coverage is in addition to the underlying coverage, so for an auto accident covered for $500k on the auto policy plus $2 million umbrella equals $2.5 million total coverage. And yes, with that level of coverage (where the defendant is an individual) the plaintiff will settle within the limits of that total coverage.

[@OR_TR_Hunter]

Another consideration for some insurance carriers is the requirement to have the maximum individual coverages on vehicles before they will issue umbrella coverage...at least it is that way with Safeco.

[@earlyretirementari]

You are correct!

[@janethunt4037]

Thank you, Ari. Great explanation of how to determine how much to get. Let's not overdo or underdo that.

[@earlyretirementari]

You’re so welcome!

[@sungee3333]

Where can you buy umbrella. Ma auto home agent doesn’t sell them.

[@deirika0613]

Good stuff Ari, Thank You! Insurance is like cauliflower. I don’t like the extra cost, but it does help me sleep.

[@earlyretirementari]

YES! I should pick a new vegetable for umbrella insurance..

[@daveharness70]

I think you should ask more people what they actually pay for the umbrella insurance. It is true that the home/vehicle needs to be "maxed" in order to obtain an umbrella (in my experience), which increases rates quite a bit. But my $2M umbrella that I've had for over 5 years is now over $1,100/year. Here is my summary data: home (~$450k), rentals ( $400k), kids at home (3, 2 of which are drivers), other investments (401k, Roth, etc. ~$1M), cars ($100k). That being said, we had to request ("sue") our insurance company when one of our kids was hit by a car and the driver was woefully underinsured. In that case, the $300k limit was reached on our homeowners policy and about $50k was utilized from the umbrella. Prior to that event, the policy was still $600 IIRC. So, it doesn't just work when YOU get sued. So while I'm glad that we have the higher limits, I'm not sure about keeping the umbrella once the kids are grown and gone, and I get rid of the rentals. It would seem that the rates will be quickly approaching $2k/year before too long....Or may just grin and bear it.

[@csilver7405]

Great topic. Appreciate your videos. Do government 457bs have protection similar to ERISA? And are thos3 assets still protected if one does a Roth conversion?

[@cuengr9677]

Do you get full access to the software in the academy or is it limited unless you are also a client?

[@earlyretirementari]

Full

[@johnmckibb]

Good video. If you have assets of $1M, and umbrella insurance of $2M as you describe, you are properly insured. What concerns me is if you get sued and lose for $5M, insurance covers $2M but you still lose everything? Makes me want to get $5M in insurance when I have $1M of assets?

[@MeltingRubberZ28]

Typically lawsuits don't go this way, at least per my agent. Typically they will just go for whatever you are worth (ie policy level). He said if you do something heinous and they make an example out of you, insurance won't matter.

[@stevenmeulink2177]

Exactly. So why not $10M or $20M? At some point you need to choose a reasonable level of insurance that allows you to sleep well. After that, exercise prudent living (drive defensively, shovel your sidewalk, don't slander) and then get on with living your best life.

[@JoeBlount-y3h]

Here's the question I have never found an answer to: Lets modify Ari's example - he has net worth of 2 million. 1M is in 401k, and protected. the other $1M is in cash. Assume Ari's kid starts a fire and burns down an apartment complex, causing 5 million in damage. How is this not a $5 million liability? i.e. why don't they take the $1M in cash AND $1M in insurance, and comb over Ari's assets before giving up on the other $3M? I can understand a plaintif being pragmatic and not waisting their time pursuing money you don't have. But I've never seen an explanation how $1M in insurance can protect $1M in assets against a several million $ liability. What is intuitive to me would be: get an umbrella policy for as big of a liability as you feel you need. For example, if you have $1M and want it to surviive a $5M liability, get $5M in umbrella coverage. Clearly I am wrong in this, but I've never found a specific explanation for why I am wrong.

[@cheetahb5]

Thanks Ari. I’ve carried a million for many years, but now I need to go review all my positions and see if I need to boost my coverage.

[@earlyretirementari]

You’re very welcome. Don’t pay more than necessary and don’t be underinsured

[@toddmaniatoddmania9844]

2:58 to 3:03- wax on, wax off.

[@SasiponPanavaravatn]

I feel lost now that I'm 39 years old and jobless. With $425,000 saved for an early retirement at age 50, $10,000 in an HSA, and a property that could yield an extra $200,000, what opportunities do I have for passive income?

[@RhysHuntoffice]

it's reasonable to consider hiring a financial counselor at this stage, but delaying retiring for a while may be a more wiser choice

[@SasiponPanavaravatn]

I'm wondering if I should merge all of my investing accounts into one. How should I proceed and are there any repercussions I should be aware of if I decide to do this? In addition, I plan to sell my property, which could result in an additional 200K over time. Is it better to diversify over a few different industries or combine everything into one investing account?

[@RichardGeorge-uj9iu]

These are critical questions for a financial planner. I met mine at a NYSE event and she assisted my wife and myself with rebalancing our 1.7 million portfolio between a regular IRA and a brokerage account. She has been trading with our authorization and has successfully recovered our financial losses three times over. We maintain and handle the market cautiously

[@drREGANBRUENGER-6687]

Wow! very impressive, my portfolio is currently stagnant. Who is guiding you please?

[@SasiponPanavaravatn]

Thank you. I emailed her a well written email and I spotted her profile here on the internet, I'm hoping she gets back to me soon..

[@jacobkowski7705]

So, $1.5 millions in my IRA is automatically protected without an umbrella policy?

[@earlyretirementari]

As of 2024, the federal bankruptcy code protects IRA assets up to $1,512,350 per person. This amount is adjusted every three years for inflation. The last adjustment was made on April 1, 2022, and the next adjustment is scheduled for April 1, 2025.

[@MeltingRubberZ28]

​@earlyretirementari I was told that it only covers 401k. It also covers IRAs? I have a 401k, traditional IRA, Roth IRA, etc. Are those all covered cumulatively under the 1.5M limit? Thank you!

[@earlyretirementari]

@@MeltingRubberZ28 you’re confusing ERISA protection with IRA asset protection

[@GP-fw8hn]

If my umbrella breaks I can buy another one. Don’t need insurance.

[@earlyretirementari]

HA!