Unfortunately, we live in a litigious society. And some individuals, particularly those with greater wealth, have a higher-than-normal loss exposure to lawsuits. This tendency is often referred to as a “suability factor” and can can be determined by examining the following:
- Size of savings account and stock portfolio
- Size of real estate holdings
- Current family income
- Profile in the community and media
- Leadership activities on not-for-profit boards
- Leadership activities in home owners’ associations
- Future income opportunities
People with a low suability factor should strongly consider securing a personal umbrella policy with at least $1 million in liability limits. People with a high suability factor should nearly always have a personal umbrella policy with at least a $2 million limit. Policy limits are available as high as $15 or $20 million, when circumstances warrant.
Remember that these are relatively inexpensive policies that provide excess liability coverage over homeowners and personal auto insurance policies. In some cases, they provide broader liability coverage than that found in the underlying policies. More importantly, they provide you great peace of mind, knowing that your personal assets are secure, even if you are the target of a lawsuit.
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Copyright 2012 International Risk Management Institute, Inc.