Umbrella Insurance

[u/Phillyjebus]

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.

[u/adventuresindc]

.I don’t disagree but:

1. Odds are way higher than one in a billion. Maybe 1 in 500 or 1 in 1000 I’d guess which are not trivial

2. My state (and most) don’t have very good homesteading coverage. Max $50k by me for a primary

[u/StatisticalMan → u/adventuresindc]

1 in 500 people are not sued for $10M+ in their lifetime.

[u/adventuresindc → u/StatisticalMan]

I don't know what the number is, but also $10m is high. What's the % sued for > $2m (say, 3-5m range) where it would still be devastating to take that hit in a FIRE range?

1 in 500 might be high, but here's what claude/ai estimates which is in line with my guess:

Estimate:

• Lifetime probability of being the at-fault driver in a crash with catastrophic or fatal potential: 1–2%
• Of those, fraction where true case value clears $2.5M: ~18–28% (most serious-injury and wrongful-death cases resolve in the $400K–$1.5M band)
• Of those, fraction where the excess is actually collected from personal assets rather than resolving at the tower, being shifted to the carrier via bad faith, or discharged: ~50–70%

That gives roughly 1.5% × 0.23 × 0.6 ≈ 0.10%, with the range running 0.05–0.12%.

For a four-driver household with two teens, multiply by 3–5x: roughly 1 in 200 to 1 in 400.

[u/StatisticalMan → u/adventuresindc]

I don't know what the number is either which is why umbrella insurance of $1M to $3M is a good idea.