Asset Protection – What You Need to Know Now

The first question you will be asked by a Financial Advisor is about what coverage you have on your personal insurance program? Having proper coverage is integral to protecting your assets. Insurance contracts vary. Consider these points when determining if you have proper protection:

Excess Liability vs Umbrella. Just like “Kleenex” has become the generic label for facial tissue, “Umbrella” has become the generic label used for liability policies with high limits. These days, “true” umbrellas are harder to find. Most of these policies are actually “excess liability” policies which means you must have an underlying primary policy covered loss (such as an auto or home policy) for the excess liability policy to provide any coverage. That’s great if your loss is covered by your auto or home policy but what if you rent a boat or motor home on your next vacation? “True” umbrellas may cover additional exposures and provide more protection.

Board of Directors, anyone? Nonprofits and associations commonly have a managing board of directors. If you gave up a few evenings a month to serve on one, you certainly want to make sure they are providing “Directors and Officers” insurance for you especially if it is a paid position otherwise any act by the board that results in bodily injury, property damage or personal injury to others, could hold you personally responsible.

Personal Injury coverage- to have or not to have? This was just mentioned in the previous point and also applies to you personally – especially if you own rental dwelling properties. Personal Injury covers things like libel, slander, false imprisonment, malicious prosecution, invasion of privacy, defamation of character and wrongful eviction.

Maintain liability limits required by your umbrella. Did you call the “lizard” that you saw on a television commercial to make sure you were not paying too much for your auto insurance? Do you have an umbrella policy? Umbrella policies require that certain underlying liability limits be maintained for the higher limits to respond. If you have $15,000/$30,000 limits on your auto policy and the umbrella or excess liability requires you maintain $250,000/$500,000 limits- you have a significant “gap” in coverage. That’s an expensive mistake!

How much coverage do you need? Add together the equity in your home and any other “real” property you own, personal belongings, investments outside of a retirement account (Retirement accounts such as 401k’s are usually “judgment proof.”) Also include savings, checking accounts and future wages. (Most people forget about future wages.) The total is the amount of total liability coverage you should have.

Contrary to popular belief, you are not paying “extra” to have an independent insurance agent guiding you on the coverage you need for your particular situation. Contact your agent today if you have any questions on your personal insurance program to be sure you’re getting the protection you think you have.

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