How We Help – Navigating Insurance
We’re living in unprecedented times, and just providing retirement options is no longer enough to guarantee your employees their safety and happiness. Every day they’re challenged with financial decisions that could make or break their financial wellbeing, putting your workplace at risk. Your Money Line provides expert guidance for your team to help navigate their day-to-day decisions with plans crafted with the help of our expert Financial Guides.
Besides our participant dashboard and it’s many tools and courses, one of the ways our Financial Guides help is by providing your participants with regular, up-to-date articles. Check out the article below for an example of what your team can expert to see from us!
Let’s set the scene:
Chris and Camila Careful are a lovely couple with two kids who try to do the right things in their financial life. They’ve insured their home and cars and have ten times their respective income in life insurance each. They’re feeling good about their risk mitigation plan. That is until their 17-year-old son, Caleb, caused a multi-car pile-up, and they were sued for damages of $900,000.
Liability insurance protects you from any accidents that are your fault. If someone else needs medical attention or has property damage, your liability coverage will cover their damages, and it’s required in most states. Your home or auto policy provides some level of liability protection, but usually not enough.
Let’s look at the “Careful’s” auto policy to determine how much liability coverage they have. An auto policy actually has three parts to liability, and those are the numbers you see that look something like 100/300/100 (your numbers may vary).
- The first number is the maximum coverage that any single person can receive in an accident.
- In this example, the second number, 300, means $300,000 maximum coverage for all injured parties.
- And the third number is the maximum property damage in an accident caused by the policyholder.
The Careful’s current coverage is 100/300/100, so they have $300,000 in personal liability under their auto policy. If they’re being sued for $800,000, they have $500,000 exposure. This is where a personal umbrella policy comes in handy.
A Personal Liability Umbrella Policy (PLUP) is a policy that provides additional liability coverage above and beyond auto or home liability coverage. In this example, the PLUP would kick in once the auto policy liability limit is reached and will cover damages and legal fees.
Umbrella policies are relatively inexpensive compared to other insurance products. A $1,000,000 policy can generally be had for $150-$200 per year.
How do you know if you need an umbrella policy? Some factors like having a swimming pool or trampoline, dogs, or anything else that might put you at risk of being sued. Having teenage drivers is another huge factor, as well as having assets above your home and auto liability coverage levels.
There is a small “gotcha” to be aware of if you buy a PLUP. A PLUP requires a minimum amount of liability coverage for your home and auto policies. You’ll want to be sure you have those minimums covered, or you’ll have a gap in coverage (out of your pocket) for the amount between your auto/home liability and the minimum the PLUP requires.
Umbrella policies are often thought of only as necessary for the wealthy, but they’re a great tool to have in your insurance box to ensure you’re never at risk of losing what you’ve worked hard to build.
If they had a time machine, The Careful’s could go back in time to talk about potential liability with a Your Money Line Financial Guide. With no products to sell or commissions to earn, our Financial Guides are ready to help participants learn about potential liability with no underlying financial motivation. Click here to learn more about how our team can help your population navigate this and other financial hurdles.