Well when you’re paying the same amount to protect your assets whether you’re worth $50k or $1mm, it’s probably better just to bank the money when you’re only worth $50k. Although some people argue you should get an umbrella anyway to protect your future earnings, as apparently future earnings can be garnished in some cases.
Yes, this is yet another reason why focusing on value of assets to determine if you should get an umbrella is not really the best way to make a decision.
I still can’t figure out what assets I have that aren’t covered by home, auto, FDIC, or the fed backstopping all my stonks. I guess that means I don’t have any assets.
I mean other than my rapier wit and natural ease in any social situation of course. But I don’t need to insure that.
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I’m not sure you’re thinking about it the right way. The umbrella is not for protecting more or different assets. It is about providing greater protection for whatever assets you do have.
Like stonks? Or just my home equity or something?
Like it protects my net worth against lawsuits?
Yes I am too lazy to google and try to understand because it gives me more excuses to type stonks.
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If I do something so damaging that the liability carrier is unable to settle for the maximum limit on the policy then I’m probably going to prison anyway.
Yes.
I’m not an asset protection expert, but II think that generally the ones in retirement accounts are pretty well protected against liability claims. On the other hand if you have just a regular taxable account with a bunch of stonks, that’s an easy target for someone pursuing a liability claim.
Having a 2 Million dollar firewall (or whatever) in front of that makes it a lot less likely that you’re lose your stonks.
Obviously, if you are in a situation where you’re liable for a fuckton of damages, then someone could conceivably get all of your umbrella and come after you for even more. So, you’re never gonna get the risk to zero.
But umbrellas are super cheap. You can get about 2 million for ~$350 a year. Sure, like all insurance, it’s -EV, but it does reduce variance, and it’s such a small amount, that it’s not worth sweating.
Feels like buying purchase protection at Best Buy.
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Highly unlikely.
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It’s super easy to rack up a ton of liability. Running over anyone young with significant earning potential is a not uncommon way to do it.
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Liability policies, generally exclude intentional acts. So if you do something for which you end up in jail, it almost by definition has to be intentional, in which case your liability policy won’t cover it at all.
- Take out umbrella policy
- Find some young person who has a fetish for getting crippled for life.
- Split the profits.
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It is. But there is a difference.
The difference is that I’m well off enough to self insure against failure of anything I buy from best buy, so I don’t have to buy -EV insurance.
I can’t say the same about insuring against the loss of all my assets. So I take the -EV to reduce variance.
I paid $500 to insure about $10k worth of camera equipment on my big road trip through Mexico and Central America. Felt very dumb about it afterward. I think the deductible was $1000 or $1500 if outside the US.
I barely used the camera - it just took up space in my locking trunk.
Yeah, that cost benefit ratio seems questionable at best.
For that same price you could get $3 million of umbrella for a year.
Exactly. I probably wouldn’t bother if I had a very small net worth. (Even though arguments can be made for it.) But if you have a significant net worth it’s a no brainer.
Like you said, earlier, if you have a high income and low assets, then someone could be tempted to garnish your wages. If you’ve got a few million of umbrella to toss their way, then it’s less likely to happen.
Now if you have low income and no assets, then you’re a poor, and umbrella insurance is not for you. There are likely far better uses of your money.
Agreed, and better explained. The other thing is that if you have a decent amount of umbrella insurance, the insurance company will fight like hell to pay as little as possible. Which by default protects your assets.
Yeah, agree. If you’ve got a 5 million umbrella, insurance company is definitely sending in the A-team to defend your ass.
I see like 17 new posts in the Personal Finance thread, and think, “Oh shit, what happened after hours tonight? Did the dollar collapse? Is the Fed doing some crazy shit?”
Nope…
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After hours same all week. Markets slightly underperform what futures indicated at open. Then futures rise immediately after market close which markets then underperform again the next day and rinse and repeat. Unsure what it means from a technical analysis point.