The Cheapest Way to Protect What You’ve Got

Personal Umbrella Policy

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A personal “umbrella” policy (PUP) provides liability protection over and above your home, renters, and auto insurance policies, usually at a much higher amount. Most auto policies max out at $250,000 or $500,000 per accident. But what if your teen is texting, hits a bicyclist, and that person dies? You could be liable for much more than the amount on the auto policy, putting your home and invested assets at risk.

The purpose of the PUP is to protect your assets in the event of an unforeseen tragic accident or situation. Coverage is usually very inexpensive – one of my clients just obtained a $10M policy for $1400 per year. A $2M policy is typically just a few hundred dollars per year. The relative low cost of a PUP makes it a smart choice for many, because well, stuff happens and we live in a litigious world. So, how do you know if you need it.

Here are some factors that might indicate you should have an umbrella policy:

  1. You have teen drivers. Enough said.
  2. You are a landlord or rent out your home on occasion via Airbnb. If someone were to get injured while staying on your property, you could be liable.
  3. You have a dog that is not covered on your homeowner’s policy. Many home insurance policies exempt breeds like pit bulls or German shepherds, leaving you at risk.
  4. You have a swimming pool or trampoline and have people over to visit your home.
  5. You are a public figure in some way (e.g., you are on your town’s city council) or you volunteer on a non-profit board of directors that does not carry director and officer coverage.
  6. You have large parties at your home and/or have a home office where clients visit.
  7. You employ people to work on your home (e.g., gardener, babysitter, handyman, dog walker, house cleaner).
  8. You have a second home that is often vacant, leaving you open to the possibility of someone being on your property and you not knowing it.

If you do need coverage, how much should you get? Most experts recommend you get an umbrella policy valued at 1-2 times your net worth. Ask your financial planner if you could benefit from an umbrella policy and get a recommendation that fits your specific situation.

Disclosure

Abacus Wealth Partners, LLC is an SEC registered investment adviser. SEC registration does not constitute an endorsement of Abacus Wealth Partners, LLC by the SEC nor does it indicate that Abacus Wealth Partners, LLC has attained a particular level of skill or ability. This material prepared by Abacus Wealth Partners, LLC is for informational purposes only and is accurate as of the date it was prepared. It is not intended to serve as a substitute for personalized investment advice or as a recommendation or solicitation of any particular security, strategy or investment product. Advisory services are only offered to clients or prospective clients where Abacus Wealth Partners, LLC and its representatives are properly licensed or exempt from licensure. No advice may be rendered by Abacus Wealth Partners, LLC unless a client service agreement is in place. This material is not intended to serve as personalized tax, legal, and/or investment advice since the availability and effectiveness of any strategy is dependent upon your individual facts and circumstances. Abacus Wealth Partners, LLC is not an accounting or legal firm. Please consult with your tax and/or legal professional regarding your specific tax and/or legal situation when determining if any of the mentioned strategies are right for you.

Please Note: Abacus does not make any representations or warranties as to the accuracy, timeliness, suitability, and completeness, or relevance of any information prepared by an unaffiliated third party, whether linked to Abacus’ website or blog or incorporated herein, and takes no responsibility for any such content. All such information is provided solely for convenience purposes only and all users thereof should be guided accordingly.

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