The wealthy in California know a thing or two about not just making money but also how to retain their assets. One way they protect their wealth from lawsuits, bad accidents and even negligence is with umbrella insurance. Forbes notes that an umbrella policy forms part of a solid asset protection plan. When other insurance policies hit their limit, the excess liability protection kicks in to cover the rest of the damages.
That said, there may still be a cap on umbrella insurance policies. This prevents insurance companies from becoming liable in instances where the payout may far exceed what they had in mind. The cap is typically around $5 million for individuals, though it may be higher for businesses. People with a net worth topping $5 million may also get access to larger umbrella policies at a premium price.
NerdWallet shares a list of the individuals who may require an umbrella policy:
- Professionals who engage in activities that may increase their likelihood of getting sued, such as volunteering, coaching a sports team or being a landlord
- People who own things or animals that may lead to personal injuries, such as a dog or fast car
- Travelers who worry about potentially getting sued while overseas
- People who have built up their savings or own assets
- Property owners
It is also important to note that in order to obtain an umbrella insurance policy, a person may need to insure their car or home first. Their insurance policies may then need to meet minimum requirements before they are eligible to purchase an umbrella insurance policy.
While the rich may set an excellent example when it comes to asset protection, an individual does not need to be rich to want to hold on to his assets and hard-earned savings. This may be an excellent investment for anyone looking to protect however much or little they have that exceeds the caps on their current insurance policies.