Protecting Assets?

[oldtoyota]

Hi there--

I was reviewing our car insurance and thinking it was time to increase our liability coverage. I am a little clueless as to what I need to do though. Do I want to cover up to the amount of money I have saved?

Someone on this board told me money in 401K accounts is well protected from potential lawsuits and so I may choose to keep some money in the plan of a former employer. At the very least, I'm going to do some research to see what protection I may need before I take a the next step.

We have a home, so we have liability coverage via our home owner's ins. However, I have not reviewed it in quite some time.

Would these policies be enough to project me if, say, someone slipped on a banana peel in my house?

Any thoughts here?

[aj_yooper]

Some people who have house and auto coverage with the same company buy an umbrella policy that increases their overall liability protection.  As an aside, I believe OJ paid for part of his first defense using that coverage.  He also had his advisers build a wall so it was difficult to touch his assets so I am thinking it can be done.

[oldtoyota]

Some people who have house and auto coverage with the same company buy an umbrella policy that increases their overall liability protection.  As an aside, I believe OJ paid for part of his first defense using that coverage.  He also had his advisers build a wall so it was difficult to touch his assets so I am thinking it can be done.

Thanks. I got into this nutty conversation with someone about how a person can break into your house, get hurt and then sue you. Even if they lose, the process can be costly. So, basically, it's that kind of thing I'm looking to protect myself from. My car and home owner's ins is done by two different places. I'll call one of them, though, and see if I can combine them and keep the same amazing price we have.

[SnackDog]

Equally, a car accident could put you in a $10 million lawsuit so you want the coverage not just for the house but also the car.  The umbrella will cover both plus other rare situations.  Depending on what state you live in, some of your assets, such as home, may be safe from legal judgements and/or bankruptcy.

[irastache]

First step is probably to consider your net worth (so add up all your assets and subtract your debt). This does not have to be exact. Getting a ball park figure is all you need.

Next consider how wealthy you look. To the average person, there is an expectation that a doctor is wealthy. (Maybe the doctor is poor with huge student loans, but still people will expect that a doctor is well off). Again the goal is just to get an idea here.

Take the higher of the two!

Consider your insurance. First is auto because I assume you own a car. Make sure you understand the different categories of insurance and what kinds of issues they protect against. No help here but to go read about them. Here is one place: https://www.usaa.com/inet/pages/advice_auto_insurance_main?akredirect=true

Do you own or rent? Both are important to have depending on your circumstance. Same deal here, make sure you understand the categories for each and what they cover. Really no hope except to understand what could happen to you and how it gets covered.

So now you've understood what you are protecting and how the insurance covers it.

The only other thing to add is if you are worth or look to be worth over one million then an umbrella policy is a cheap way to extend your auto and home coverage to meet your needs.

[oldtoyota]

Thanks! I appreciate the advice!

[Mr Mark]

There are two things you describe.

The cost of getting sued, legal defense etc,

And the liabilities if found guilty.

I have insurance for the first and it's quite cheap, I think around $10 a month.

The liabilities are probably covered via house insurance and car insurance. If you're a normal person and take all reasonable care you are unlikely to be found liable, in my humble nonlawer opinion.