I have a $1MM umbrella policy that I opened when my son got his license back in 2020.

The first year, the policy was only $212. In subsequent years, the premiums were $531, $453, $440, and now this year it is $568 (all costs are in order from 2021-current).

First question: Why is this premium so variable, and why does it go up and down in various years?

Second question: Once my son is on his own and paying his own insurance, are there any really good reasons to keep the coverage? I realize it also would cover any gap if I were to have an accident, but a $1MM umbrella policy seems excessive to cover that hypothetical gap.

I don't have any dogs, don't have a pool, and don't have any rental properties.

Do you have $1MM to lose in non homestead, non retirement assets?

Mine has never gone down unless I switched providers. I don't understand the deviation there if that is all with same provider unless they have a wildly fluctuating customer base.

Yes, policy has always been with the same company.

MAS444 said:

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Do you have $1MM to lose in non homestead, non retirement assets?

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Most of my net worth/assets is tied up in retirement accounts. I do not have anywhere near $1MM in cash.

Was your son 16 when he got his license? Has he had any tickets and/or accidents? When did you add a second vehicle and/or have you changed any of the vehicles since policy inception?

Is the policy bundled with your home/auto, has that changed?

You likely got a super cheap rate for year one, and then a massive spike for year 2 (thanks covid), then a back to "normal" before going back up again this year (along with most insurance coverage due to market)

_lefraud_ said:

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Was your son 16 when he got his license? Has he had any tickets and/or accidents? When did you add a second vehicle and/or have you changed any of the vehicles since policy inception?

Is the policy bundled with your home/auto, has that changed?

You likely got a super cheap rate for year one, and then a massive spike for year 2 (thanks covid), then a back to "normal" before going back up again this year (along with most insurance coverage due to market)

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Son was 16 when I opened the policy. No accidents or tickets on record for either of us. We are both driving the same cars.

Policy is bundled with home and auto, both of which had the biggest increases on the last/most recent renewals that I've seen in a while.

Homeowners went up over $500/year and auto went up almost $400/year. Previous to this year, my premiums had been pretty stable. I didn't get any decreases during Covid, but wasn't getting the increases everyone else was either.

At some point you have to ask yourself what are you trying to protect and at what cost. No lawyer is interested in an uncollectible judgment.

MAS444 said:

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At some point you have to ask yourself what are you trying to protect. No lawyer is interested in an uncollectible judgment.

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That was pretty much the underlying question behind my OP. I was just wondering if I was missing something obvious about what the umbrella policy covers.

In all honestly, given the age of our cars, I could probably drop our auto back to liability only.

This thread is from last year, but it may have some useful information for you, as well:

https://texags.com/forums/57/topics/3378484/replies

That's not the way it works as a practical matter...but I'd definitely rather be over insured than under insured. I'm just personally not gonna have excess much above what I've got to lose (and isn't already covered by underlying coverage).

Fair points. Bottom line is, I'm going to keep it until my son comes off my auto policy, so I've got a few more years. It's just annoying that it fluctuates.

I suspect when he drops off, so will my premium (as will my auto premium), and I won't be complaining about the cost so much.

MAS444 said:

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That's not the way it works as a practical matter...but I'd definitely rather be over insured than under insured. I'm just personally not gonna have excess much above what I've got to lose (and isn't already covered by underlying coverage).

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This has been the way I've been looking at all of my insurance. I dropped FEMA flood last year because the water came nowhere near my house in Harvey, and that's pretty much as bad as it's going to get. I'm on an HDHP for health insurance and fund my HSA to the max. Cars are reaching a point where comprehensive may not be necessary.

I just don't want to get complacent and keep paying for something just because that's what I've always done.

Although, I just remembered, I can't drop back to liability on auto and keep the umbrella. They are tied together.

Yeah they require certain minimum limits of liability (much higher than the state required minimum) for umbrella coverage. And I would definitely recommend having decent liability limits anyway. Also, don't ever go "liability only." Always keep good UM/UIM limits as well. Especially if you're don't have A++ health coverage.

Good advice. I was using liability only fairly loosely. Basically, my cars are getting to the point that replacement value probably isn't worth having them covered. But, yes, uninsured motorist and medical are important to have good coverage for.

TXTransplant said:

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Fair points. Bottom line is, I'm going to keep it until my son comes off my auto policy, so I've got a few more years. It's just annoying that it fluctuates.

I suspect when he drops off, so will my premium (as will my auto premium), and I won't be complaining about the cost so much.

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Yes, it should drop back a bit when the young motorist drops off. In the same vein, we had a surprise increase to ours when the company realized that we now have two young drivers.

Bottom line, everyone has to manage risk as they see fit, but this is not just about vehicular activity. Umbrella covers most everything where you are not criminally negligent. I encourage everyone to actually sit down with your p&c agent at least annually. We have found some way to save a few $$ every single time that I've done this--whether it be bundling, new roof, fire alarms, honor student discounts.

MAS444 said:

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That's not the way it works as a practical matter...but I'd definitely rather be over insured than under insured. I'm just personally not gonna have excess much above what I've got to lose (and isn't already covered by underlying coverage).

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I'm genuinely curious as to how it does work as a practical matter...

It would be extremely rare for a lawyer to try to get a worthless judgment above decent underlying policy limits. A judgment against an uninsured person - sure (though still worthless and not common). A judgment against a very wealthy person - sure (but they usually have adequate coverage). But not against someone they can't collect against with mid six figures liability limits. AN argument can be made that high limits and excess coverage even makes you MORE of a target.

My main point is what you realistically have to lose should be a part of the equation.

MAS444 said:

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It would be extremely rare for a lawyer to try to get a worthless judgment above decent underlying policy limits. A judgment against an uninsured person - sure (though still worthless and not common). A judgment against a very wealthy person - sure (but they usually have adequate coverage). But not against someone they can't collect against with mid six figures liability limits. AN argument can be made that high limits and excess coverage even makes you MORE of a target.

My main point is what you realistically have to lose should be a part of the equation.

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Thanks

MAS444 said:

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It would be extremely rare for a lawyer to try to get a worthless judgment above decent underlying policy limits. A judgment against an uninsured person - sure (though still worthless and not common). A judgment against a very wealthy person - sure (but they usually have adequate coverage). But not against someone they can't collect against with mid six figures liability limits. AN argument can be made that high limits and excess coverage even makes you MORE of a target.

My main point is what you realistically have to lose should be a part of the equation.

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In other words, if my existing liability limits are $2M through underlying policy limits, but then I get umbrella that bridges me from $2M to $5M you are saying that bridge might make me more of a target.

I'm not disputing; I just hadn't thought about it that way.

Yes it could...not so much a target for someone to make a claim against but to try and collect more money against. But not so much so that I wouldn't have the extra coverage if you had enough at potential risk.

YouBet said:

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MAS444 said:

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It would be extremely rare for a lawyer to try to get a worthless judgment above decent underlying policy limits. A judgment against an uninsured person - sure (though still worthless and not common). A judgment against a very wealthy person - sure (but they usually have adequate coverage). But not against someone they can't collect against with mid six figures liability limits. AN argument can be made that high limits and excess coverage even makes you MORE of a target.

My main point is what you realistically have to lose should be a part of the equation.

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In other words, if my existing liability limits are $2M through underlying policy limits, but then I get umbrella that bridges me from $2M to $5M you are saying that bridge might make me more of a target.

I'm not disputing; I just hadn't thought about it that way.

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Yeah - the rule of thumb I've heard is to not insure more (and probably not a lot less) than your net worth (less homestead and retirement accounts, which are off limits for most lawsuits). I'd say this is much more important for people with higher risk factors (those who own planes, pools, dirt bikes, boats, jet-skis, etc.).

I bleed maroon said:

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YouBet said:

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MAS444 said:

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It would be extremely rare for a lawyer to try to get a worthless judgment above decent underlying policy limits. A judgment against an uninsured person - sure (though still worthless and not common). A judgment against a very wealthy person - sure (but they usually have adequate coverage). But not against someone they can't collect against with mid six figures liability limits. AN argument can be made that high limits and excess coverage even makes you MORE of a target.

My main point is what you realistically have to lose should be a part of the equation.

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In other words, if my existing liability limits are $2M through underlying policy limits, but then I get umbrella that bridges me from $2M to $5M you are saying that bridge might make me more of a target.

I'm not disputing; I just hadn't thought about it that way.

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Yeah - the rule of thumb I've heard is to not insure more (and probably not a lot less) than your net worth (less homestead and retirement accounts, which are off limits for most lawsuits). I'd say this is much more important for people with higher risk factors (those who own planes, pools, dirt bikes, boats, jet-skis, etc.).

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This is essentially what we've done. And considering how cheap it is (relatively speaking) it's good peace of mind. I've also found that you can't necessarily get umbrella coverage above certain amounts anyway. We were unable to close the gap even if we wanted to at least through traditional gap coverage. I suspect there are non-traditional ways to get there I'm not familiar with.

Your umbrella should go down once your son reaches 22

Premiums for almost every type of property and casualty policy are based on the insurers forecast of future claims for the upcoming policy period. Of course they base those forecasts on prior year claim experience. Right now, the economy is in an inflationary cycle and you can expect that the cost of your insurance will reflect the increased prices we see across the board. As far as rating a specific policy, most companies base umbrella policies based on the number of drivers, their age, the number of properties, and other exposures like boats, other vehicles (ATVs, RVs, motorcycles), and driving and claim history. Even if none of the rating factors change, you can expect that medical, legal, and claim adjustment costs (labor) increase year over year, so expect umbrella premiums to increase. If it should happen to go down, that will not be typical, but don't knock it too much.

TXTransplant said:

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I dropped FEMA flood last year because the water came nowhere near my house in Harvey, and that's pretty much as bad as it's going to get.

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Just be careful with this one…I work with many MUDs in the Houston area where they didn't come close to flooding during Harvey but 6 months later when we had a high intensity 30 min rain ( I think it was 8 in in 30 min) many homes did flood. Flood insurance would cover but not home owners.

Just something to think about. As an expert in this area, I strongly recommend to all to have flood insurance regardless of their "Harvey" status.

I suggest you check Auto-Owners Insurance for a more cost effective policy.

We recently took out an umbrella policy through our insurance broker, who found a very competitive one with Auto-Owners Insurance (we don't have our car insurance with them, but we were able to get the umbrella policy).

Good luck.

Ag2000 said:

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TXTransplant said:

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I dropped FEMA flood last year because the water came nowhere near my house in Harvey, and that's pretty much as bad as it's going to get.

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Just be careful with this one…I work with many MUDs in the Houston area where they didn't come close to flooding during Harvey but 6 months later when we had a high intensity 30 min rain ( I think it was 8 in in 30 min) many homes did flood. Flood insurance would cover but not home owners.

Just something to think about. As an expert in this area, I strongly recommend to all to have flood insurance regardless of their "Harvey" status.

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Thankfully, my street has not had any issues with flooding over the last 10+ years. The situation you described above is actually what I was initially worried about and why I got the policy in the first place (new construction, so who knew what would happen).

There are houses on the opposite side of my subdivision that had this exact issue - they actually flooded a couple of times before Harvey. I'm so glad I didn't inadvertently purchase one of those houses. I seem to have purchases where they did the drainage correctly (and we sit up a few feet higher in elevation).

Thought I'd come back and update this. Got my auto renewal today.

My 6 month premium has gone from $1661 to $1849 to $2040 since April of last year.

Homeowners went up over $500. With the increase in the umbrella, they just hit me up for another $1000/year all in just a few weeks. Almost $1500 more since this time last year.

I called to ask about the auto increase, and they said my son lost some of his discounts because the car is older and he drove it more miles this past year (14k vs 11k). Used to be insurance went DOWN as the car got older!

They talked me through my options, and I ended up increasing his deductible from $500 to $2000 to get most (but not all) of the most recent increase back (a whopping $117/6 months). Didn't drop to liability only because it looks like the car is still worth around $15k.

Did you shop more than one carrier?

I haven't shopped around in a while. The last time I did it, no one could beat my overall total. If auto was cheaper, homeowners was more expensive, and vice versa.

That's been probably 5 years ago, and I haven't shopped around since because my premiums have been pretty stable (and not unreasonable).

I expected the homeowners increase (it's been right around $2k since before Covid, last big increase was 2019). It's the auto that's really aggravating.

Honestly, I just don't have the time to do it right now. I may compare some numbers with my BF to see if it's even reasonable to expect to do better. He has a similar age/construction house and a male driver under age 21.

You don't have to keep auto and home with the same carrier. You can find better rates if you haven't shopped em in a while. Carriers creep your rates up year after year because many people just stay with them and don't ever shop around.

That's just it, mine weren't creeping. My last homeowners increase was 2019. It's been stable since then. And the big auto jumps have happened just this past year.

The last time I shopped, the quotes were all based on me bundling both policies. Splitting them was crazy expensive. However, I did the shopping on my own and didn't engage a broker. I think I got quotes from Allstate and Liberty Mutual. Maybe one other company.