Most people have insurance on their houses and their cars. The wealthy also insure their other types of properties such as boats and planes. The issue for many people from the most affluent to those with much less is do they have enough coverage considering their level of personal wealth. For the most part the answer is probably no. Failing to have sufficient personal coverage can possibly adverse impact their business interests as well.
According to Adam Hale, cofounder and COO of Summit CPA Group, a leading accounting firm providing virtual CFO services throughout North America, “We find that many business owners, while they have liability insurance on their companies, are not taking the same approach to protecting themselves when it comes to their personal lives. Also, by not properly insuring themselves, they are often potentially putting their equity in their companies at risk. That’s why with our clients we systematically look at all their liability issues to provide them the best way to address managing risk and that usually includes fixing or improving or getting the right personal umbrella policy for each of them.”
As business owners become more successful – as their businesses grow – and as they build greater personal wealth, making sure their personal umbrella policies keep up and are providing the appropriate coverage is not inherently problematic. According to Joseph Weiss, a leading authority on liability insurance with Bruce Gendelman Insurance Services, “One of the failings for many business owners in obtaining appropriate umbrella policies is understanding what’s at stake and the level of risk they are assuming. Once this is understood, most can better analyze their risks and obtain the appropriate amount of coverage. Since personal umbrella polices are inexpensive compared to other asset protection strategies, they remain one of the most flexible and primary wealth protection tools for a business owner.”
Complicating the matter for many business owners purchasing personal umbrella policies is that there are many professionals who have a limited understanding and lack access to policies that can provide greater coverage. “We work with a lot of very wealthy entrepreneurs,” says Anthony Glomski, author of Liquidity & You and founder of the internationally recognized wealth management firm, AG Asset Advisory. “Many of them were told they cannot get more coverage… they can’t get a larger personal umbrella policy. What they’ve really been told is that they need to find another P&C professional. We have extremely knowledgeable and capable specialists as part of my team. We can get them the coverage they require.”
Personal umbrella policies are a very cost effective way to help manage risk. For business owners they can be essential in helping protecting their wealth including their equity in their companies.
By: Russ Alan Prince