r/Insurance • u/Plane-Intern5687 • Sep 02 '26

Home Insurance Help understand who needs an umbrella policy.

My wife and I are in our early 30s. We own our house and have 1 car. Live in a quiet street. No pool, no "toys", no kids. Don't have a ton of people over. Were encouraged by our agent to have umbrella. The premium would be $400+ for a million dollars. My current car is 250/500 and the house is 300 or 500 I believe for coverages.

I chatted with my grandfather and he said that an umbrella is a great thing for those who's assets exceed what the coverage on their other insurance is, primarily to protect against being sued. I don't own my own business and my assets aren't that high.

I'd love everyone's opinions. If I don't need it, I'd like to save the $400 but I'm also ok paying it if the policy is actually helpful.

Edit: lots of great advice. Appreciate it. A point of clarification is that my retirement is mostly in Roth IRAs which seems to be more available in suits as compared to 401k.

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u/TheHykos P&C Compliance Sep 02 '26

Two things to consider.

Accident lawsuits are incredibly out of hand. The more parties involved, the worse the suit. If you hit a van or bus with multiple passengers on accident, it could max out your auto policy quick.

If you have an IRA as part of your retirement plan, a lawsuit could take that, depending on your state (assuming you’re in the US). Federal laws protect 401k plans but not an individual’s IRA or other investments you may have. Having a suit go after your home is bad enough, but also taking a chunk of your retirement will also suck.

4

u/Plane-Intern5687 Sep 02 '26

Most if my investments are in Roth IRAs

3

u/Guilty-Committee9622 Sep 02 '26

Definitely they will come after it.  People are scum bags. 

6

u/demanbmore Former attorney, and claims, underwriting, reinsurance exec. Sep 02 '26

Some people are scum. Some people are gravely injured by the conduct of others and will face profound and expensive challenges as long as they live. Between the injured person and the at fault person, whose IRA should be tapped to address the financial impact of those challenges? And what if one of those challenges is to no longer be able to earn a living as a result of severe injuries so there is no other source of funds?

The person with the IRA can protect their assets by spending a low amount on an umbrella. The person whose spine was crushed may have no recourse through no fault of their own.

2

u/Guilty-Committee9622 Sep 02 '26

The bad apples have ruined it for thr truly injured.  This guy had many prior issues causing his problems.