I talked to my State Farm agent this morning to complain about the 32% increase in the 2025 premium. He told me to expect another 50% increase in 2026.
I thanked him for the warning and told him I’ll let the policy lapse. Why throw good money after bad? There’s been no change in my risk profile. I’m paying for the bad choices of others in the risk pool.
Since I have a low risk of getting sued, and there’s always the chance of the insurance company screwing you out of the coverage you paid for, it makes more sense to retain the risk, and invest the premium.
I pointed out that I can more than buy a new car on the strength of the collision & comp coverage I’ve declined over the past 25 years, while investing the savings in the stock market.
Mine was $5 MM, but the first $1 MM of coverage is the most expensive. My 2025 premium was $495 for $5 MM coverage, and they gave me quotes of $365 for $3 MM and $185 for $1 MM.
But the calculation you need to make is the risk that you’ll attract a lawsuit. If you’re hold a lot of large drunken parties at your home for 30-40 people with some risk a guest will take a header off the balcony, you’re more in need of a policy than someone sitting at home watching TV or playing video games.
For me, this is more like coverage for getting hit by a meteor or space debris, and $495/year is way too much for my risk.
The year before Obamacare started, my health premium for a high deductible plan eclipsed the $10,000/yr mark. I cancelled it at that point and accepted the small risk I might get a $1 MM hospital bill.
I had a $5,000 deductible for medical costs and a separate $3,000 deductible for prescription drugs. I was taking an expensive drug at the time that cost about $10,000/yr in the US and $4,500 out-of -pocket if I used my US health insurance, but I could buy it in Canada for less than $3,000/yr, so I did that. I was also paying cash for doctor’s visits and lab work at the time since that was cheaper than involving the insurance company.
It’s just a matter of understanding all the ways the insurance company can cheat you and finding a work-around.
You are leaving out somebody tripping on your front porch or sidewalk and hitting their head. As long as you can handle a potential $1 million hit then you can save the $500.
Nope. That’s a common area, covered by the homeowner’s association liability policy. Oddly my rear deck is apparently a common area, too, that must be maintained by the homeowner’s association, even though they have to use a ladder, or come through my front door to access it. So if a drunken guest at a party falls off the balcony, it’s my fault. If the railing fails, and a sober one hits the pavement, it’s the homeowner’s association fault.
How about you inadvertently injuring someone in public (e.g. causing them to fall), and that someone ends up disabled. Yes, tiny risk, but impact could potentially wipe you out financially. A gamble not worth it in my mind.
Over the past 10 years my umbrella policy has been essentially flat. For some reason took a dip in 2019-2021 then over the past couple year now back to what I was paying in 2016. And from what I remember, nothing has significantly changed during those times.
Ours policy is essentially a business expense since we have rental properties. And even though they are all in separate LLCs, never hurts to have extra protection even though some claim that puts an even bigger target on your back.
Home owners insurance usually cover first. In an auto accident auto insurance is first. Umbrella increases coverage.
Worst case is when injured professional seeks lifetime income. $5mm might be a good number. Especially if multiple professionals are injured. $1mm is minimal coverage.
Slander and libel are usually excluded.
A friend thinks his policy will cover legal expenses in a “stand your ground” shooting case.
I don’t pay attention to year-by-year fluctuations and am prepared for a 50% market drop at any time. Year 2000 and 2008 are lost in the round off over a 50 to 60 year investing lifetime (i.e., 25-30 years saving for retirement, and God-willing, 25-30 spending it after you retire).
It’s when you incur trading costs and taxes responding to interest rates and market whispers that you lose money. I made a fortune ignoring Hussman.
Potentially it could be a $10 million judgement and wipe me out anyway, even with a $5 MM umbrella.
In practice, your IRA is generally judgement proof, so it’s just my taxable account that’s at risk. Also, I still have $500,000 liability insurance on my automobile and, $100,000 on my residence.
There’s a tiny risk I could be hit with space debris. I’m retaining that risk, too, instead of buying coverage.
Tripping on the front step isn’t enough to get a judgement. I’d have to be shown to be negligent in some way. And my front step is in a common area maintained by the homeowner’s association.