Tradelite,
An umbrella policy is probably the best insurance purchase you could make. It prevents your cash-in-the-bank from being cleared out.
RE: "What in the heck are you up to, if you're so concerned about being sued for negligence? Can you not afford good legal representation?"
Mistakes happen. Why pay a million in legal fees plus a multi-million dollar lawsuit settlement, when you can pay a few hundred per year for basic insurance protection.
The formula for umbrella insurance is this - find out what the worst settlement figures are for accidents (cars, swimming pool accidents, etc.) and compare this to the median settlements, and pick a number you can live with, while also covering your assets.
The first thing lawyers do in a lawsuit is gather up your bank/brokerage balances, which they will consider their minimum target. This information is easily available to them. Never keep your money in one bank, nor in one country, have two umbrella policies (so the lawyers think your assets are half of what you have), put your assets in different entities, try to look poor, drive an old car, never inform any brokerage firm your total assets (understate by simply writing "> $x", where x is low, a truthful yet defensive answer. You have a right to your financial privacy, so be truthfully ambiguous. Don't open up an account at any brokerage firm that doesn't permit you to write > $x, rather than using their specified ranges.
Your bank/cash is an open target for any lawsuit. So is your brokerage money. Money in tax-deferred accounts are more protected by the courts (401ks, ira's, pensions, annuities), so stuff as much into them. Even primary real estate is more protected, though depending upon the zip code, it could be a liability if it motivates the lawyer.
State Farm won't give your Dad an u/p becaue he's older and because he totalled his car, not worth the risk - they are probably afraid he'll forget to turn the stove off and burn his house down by mistake or some other type of accident that's more costly (like neighbor kids falling off his roof after he forgot to take a ladder down).
I would get an umbrella policy - it's cheap and worth it. It's the policy that most insurance companies least prefer to sell, because it's a better deal for you, not them.
Regards,
Amy J |
