I usually write about commercial marine insurance, but this month I’d like to discuss ways to protect your personal assets.
You may think that this subject does not really apply to you. However, most business owners, managers and supervisors are what we in the insurance business call “target defendants.” This means that they are perceived as possessing assets that make them vulnerable to large personal claims in case of an accident in their personal life or their family’s personal lives. In other words, your personal protection, via insurance, cannot be overlooked.
You probably own at least one car, and maybe your business supplies you with another car. Be sure to insure your vehicle with as much liability insurance as you can buy. I’m talking as much as you can buy, not how much you can afford. In most cases, the cost difference between minimum and maximum liability limits is not very much. Ask your agent.
This brings me to a pet peeve. There is a TV commercial that gives the impression that you should tell your insurer how much you want to spend, then the insurer designs a policy to meet that figure. This could lead to a personal asset disaster. An experienced agent will give you the highest liability limit you can get and then try to save you money with higher deductibles or lower medical payments limits. That way, your assets are still protected.
Let’s move on to homeowner’s insurance. You should insure your dwelling and belongings to what their replacement cost is, not their actual cash value. It is also important to demand a “special perils” policy. The cost is small to move up from the usual broad perils policy to a special perils policy, but the coverage is much more broad. A special perils policy means that you are prepared for a potentially catastrophic event.
For personal liability coverage on your homeowner’s policy, request the maximum amount available. Then ask for a personal umbrella of at least $1 million. Remember, you’re protecting your personal assets and it doesn’t take much for a business owner to have a personal net worth of over $1 million.
Save money by requesting a package policy. This will allow you to pool your policies and cut premiums.