With Wealth Comes Worry

June 12, 2019

America is the land of the litigious. In other words, it’s a lawyer’s market. From scalding hot café drink to cracks in the rich neighbor’s sidewalk, where people see wealth, they see opportunity.

To further fortify your roof of protections, think outside the box. Like everyone else, you probably equate the ‘unexpected’ with death, disease or natural disaster. But during your lifetime, you’re bound to face financial threat in the form of other people—specifically, sue-happy ones.

Whether we’re talking about personal or business assets, I always advise clients to strongly consider extra liability insurance, aka an umbrella policy.

You might think, ‘But I’m so safe. Why buy the umbrella when I already have the roof?’

Let’s stick with the analogy. While most homes can handle a little rain, what happens in the event of a hurricane? A flash flood? The tsunami of the century?

Ask anyone who has been on the receiving end of a lawsuit, and they’ll tell you all about the exorbitant costs. An umbrella policy adds that extra bit of support to the existing roof of your financial home. Here’s how you stand to benefit:

  • Liability insurance protects both your current and future assets
  • In many cases, the policy protects you whether you’re guilty or not
  • If you need legal defense, the policy can help pay out of pocket expenses
  • The policy can help cover accidents that happen on your property
  • The policy can help cover accidents that happen due to your negligence
  • Coverage includes personal injury, property damage and more

Sure, the odds may be in your favor. But how many stories have you read with the ‘wrongfully accused’ storyline? The inspiration has to come from somewhere!

*The Insurance Information Institute reports that 1 in 15 insured homes have a claim processed each year; 1 in 750 have a liability claim related to a lawsuit. Specifically, research mentions the policyholder or family members causing bodily injury or property damage to others.

Of course, you may already have homeowners and car (liability) insurance. But there are limits associated with those plans. If someone becomes permanently injured in front of your house or in the course of a car accident, all of your assets and future income are at stake. In America, negligence is a ‘real’ thing, so extra liability insurance is essential.

The good news is, umbrella policies are extremely inexpensive, running in the $200 range annually for $1M worth of coverage. If you decide to roll the dice and live on luck, just remember: when it rains, it pours.

*Insurance Information Institute calculations, based on ISO®, a Verisk Analytics® business, data for homeowners insurance claims from 2012-2016

Series contributor:
Mendy Kaufman, BFG Associate

Starting his career as a tax preparer for a reputable CPA firm, Mendy Kaufman joined BFG in 2015 to better serve himself and the greater community. He is now a successful fully licensed broker, and also works as an investment advisor with Park Avenue Securities.

Having amassed years of direct tax experience, Kaufman has a keen ability for helping people understand their unique financial situations. This also allows him to personalize products to their exact needs. In his free time, you can find Mendy reading books and delving into thelatest industry research. He also enjoys empowering up-and-coming BFG entrepreneurs and participating in charitable causes like Bikur Cholim and Chesed of Williamsburg.



Mendy Kaufman is a Registered Representative and Financial Advisor of Park Avenue Securities LLC (PAS). OSJ: 7 Hanover Square, New York, NY 10004, 1-888-600-4667. Securities products and advisory services offered through PAS, member FINRA, SIPC. The Guardian Life Insurance Company of America® (Guardian), New York, NY. PAS is an indirect, wholly-owned subsidiary of Guardian. Brooklyn Financial, which is the doing business as (DBA) name of Guardian Distributors, LLC, is an Agency of The Guardian Life Insurance Company of America® (Guardian), New York, NY. Guardian, its subsidiaries, agents, and employees do not provide tax, legal, or accounting advice. Consult your tax, legal, or accounting professional regarding your individual situation.

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