Too much umbrella insurance?

[u/dereku1967]

I am not an attorney, but I work with one in a large company. We were talking a few weeks ago about umbrella insurance. She said she only carries $1M, because the first thing the opposing attorney will ask for is for the total insurance amount available. She believes a higher Insurance value makes you more of a target. I’m currently insured for $5M, and if there’s any logic behind this, maybe I should drop mine down to just $1M.

For context, I’m in my mid 50s, but have one son who will be driving on his own in about a month, and a daughter who is still only 15 so I’m just now approaching my nervous years.

[u/jocall56]

Thanks for posting this helpful answer - I have a follow up I’m hoping you won’t mind answering…

What prevents someone from going after both the liability policy AND the assets?

I’m in between those extremes you described above - moderate assets and an equivalent liability policy. I know its responsible to have the liability policy, but I never got a straight answer as to how I’m not simply doubling what is available to go after.

[u/SpiteFar4935 → u/jocall56]

The short answer is nothing. If you screw up badly enough the injured party (or more likely their estate) can go after both your insurance and your assets. But your insurance pays first. A trial is a risk and there is guarantee a jury will award a high dollar amount. If you have enough umbrella coverage the other side is overwhelming likely to settle within your coverage limits unless the damages are really, really severe. 

[u/murppie → u/SpiteFar4935]

Generally untrue in my experience just FYI. When insurance pays out you generally have to agree not to pursue the other party.

[u/SpiteFar4935 → u/murppie]

That assumes you are willing to settle at or under the limits of the insurance policy. Your insurance does not determine my damages. If you run me over in a crosswalk because you are texting while driving, me (or more likely my estate) is going to sue you for a heck of a lot more money than your standard auto insurance liability coverage. 

Now, you can't get blood from a stone so if you are broke I will likely settle for the policy limit. But if you have assets I am going to want those assets over and above your insurance policy. Now, if you have 3M in an umbrella policy I might settle for that 3M and not pursue you other assets but no guarantees.