<p>My parents have set up a trust to protect their inheritance for my sister and me. I’ve told them not to worry about it, but they insisted.</p>
<p>Be careful, not all trusts provide asset protection!! This is a common misunderstanding. The most common type of trust - called a living trust or revocable trust does not protect you in case of a lawsuit. These trusts avoid probate and for very wealthy people it can save on estate taxes - but it is not protection against lawsuits. Irrevocable trusts or continuing trusts with trust protector powers can be set up to provide asset protection for the next generation, but are more expensive to set up and administer. It appears Maine may have one of these.</p>
<p>Trusts have tax benefits, but it won’t provide asset protection if you are the beneficiary.</p>
<p>You can put property in an LLC, but you have to have a separate one for each property, and in my state the annual filing fees and extra tax work required are too expense. It’s a lot cheaper to just get a big umbrella. (You could use a series LLC if your state recognizes it.) The other problem is that if you manage your own properties, you will get sued as the property manager, so you wind up not being protected anyway.</p>
<p>Ok, I just realized I didn’t finish my story.</p>
<p>It became clear the plaintiff was just looking for a quick payout, but the insurance companies in our area have decided to never settle anything, they litigate to the bitter end. Our lawyer said he wins well over 90% of his cases, and it’s a big deterrent to plantiff’s lawyers to take these cases because they take years and rarely win. There has to be a solid case or they won’t take it.</p>
<p>In this case, the plaintiff’s attorney was her nephew, who is a DUI attorney and never tried a personal injury case before. He didn’t know what he was doing. It was almost textbook in how not to try one of these cases.</p>
<p>It took the jury 14 minutes to find for us. 
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<p>Wow, thanks for all the replies! I don’t hear anyone saying that it is unneeded. In this litigious culture, it seems we all must be prepared for the worst. Counting Down knows that I’m an RN, and yes, crazy lawsuits do come up, though have not personally heard of any at my institution. But as I work for an employer that is getting a little leaner and meaner, it might be a good idea for this reason alone. </p>
<p>The teens in my house have morphed into young adults, and only one is still in college for the rest of this year. My two Ds only drive when home, so are only covered as occasional drivers. </p>
<p>In previous talks with insurance agents, they have vaguely mentioned umbrella coverage, never much of a push. I’m guessing that some of this is perhaps differing geographic trends? </p>
<p>Recently I dropped collision insurance on my 13 year old vehicle, and I’m wondering if that is what led to the letter, as I’m guessing they’d love for me to get the collision again, and an umbrella policy besides. Sounds like much more per year than the $400 mentioned. </p>
<p>Chicago Bear, the book recommendation is appreciated. You mentioned shopping around for a policy. So does that mean shopping around for car insurance at the same time, if the two are tied together? My agent works for a single company. They’re more expensive than some, but treated me well in the past, and have a good reputation when it comes to house claims here in tornado country. Sometimes I wonder if this is just foolish inertia on my part, or if the loyalty might serve me well if the insurance is needed.</p>
<p>Another reason for an umbrella, the insurer must provide a defense! If you only have $100,000 in liability coverage and are sued for several million, if the case is strong they are likely to cut a check for $100,000 and walk away leaving you to fend for yourself after discharging their obligation. If they are liable for a million, they will provide the vigorous defense noted above.</p>
<p>fwiw: A big YES to getting a Liability Umbrella. I am a big believer in insuring against catastrophic loss, not small losses you can financially weather. You can offset the cost of a Personal Liability Umbrella, by perhaps getting higher deductibles on your Homeowner or Auto Collision deductibles. If you raise your Homeowner deductible to say $3000 from $500 or $100 you generally save a few hundred $ a year. Or increase your Auto Collison deductible from $250 to $1000. Generally speaking, larger deductibles are a better long-term buy. The savings can buy an extra million of Liability protection. Auto policies need higher Personal Liability limts to qualify for an umbrella because, statistically, the majory of larger claims arise from driving around in cars.</p>
<p>Our umbrella runs about $550/year. Have it through the same folks we use for all our other insurance. </p>
<p>ChicagoBear is spot-on about the insurance company providing a vigorous defense. This was a major reason DH wanted to get umbrella coverage. (He also had a couple of insurance cases in private practice early in his career that reinforced this decision.)</p>
<p>Dropping collision on a 13 yo car is a good idea, as long as you can afford to replace the car if necessary. We dropped collision on our CR-V when it was ~ 9 yo. Was used just as a station car, with less than 3,000 miles per year.</p>
<p>I worked at a plaintiff’s lawfirm in the early 80s. One of my 1st purchases for myself was my own auto insurance as well as my own umbrella policy. There are just way too many things that can happen that cost a ton of $$$$. Auto insurance policy coverages are woefully inadequate to fund the damage they can inflict, on even a utility pole, to say nothing of the hospital bills, lost wages, and possible paralysis and/or death.</p>
<p>One thing I noticed early on is that folks with umbrella policies ended up being defended by most of the best law firms in town, who had a BIG incentive to do a good job of defense. Paying for one of those firms for just a few hours was less than the price of the annual premium.</p>
<p>Umbrella policies are one of the best deals around and yes, you do get a better premium if you buy ALL your policies with the same company–homeowners, auto and umbrella. You can have an independent agent shop around for you or do it yourself, whichever you’re inclined to do & however much energy you have for the project. Be sure to get protection that covers all your exposures so you don’t have a scary surprise if the policy is needed. If you have rentals, be sure they’re covered as well.</p>
<p>Yea, we dropped collision on all our cars except our “baby” which is a 2005 Volvo. The others are a 2000 van & a 1998 sedan. S has a 1992 sedan–don’t know if he’s got collision on it or not.</p>
<p>I always learn so much on CC. Is there another site like this anywhere?</p>
<p>I also recommend umbrella policies. With my insurer, I am able to carry lower limits on my car insurance since I have the umbrella so part of the cost is offset that way. I carry 100/300 with a $1m umbrella. Without the umbrella, I would carry significantly more insurance on my cars. I have never heard that you have to carry larger limits in order to get the umbrella. </p>
<p>While I’m at it, everyone should check on the limits of their uninsured motorist coverage too. Many people carry too little.</p>
<p>What limits do you recommend for uninsured motorist coverage, cartera45?</p>
<p>It depends on your assets, but at least 100/300k. I would go higher if it is offered. Some states only offer the amount equal to the liability coverage.</p>
<p>Cartera45, why do you recommend higher uninsured motorist coverage? I was thinking about dropping uninsured/underinsured motorist coverage entirely and beefing up the liability coverage. We already dropped collision and comprehensive because our best car is worth maybe $2500.</p>
<p>Our health insurance has a catastrophic cap of $3000. We’re both retired, so suing for loss of income wouldn’t be a factor. What is the advantage of having UM/UIM coverage?</p>
<p>If there can be no claim for lost wages, then the need is less, but I still feel it is a good thing to have because the coverage is typically very reasonable. In some states, as many as 1 in 3 drivers is uninsured or inadequately insured so the odds have grown over the years that you might be involved in an accident with an uninsured driver. A hit and run accident would also be covered under your uninsured motorist coverage. It covers passengers or other people driving your car too and covers you if you are walking or riding a bike or even skateboarding and are hit by an uninsured motorist. It covers things that your health insurance would not - including pain and suffering, disfigurement, scarring, etc.</p>
<p>If you are in a car accident, your medical insurance is going to go after the auto insurance for payment of expenses. Our medical claim forms always ask if the claim is related to an accident.</p>
<p>Some states require uninsured motorist coverage.</p>
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<p>Ok, CountingDown, I’m curious! What in the world is a station car?</p>
<p>HA! Counting Down, I’ve never heard anyone else use that expression. In our family, the “station” car is the old clunker that usually goes no further than the commuter train station in town. Its paid for, passes inspection, and usually starts. Its sole purpose is to travel the mile or two to the train station, twice a day, 5 days a week.</p>
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<p>I was told that you have to carry 250/500 liability and the umbrellar starts with 500 and carries another million above the 500.</p>
<p>I used to have a clunker that takes me back and forth to the bus station. somehow, after a job change, I had to drive that car across two states(NJ, NY and CT) 100 miles each way. I ran it down to the ground, sooner than later. :)</p>
<p>Thanks Mansfield! Obviously, I live in the south where we don’t have commuter trains :-).</p>
<p>That’s exactly what a station car is! It’s how we nurse our oldest car for a couple of extra years so we can avoid a new car payment. DH would drive it to the Metro station 2.2 miles away and then take the train in to DC.</p>