One thing, though, that Umbrella policies cover that home liability policies usually do not are things like slander, defamation of character, etc.

For coverage to damage done to you, you need to get specific insurance. So damage to your house is covered by home insurance, car by car insurance, etc. Health insurance covers most of the rest. For anything else you have to sue the person who hurt you and pray they have enough money to pay out.

As for how the other side can find out I honestly don’t know for sure since I don’t know if this sort of thing can show up in discovery. Although I would imagine that when you file your own papers and suddenly a bunch of insurance company lawyers show up on your fillings the other side might clue in. But I did find this article from a personal injury attorney saying that they ‘look for’ umbrella policies to squeeze more money. This leads me to suspect that lawyers have a way to find out if there is an umbrella policy.

This actually makes a lot of sense. If the suing party couldn’t find out about the umbrella policy then the suing party couldn’t sue the insurance company to cover the damages. So my guess is that lawyers have figured out how to find out. Can’t leave any dollar unturned. :)

Somehow I got the idea that one of the advantages of an umbrella policy, in addition to a higher covereage limit, was that it also covered some things one would never think of. My agewnt made it clear that it is strictly a liability policy, so only covers claims against me, not any damage I might suffer. Since she says the policy is indeed called a personal liabuiluty policy, I guess she is correct. And so I ask, is there some sort of NON-liability coverage that I should be getting that I’m not, if it’s liability only?

Also, when I told her I’d read that one’s amount of assets is virtually irrelevant and that someone could sue you for the amount of the umbrella insurance ploicy PLUS the vlaue of my assets to boot, she questioned how the other side would ever even know I had a policy, that such info would be kept highly confidential by State Farm. I did not know that answer and merely replied that I hadn’t seen a single thread on the internet that suggested that a lawyer would not learn of the insurance policy in due course, so I assumed they have a way of finding this out. My guess is that she just is unaware, but I’d like to pass on this inforamtion to her. And, so I ask: Indeed, how does the other side learn that you have a nice, juicy umbrella policy they can go after? Is this something that one must disclose in a depsoition, or do they learn it even earlier than that, so that they can decide whether the case is even worth their time? Please excuse my ignorance.

Thanks muchly,
Dean

Dean

My understanding is that the insurance company is on the hook up to the full amount of the policy so they can’t negotiate a settlement for themselves for less than the policy amount if that leaves liability outstanding. But I believe all the policies say that the insurance company does not have to pay out damages higher than its policy amount. So if it pays out a settlement for the full limit of its policy then shouldn’t it be off the hook?

As for the cost of going to court even a cheap lawyer costs $250/hour and that isn’t counting administrative costs. So $1,000,000 divided by $250/hour is 4,000 hours which equals 2 work years. So if there is a $10M claim against a $1M policy and the insurer figures they are looking at two lawyers for at least 6 months (E.g. $0.5M in legal fees) and there is still a 40% chance of losing the case (thus requiring the other $0.5M in the insurance company’s liability to be paid out) then they might just decide to settle. Who knows? I have thankfully stayed far out of courtrooms and I’d very much like to keep it that way so I’m not in a good position to comment. For all I know 99.999% of cases are for tiny amounts and insurance companies regularly either just pay the whole thing off or fight to the death. I just don’t know.

That was the point of my original lament. I can’t find any good figures to help me understand what risk I’m facing so I can calculate how much insurance is appropriate.

I would assume that even a big outfit like State Farm does not settle for $1M very often, at least if it’s not negligence so, though I get your point, I’d hope it doesn’t happen often. Actually, I didn’t realize that they can settle and still leave me holding a bag. Can they settle for less than 1M and still leave me holding the bag, or only for the maximum? I wonder why they anyone would settle for the maximum anyway, except to avoid legal fees, which probably aren’t that expensive for them, plus they might recover the fees, if they win.

Thanks so much!

Dean

At that point the insurance company has paid out the maximum it owes and it no longer has any interest in the case. Thus leaving me alone to fight the now $9,000,000 lawsuit.

The point being that the interests of the insurance company and myself do not necessarily align. Of course if the insurance company thinks the lawsuit is cheaper to fight than settle then sure, now I will have some serious fire power on my side.

As for recommending Amica over State Farm I relied heavily on the table in section 2, all the entries there apply nationwide but the insurance commissioner rating. It’s probably worth looking up the ratings in California. The latest consumer complaint study for California for home insurance actually puts State Farm ahead of Amica.

Washington State suffers from major earthquakes and I’m told the rate of major earthquakes is about equal to Southern California (my old home). The reason you hear more about earthquakes in CA is that smaller quakers are much more frequent there. In any case I did worry about earthquake coverage which is why I checked credit ratings. That gives me some idea of how much damage the company can take. And in that area State Farm and Amica rate equally. So personally I wouldn’t worry about that in terms of choosing between State Farm and Amica.