Protect Your Financial Future
The Crucial Role of
Umbrella Insurance
In recent years, California has experienced a surge in personal injury lawsuits driven by the uptick in bodily injury and premise liability cases. Consequently, many of our clients often ask, “How can I safeguard myself in a lawsuit?” The answer lies in what you can do to protect yourself before getting sued. In terms of California law, there’s good and bad news. The downside is that your living trust does not protect your assets if you get sued. Your heirs have protection through the Life Plan Inheritance Trusts provided in your Life Plan Living Trust, but that does not protect you while you are alive. On to the good news: The California Homestead Exemption automatically protects a portion of the equity in your home. This was covered in detail in our May 2023 Newsletter. To summarize, up to about $675,000 of the equity in your home is automatically protected if there is a judgment against you. The exact amount depends on the median home price in the county where you reside. That is helpful, but it may not be enough to help you sleep peacefully at night.
covers liability stemming from personal injury, property damage, and specific legal actions. This coverage shields you from judgments resulting from your actions, as well as those of your spouse and dependents residing in your household. “If you don’t already have a PUP, we suggest you ask your insurance broker for more details on the type of coverage available and how it can work for you.” How Does PUP Work? The ins and outs of PUP are straightforward. For instance, suppose you’re involved in a car accident where the injuries sustained by the other driver, though not severe, hinder their ability to work for six months. Since you’re deemed at fault and the injured driver holds a lucrative job, the repercussions are significant. They are claiming $1,250,000 in damages. Unfortunately, your auto policy has a limit of $250,000. If you have a PUP, it will kick in and pick up the extra million- dollar difference between the damages and your auto policy limit (assuming you have $1,000,000 in PUP coverage). While PUP coverage is a great tool in protecting your assets, it has limitations. If you don’t already have a PUP, we suggest that you ask your insurance broker for more details on the type of coverage available and how it can work for you. After all, it may just help you sleep better at night.
Thankfully, umbrella insurance can help to alleviate some of these concerns.
What Is Umbrella Insurance? A personal umbrella policy (PUP) might be the solution for those seeking added protection. While you should contact your insurance agent to get the details of how a PUP can protect you and the limits of that protection, we’ll give you a brief overview of how it generally works. PUP is extra insurance that you can obtain, usually at very affordable rates, to provide extra coverage for personal liability above and beyond the limits of your other insurance (home, auto, boat, etc.). Usually, it
2 PrestonEstatePlanning.com
Made with FlippingBook Ebook Creator