Are You Covered If You Get Sued?
Will you be okay if you get sued? Unfortunately, there's a good chance your wealth would be at risk if someone sued you successfully. Find out how to protect yourself by watching this video.
Patrick King: Are you covered if someone sues you? Find out more coming up.
Patrick: Hey there, folks. I'm Patrick King with Transformative Financial. Here on this channel, we help people make money, keep money, and feel more financially secure along the way. If that sounds like something that you're interested in, I'd love to talk with you to see if it's a good fit. My number is 404-500-9261. My email is Patrick@transformative-financial.com. But on today's episode, if someone tries to sue you, are you covered?
Unfortunately today, we live in a litigious world. That's why having liability insurance coverage is so important. Your homeowners and your auto insurance policies, they will cover some liability if someone gets hurt on your property or if someone gets hurt in an accident that you cause, but it may not be quite enough. For instance, your homeowner's insurance may cover $200,000, $250,000, $300,000 – sometimes even up to half a million dollars in liability coverage, but if somebody is maybe a little over-served and slips and falls off your deck or something like that and decides that they want to sue you, it might be for more than that amount.
Also, the same kind of thing would happen with your auto insurance coverage. Quite often, I see the liability limit of each accident on most clients policies start off at $250,000 for one crash. If someone gets hurt, that may not be nearly enough. As far as the limits for liability, they recommended on auto insurance policies, that’s half a million, but still, that still may not be enough. What happens? What do you do? What if you get sued for big bucks?
Well, that's why they have a thing called an umbrella personal liability insurance policy. The great thing, it's relatively cheap, so there's no reason to not have one of these things, but just no one does. It's called the umbrella liability policy because it sits over the coverages that you have in your homeowners and auto insurance policies. I mentioned that your homeowners may cover $300,000, let's say, and then let's say your auto covers the same thing, another $300,000 in liability, if someone sues you for that amount, but if you go over that amount, that comes out of your pocket, and you certainly want to avoid that.
The umbrella policy, well, where those policies stop coverage, continue coverage. It's most frequently bought in one million dollar increments and it's also, of course, umbrella, I guess, not only because it sits on top of those policies, because it's definitely for rainy days. Because it works with those other policies, it's most frequently purchased through the same insurance company that you get your homeowners and your auto insurance coverage through.
It usually costs between $200 and $400 per $1 million dollars of coverage, and that's per year, so that's not a whole lot of dough. Then the rule of thumb is that you get at least one million dollars in coverage, and if your net worth is greater than $1 million dollars, usually, the rule of thumb is, get an amount of coverage that's equal to your net worth. Yes, go grab your umbrella liability insurance policy in case some scam artist tries to break-check in front of you in the highway and jumps out with the neck brace already on.
That's it. That's all I’ve got for today, folks. Thanks, folks, and I hope this is helpful. I'm Patrick King with Transformative Financial. Until next time, cheers.
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