Although a comprehensive insurance plan is part of every good estate plan, there are 2 very serious reasons why insurance is not full asset protection.
- Coverage Limits
- Coverage Exclusions
Insurance Coverage Limits
You only have as much insurance as you purchase and it is impossible to buy enough insurance to cover some of the huge verdicts that are returned (i.e., $11.8 million, stemming from a car accident.)
But, get good advice from your estate planning attorney and your insurance professional and with their help develop the best comprehensive insurance plan for your situation.
Be sure that plan includes umbrella liability insurance, which raises the limits on your homeowners and auto policies to whatever limit you purchase such as $1 million or $5 million dollars.
Umbrella liability insurance also known as personal catastrophic insurance is an inexpensive and excellent investment. If you own a business, you need business umbrella liability as well.
Insurance Coverage Exclusions
Youve likely heard of claims being denied because the insurance policy has an exclusion such as a homeowners policy doesnt cover either flooding or acts of God such as an earthquake.
But, there are many more exclusions. For example, some umbrella liability insurance policies exclude claims arising from dogs, lawn mowers, business activities, guns, intentional acts, dangerous sports, and dangerous equipment.
Bottom Line Insurance Advice
Understand what your insurance policies cover and exclude. Consult with a qualified estate planning attorney to make sure you have a comprehensive insurance plan in place as well as additional asset protection measures. Insurance alone is not enough.