Risk Management of Your Financial Strategy

We all know insurance companies are not non-profit agencies, and so there are many types of insurance available for purchase. In general, I would recommend insuring the catastrophic losses that could occur (i.e. loss of income, loss of home, loss of a valuable car or collectible, etc.) and self-insuring through sufficient reserves for potential smaller losses.

One of the few insurance coverages I am a fan of is personal liability protection with umbrella liability coverage, which picks up where the smaller amounts of liability protection within your auto and home owners/renters policy leaves off. This safeguard pays for a judgment amount against you for many different circumstances (i.e. someone injured on your property, your animal causing harm or damage, libel and slander, etc.). Of course, please consult directly with your property and casualty insurance agent for your policy’s particular depth.

(Editor: See examples of million-dollar lawsuits where umbrella liability coverage helps cover the difference.)

Umbrella liability is usually best to package and add on with the same carrier you already have your homeowner’s/renter’s and auto insurance with for discounts. Since your other policies’ limits serve as a form of a deductible for your umbrella policy, it is relatively cheap (in most states $1 million of coverage will not cost more than $200 per year, but of course this price per risk is determined on an individual basis).

This coverage also comes in increments of $1 million, typically an adequate amount when starting your career. However, as your net worth increase, you should add chunks of $1 million coverage.

Jon C. Ylinen is a Financial Advisor with North Star Resource Group and offers securities and investment advisory services through CRI Securities, LLC. and Securian Financial Services, Inc., Members FINRA/SIPC. CRI Securities, LLC. is affiliated with Securian Financial Services, Inc. and North Star Resource Group. North Star Resource Group is not affiliated with Securian Financial Services, Inc. Please consult a financial professional for specific advice in relation to your individual circumstances. This should not be considered as tax, specific loan repayment for an individual or legal advice. 865255IR/ DOFU 02-2014.