Getting Sued in California... Solving the Protection Puzzle

What's most important to you about your insurance protection?  I've asked this question thousands of times in my insurance career.  The answer I get most often is, "I want to make sure I'm covered if the unthinkable happens to me" (or words similar).

What could these "unthinkable" events possibly be?  What quickly comes to mind is a fire that burns down the home.  A serious car accident is near the top of the list also.  Of course, this is why we purchase auto and home insurance.  To protect our assets when the "unthinkable" happens.

Our job as insurance advisors is to make certain our clients are fully protected when these tragic events occur.  It's important to us that we at least recommend adequate insurance coverage.  The final decision is always up to the policy client.

One of the most common problems we see when we first meet with potential clients is low or inadequate liability limits.  Liability protects our assets and income if we get sued as a result of an accident where we're negligent (at fault).  And the most common law suit is from a car accident.

Most of us have heard that California is a "litigious" state.  And it certainly is.  We have more than our share of attorneys, some of which are "accident chasers" looking to take advantage of accident victims. 

How Much is Enough?

But the most puzzling question is, "How much liability coverage is enough for me?"  In other words, if I were the cause of a serious car accident that caused severe injuries and property damage to others, how much liability coverage would I need to fully protect my assets?

The answer is we don't know for absolute certainty.  The final decision is always up to you the customer (insured).  But here are some guidelines we use to help people make that decision.  We recommend your liability limits be equal to or greater than your net worth (assets minus liabilities), plus 30% of your projected income to retirement.

A question we often get is, "Why should I protect my income?"  The answer is your income is at risk if you're declared negligent in a personal injury law suit.  Yes, they can garnish wages in certain situations.  So it's important to protect your future income in addition to your net worth. 

The Solution

What is the answer to this dilemna?  For most people who are serious about protecting their financial future, we recommend a personal liability umbrella policy. 

An umbrella policy is so dubbed because it acts like an umbrella, poised above your car and home policies.  When the liability limits of your car or home policy are pierced, it provides typically $1,000,000 of additional protection.  You can also get higher limits.

Some may think they can't afford an umbrella policy.  Actually it is relatively inexpensive, often costing less than $200 per year for a family with a home and 2 cars.  And in some cases most or all of this cost can be offset through higher deductibles on the car and home policies.

Want to solve the liability lawsuit protection puzzle?  Consider an umbrella policy.  It can provide the protection and peace of mind you seek.