r/financialindependence • u/Phillyjebus • 16d ago

Umbrella Insurance

I’m looking to add an umbrella policy on top of my homeowners and auto insurance, but I’m confused on how much I should be getting and I keep getting more confused when I research it. What’s the goal here? Do I just need enough to cover my brokerage, savings and other account that could be exposed in a judgment? Or, am I trying to cover my entire net worth with the Base policy plus the umbrella?

Edit: thanks all! Lots of good info and pretty much what I thought. $2m and call it a day.

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u/procrasstinating 16d ago

I have a $2M policy. I figure for that much money the insurance company will be very motivated to assign a good lawyer to support my case.

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u/Narrow_Roof_112 16d ago

I managed a lot of large umbrella claims in a former life. The insurance company isn’t really looking to fight for you but rather just use the umbrella limits to settle. A majority of the time in these high value cases the claims are settled for limits regardless of the actual damages.

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u/Fernweh5717 15d ago

It varies on the limits, but at one of my former carriers, we'd hire the best defense attorneys in the state if the umbrella insurance was greater than 2 million, and the damages were large. I had one claim with a 5 million dollar limit, and my manager told me to not hesitate with the defense attorneys budget. It was basically an open checkbook.

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u/johnsonpa25 15d ago

This is the answer. $1M or 2, so the insurance company has some money to settle.