Insurance Read Time: 4 min

Keep Your Umbrella Handy

In 2020, the U.S. had a record 22 million millionaires, up from 20.2 million in the previous year. An increase in personal wealth may bring greater financial flexibility; it may also bring greater liability. Individuals with high net worth, or those who are perceived to have high net worth, may be more likely to be sued. And personal injury claims can cost millions.1

Umbrella liability insurance is designed to put an extra layer of protection between your assets and a potential lawsuit. It provides coverage over and above existing automobile and homeowners insurance limits.

For example, imagine your teenage son borrows your car and gets in an accident, seriously injuring the other driver. The accident results in a lawsuit and a $1 million judgment against you. If your car insurance policy has a liability limit of $500,000, that much should be covered. If you have additional umbrella liability coverage, your policy can be designed to kick in and cover the rest. Without umbrella coverage, you may be responsible for paying out of pocket for the other $500,000, which could mean liquidating assets, losing the equity in your home, or even having your wages garnished.

Umbrella liability insurance is usually sold in increments of $1 million and generally costs just a few hundred dollars a year. It typically covers a broad range of scenarios, including bodily injuries, property damage caused by you or a member of your household, even libel, slander, false arrest, and defamation of character.

Deciding whether liability coverage is right for you may be a question of lifestyle. You might consider buying a policy if you:

  • Entertain frequently and serve your guests alcohol
  • Operate a business out of your home
  • Give interviews that may be published
  • Drive a lot of miles or have teenage drivers
  • Live in a manner that gives the appearance of wealth
  • Have a dog, especially if the breed is known to be aggressive
  • Own jet skis, a boat, motorcycles, or snowmobiles

Even if you don't yet have a tent in the millionaire camp, you may want to consider the benefits of liability insurance. You don't have to be a millionaire to be sued for a million dollars. Anyone who is carefully building a financial portfolio may want to limit their exposure to risk. Umbrella liability can be a fairly inexpensive way to help shelter current assets and future income from the unexpected.

This is a simplified description of coverage. All statements made are subject to the provisions, exclusions, conditions, and limitations of applicable insurance policies. Please refer to actual policy documents for complete details regarding coverage.

Who's Got What?

In 2020, there were over 35 million households in the United States whose net worth was in the $100,000 to $1 million range (excluding primary residence). Less than 10 million households had a net worth of $1 million or more.1

1. Credit-Suisse.com, 2021

The content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. This material was developed and produced by FMG Suite to provide information on a topic that may be of interest. FMG Suite is not affiliated with the named broker-dealer, state- or SEC-registered investment advisory firm. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security. Copyright FMG Suite.

Share |
 

Related Content

Money Doesn’t Grow on Trees: Teaching Your Tweens the Value

Money Doesn’t Grow on Trees: Teaching Your Tweens the Value

Now’s a great opportunity to help kids learn about the value of money. Not just that it’s useful or necessary—but how we get it and how to maximize its value.

Home Mortgage Deduction

Home Mortgage Deduction

Use this calculator to assess the potential benefits of a home mortgage deduction.

A Penny Saved is Two Pennies Earned

A Penny Saved is Two Pennies Earned

Here are some simple and inexpensive energy-saving tips that may help you save money.

 

Have A Question About This Topic?







Thank you! Oops!

Learn, Earn and Retire at Any Age

What can the rest of us learn from millennials’ desire to embrace all of life in the moment?

Conquering Retirement Challenges for Women

Looking ahead can help you conquer these unique obstacles.

The Business Owner’s Quick Start Guide to College Funding

As a small business owner, you’re used to having to rely on yourself for everything from retirement planning to health insurance. Saving for your children’s college fund is no different. It may seem like a daunting task, yet there are strategies you can use to help fund your children’s education.

View all articles

Bi-Weekly Payments

This calculator estimates the savings from paying a mortgage bi-weekly instead of monthly.

Capital Gains Tax Estimator

Use this calculator to estimate your capital gains tax.

How Much Home Can I Afford?

With a few simple inputs you can estimate how much of a mortgage you may be able to obtain.

View all calculators

Principles of Preserving Wealth

How federal estate taxes work, plus estate management documents and tactics.

Your Cash Flow Statement

A presentation about managing money: using it, saving it, and even getting credit.

Managing Your Lifestyle

Using smart management to get more of what you want and free up assets to invest.

View all presentations

16 Wall Street Cliches in 60 Seconds

Pundits say a lot of things about the markets. Let's see if you can keep up.

Suddenly Single: 3 Steps to Take Now

Have you found yourself suddenly single? Here are 3 steps to take right now.

Social Security: By the Numbers

Here are five facts about Social Security that might surprise you.

View all videos