Our Homes; Our Largest Assets

Blood out of a Turnip

If you are one of the very, very fortunate families to own a home here in the Peninsula, you most likely have benefited from appreciation.  I understand the appreciation has slowed, but most of us still have positive equity.  When you put your money in a bank, most of us know at this point to look for FDIC backed banks to insure you have some type of protection for your money should the bank go under.  If you have an employer sponsored retirement plan, your employer is required to have some type of bond to protect some of that money too.  What do you have in place to protect your biggest asset, the equity in your home?  

Well, if you have a home loan, you are required to have homeowner’s insurance.  If you are a renter, you still have the need to protect your other assets (see prior BLOG entry on renter’s insurance).  Your liability coverage on both your home policy and your auto policy can turn out to be your best friend.  Your liability protection is in place to provide your insurance company with money to settle a claim in which you are liable.  Most people think of this in the context of an auto accident, people are killed in their cars more often than this insurance agent likes to think about…..BUT, people also slip and fall at peoples homes, children drown in their pools, children are hit with a baseball bat when someone is not monitoring the Piñata, it happens.  As a matter of fact, this last Saturday, my own daughter fell (or as she insists, was pushed), out of a jumpy and has a gash on her back and hit her head.  An accident yes, but had she been severely injured, is there a liability exposure for the homeowner, you bet there is.  

This is where your liability comes into play.  Your liability should have some direct correlation with your assets.  If you are one of those people who thinks the state required minimums on your auto insurance are adequate as you “don’t really drive that much,” you could be setting yourself up for a serious problem.  In case you are wondering what the state requirements are, here you go:  15/30/5.  That means your insurance company will pay a maximum of $15,000 per person for bodily injury, $30,000 total per accident for bodily injury and $5000 for property damage.  Better not total a Mercedes, BMW or a Ferrari for that matter!  If God forbid you kill someone in your car, they will pay $15,000, that is it.  How do you think the surviving family will react to this?  Do you think they will be happy with the $15,000 check your insurance gladly writes them?  Would you be? 

 If you have not looked into a Personal Liability Umbrella Policy, please do so now.  This type of policy will give your insurance company an additional $ 1 million of protection to help settle the claim.  This is a minimum amount; you may need 2, 3 or even 4 million to protect your assets.  This is something your financial planner, or your insurance agent can help you with.  For a nominal annual fee, would you rather have your insurance company write a check, or go into the equity of your home?    

This is an easy choice to make.  To make it an even easier choice, one of my employees just handed me a copy of a recent article in the New York Times, dated, March 18th.  Guess what the title is?  Umbrella Coverage for Preventing Your Ruin.  This is serious business folks. You can check out the article by clicking on this direct link: 


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