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The first question a financial advisor will ask is what coverage you have in your personal insurance program. Having adequate coverage is critical to protecting your assets. Insurance contracts vary. Consider these points when determining if you have adequate protection:

Excess Liability vs. Umbrella. Just as “Kleenex” has become the generic label for facial tissues, “Umbrella” has become the generic label used for high-limit liability policies. These days, “real” umbrellas are harder to find. Most of these policies are actually “excess liability” policies, meaning you must have an underlying primary policy covered for loss (such as an auto or homeowners 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 RV on your next vacation? “True” umbrellas can cover additional exposures and provide more protection.

Board of Directors, anyone? Non-profit organizations and associations usually have a management board of directors. If you’ve given up a few nights a month to serve one, you certainly want to make sure they provide “Directors and Officers” insurance, especially if it’s a paid position; otherwise, any act of the board that results in bodily injury, property damage, or personal injury to others, could hold you personally liable.

Personal Injury Coverage: To Have or Not to Have? This has just been mentioned in the point above and also applies to you personally, especially if you own rental housing properties. Personal injury covers things like defamation, slander, false imprisonment, malicious prosecution, invasion of privacy, defamation of character, and wrongful eviction.

Maintain the liability limits required by your umbrella. Did you call the “lizard” you saw in a TV commercial to make sure you weren’t paying too much for your car insurance? Do you have an umbrella policy? General policies require certain underlying liability limits to be maintained in order 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 to maintain $250,000/$500,000 limits, you have a significant “gap” in coverage. That is an expensive mistake!

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

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

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