1 00:00:00,000 --> 00:00:05,340 Ralph: Do you know, if your insurance coverage is enough to protect your assets in a worst case scenario? 2 00:00:05,939 --> 00:00:07,410 Well, let's talk about that today. 3 00:00:07,560 --> 00:00:11,040 We're going to specifically talk about umbrella insurance policies. 4 00:00:11,220 --> 00:00:14,040 And if you need one to protect your personal assets. 5 00:00:15,833 --> 00:00:34,933 Welcome to the Ask Ralph Podcast, where listening to an experienced financial professional with over 30 years of experience can help you make sense of confusing questions, current headlines, and industry trends about taxes, small business, financial decision making, investment strategies, and even the art of proper budgeting. 6 00:00:35,233 --> 00:00:42,013 Ask Ralph makes the complex simple by sharing his real world knowledge from a Christian perspective with all things financial. 7 00:00:42,263 --> 00:00:44,813 Now here's your host, Ralph Estep,, Jr. 8 00:00:46,705 --> 00:00:47,930 Ralph: Welcome to our Saturday show. 9 00:00:47,930 --> 00:00:49,430 I'm so glad you chose to join us. 10 00:00:49,700 --> 00:00:52,160 I just want to thank you for listening and supporting the program. 11 00:00:52,490 --> 00:00:57,170 I'm coming to you as normal from the Estep farm and the beautiful Saggio Accounting studio. 12 00:00:57,470 --> 00:01:07,820 Let me put on my podcaster hat and put down those overalls and let's move that adding machine to the side this morning, and let's get into some financial wisdom from a Christian perspective. 13 00:01:08,150 --> 00:01:11,720 Today, we're going to do a deep dive into umbrella insurance policies. 14 00:01:11,720 --> 00:01:15,170 And no, these are not insurance policies to protect you when it rains. 15 00:01:15,530 --> 00:01:17,120 We're going to discuss what they are. 16 00:01:17,360 --> 00:01:21,260 Who needs them and whether they align with biblical financial principles. 17 00:01:21,680 --> 00:01:23,390 Most of us insure our homes. 18 00:01:23,570 --> 00:01:24,890 We insure our cars. 19 00:01:25,190 --> 00:01:35,990 And we have health insurance because we understand the importance of managing risk, but what happens when a serious accident leads to damage or lawsuits that exceed our normal policy limits? 20 00:01:36,440 --> 00:01:37,280 The truth is folks. 21 00:01:37,280 --> 00:01:42,080 Our assets could be at risk if we don't have additional liability coverage in place. 22 00:01:42,470 --> 00:01:45,230 That's where umbrella insurance policies come in handy. 23 00:01:45,830 --> 00:01:48,590 Don't forget to subscribe to the show and join our email list. 24 00:01:48,800 --> 00:01:54,890 You do that at askralphpodcast.com . You don't want to miss tomorrow's show tomorrow's our spiritual Sunday show. 25 00:01:54,890 --> 00:01:57,530 And we're going to talk about living in gratitude. 26 00:01:57,890 --> 00:02:02,390 That's something we can all learn from so I'm going to, encourage you to make sure you tune in for tomorrow. 27 00:02:02,390 --> 00:02:04,550 Show living in gratitude. 28 00:02:05,126 --> 00:02:06,950 Well, let's start with today's Bible verse. 29 00:02:07,190 --> 00:02:11,630 It comes to us from the book of Proverbs chapter 27, verse 12, and it says this. 30 00:02:12,170 --> 00:02:17,840 The prudent, see danger and take refuge, but the simple keep going and pay the penalty. 31 00:02:18,140 --> 00:02:19,280 I thought that was a great one. 32 00:02:19,280 --> 00:02:20,540 When we talk about insurance. 33 00:02:20,960 --> 00:02:25,100 Just as wisdom teaches us to prepare and protect ourselves from physical danger. 34 00:02:25,340 --> 00:02:28,760 Having proper insurance coverage protects us financially. 35 00:02:29,000 --> 00:02:37,160 When the unexpected arrives and my friends, if you've lived any amount of time in this world, You know, we are always faced with unexpected situations. 36 00:02:37,520 --> 00:02:39,620 So let's start with a basic question. 37 00:02:39,860 --> 00:02:43,040 And that's Ralph, what is umbrella insurance? 38 00:02:43,220 --> 00:02:45,500 And as I said, it has nothing to do with the weather. 39 00:02:46,010 --> 00:02:56,330 An umbrella insurance policy provides additional liability coverage beyond what's included in your normal homeowners in your renters, your auto or your watercraft insurance. 40 00:02:56,660 --> 00:03:01,790 It protects your assets like investment properties, savings accounts, or retirement funds. 41 00:03:01,790 --> 00:03:11,330 When you're found legally responsible for causing bodily injury, maybe you've been found guilty of property damage or personal injury caused to another person. 42 00:03:11,796 --> 00:03:13,936 For example, here's one we can talk about. 43 00:03:14,116 --> 00:03:16,996 If you accidentally injured someone in a car accident. 44 00:03:17,356 --> 00:03:20,326 And they sue you further medical bills and loss of wages. 45 00:03:20,656 --> 00:03:25,366 And if that amount of the lawsuit that's given to them exceed your auto limit policy. 46 00:03:25,706 --> 00:03:26,366 And listen folks. 47 00:03:26,366 --> 00:03:29,816 Most people's auto limit policy is only $300,000. 48 00:03:30,056 --> 00:03:33,416 So once you reach that, then they're going to come after you personally. 49 00:03:33,776 --> 00:03:38,336 Well, this is where umbrella policy step in a coverage helps pay for those damages. 50 00:03:38,336 --> 00:03:39,956 So your assets stay protected. 51 00:03:40,376 --> 00:03:45,536 So if someone was to sue you and you only had that $300,000 policy limit. 52 00:03:45,986 --> 00:03:50,066 If the court or a judge or a jury, awards them more than that, guess what? 53 00:03:50,426 --> 00:03:52,046 You may have to sell your home. 54 00:03:52,166 --> 00:03:54,446 They may be able to go after your personal assets. 55 00:03:54,476 --> 00:03:57,116 Now I'm not an attorney and I don't play one on TV. 56 00:03:57,116 --> 00:04:01,766 I'm not giving you legal advice, but this is the whole point of an umbrella policy. 57 00:04:02,066 --> 00:04:03,386 It kicks in. 58 00:04:03,386 --> 00:04:06,146 Once you reach that maximum limit on your policy. 59 00:04:06,836 --> 00:04:11,306 So now that we know what an umbrella policy is, let's talk about who needs these insurance policies? 60 00:04:11,876 --> 00:04:12,476 Here's the deal. 61 00:04:12,476 --> 00:04:18,716 Folks, umbrella insurance is recommended for high net worth individuals with substantial assets to protect. 62 00:04:19,046 --> 00:04:20,186 Well, you might say Ralph. 63 00:04:20,666 --> 00:04:24,356 Maybe I'm not a high worth individual, but here's the thing I'm going to add to that. 64 00:04:24,686 --> 00:04:26,036 It also provides extra coverage. 65 00:04:26,036 --> 00:04:32,516 If you engage in activities with increased liability risks, like those things could be something such as teenage drivers. 66 00:04:32,906 --> 00:04:36,206 If you have a home rental or if you own any watercraft. 67 00:04:36,446 --> 00:04:43,196 So it's not just if you're a high net worth individual, but if you have any risks, like teenage drivers, a lot of us have gone through that. 68 00:04:43,196 --> 00:04:44,666 I know I went through that with my two boys. 69 00:04:44,936 --> 00:04:49,946 Maybe you rent a home or you rent multiple homes or you own a boat or some other kind of watercraft. 70 00:04:50,516 --> 00:04:58,616 As a general rule of thumb, if your net worth exceeds $500,000 not counting your home's value, umbrella coverage is a wise idea. 71 00:04:58,946 --> 00:05:05,666 Or if you own multiple properties that you rent out, having that umbrella policy gives rental property owner, significant peace of mind. 72 00:05:05,666 --> 00:05:09,386 This is something I recommend for all of my clients who own rental properties. 73 00:05:09,716 --> 00:05:11,696 So now let's cover the benefits. 74 00:05:12,086 --> 00:05:14,036 Of these umbrella insurance policies. 75 00:05:14,036 --> 00:05:15,506 And the first one is the biggest one. 76 00:05:15,926 --> 00:05:17,456 It protects your assets. 77 00:05:17,786 --> 00:05:21,546 With an umbrella policy, your assets like investment accounts retirement. 78 00:05:21,566 --> 00:05:24,656 accounts savings and college funds are shielded. 79 00:05:24,896 --> 00:05:35,246 If you ever need to pay out a large settlement, they can't touch them because your umbrella policy is going to take the place and cover up to that new amount over and above your normal limit. 80 00:05:35,456 --> 00:05:38,036 Number two, it provides higher liability coverage. 81 00:05:38,036 --> 00:05:39,386 That's exactly what you were talking about. 82 00:05:39,716 --> 00:05:47,066 Umbrella policies generally provide between 1 million to $5 million in additional coverage above your other insurance policies. 83 00:05:47,276 --> 00:05:49,286 Some go as high as 10 to 15 million. 84 00:05:49,526 --> 00:05:51,686 So let's talk about a real life example. 85 00:05:51,956 --> 00:05:53,186 Actually had this happen. 86 00:05:53,396 --> 00:05:56,016 Many many years ago to someone I knew pretty closely. 87 00:05:56,016 --> 00:06:01,116 One of my former clients, they actually had a cleaning person that came to their house and it was the winter months. 88 00:06:01,446 --> 00:06:05,796 Well, this cleaning person decided to walk across the sidewalk that they hadn't cleared yet from snow. 89 00:06:05,796 --> 00:06:06,846 And they slipped and fell. 90 00:06:07,266 --> 00:06:09,726 And they did have some significant injuries. 91 00:06:10,236 --> 00:06:11,406 Well, here's the deal folks. 92 00:06:11,556 --> 00:06:15,906 The insurance company for their homeowners policy only went up to $300,000. 93 00:06:16,176 --> 00:06:21,216 Well, this particular individual went to court and was awarded $750,000. 94 00:06:21,666 --> 00:06:26,256 Now, in this particular case, this person did not have an umbrella policy. 95 00:06:26,616 --> 00:06:34,716 So they ended up going over and above their insurance limit and they had to scramble and find ways to pay that they ended up losing their home. 96 00:06:35,076 --> 00:06:37,866 So, this is where an umbrella policy would have protected them. 97 00:06:38,076 --> 00:06:40,566 So let's look at that same scenario over again. 98 00:06:40,866 --> 00:06:47,346 Had they had that umbrella policy, let's just say for a million dollars, they wouldn't have had to come out of pocket with anything. 99 00:06:47,646 --> 00:06:54,196 Because once they met that $300,000 limit for their home policy, then the umbrella policy would have kicked in and paid the difference. 100 00:06:54,406 --> 00:06:55,816 So let's move on to number three. 101 00:06:55,966 --> 00:06:56,866 And this one is huge. 102 00:06:57,196 --> 00:06:58,816 It also covers legal fees. 103 00:06:59,056 --> 00:07:05,416 If you ever need to defend yourself in court due to a liability lawsuit against you, attorney fees often exceed damages. 104 00:07:05,596 --> 00:07:12,166 In other words, the insurance companies might say, listen, we're going to go ahead and settle for that 300,000, because that's the most we're going to have to pay anyway. 105 00:07:12,376 --> 00:07:12,946 But guess what? 106 00:07:12,976 --> 00:07:15,736 Then folks you're left holding the bag for those attorney fees. 107 00:07:16,246 --> 00:07:20,746 Umbrella insurance handles both damages and legal costs up to that limit. 108 00:07:21,196 --> 00:07:23,896 Let's look at number four and that's affordable additional protection. 109 00:07:24,286 --> 00:07:25,066 Here's the truth. 110 00:07:25,126 --> 00:07:31,456 I was shocked when I actually bought one of these myself umbrella policies are reasonably priced for the additional coverage amounts provided. 111 00:07:31,906 --> 00:07:39,016 Here's the truth policies start around $150 to $300 per year on average for a million dollars in coverage. 112 00:07:39,346 --> 00:07:43,816 Think about that $50 a month or maybe $30 a month over the year. 113 00:07:43,936 --> 00:07:46,156 And you can get up to a million dollars in coverage. 114 00:07:46,636 --> 00:07:47,566 And listen, here's the truth. 115 00:07:47,986 --> 00:07:52,546 As with anything, there are potential drawbacks to consider when purchasing umbrella insurance. 116 00:07:53,026 --> 00:07:53,956 let's start by saying it. 117 00:07:53,986 --> 00:07:55,906 No insurance product is perfect though. 118 00:07:56,176 --> 00:07:57,856 Here are a couple of aspects to weigh in. 119 00:07:58,036 --> 00:07:58,576 Number one. 120 00:07:58,876 --> 00:08:00,886 It doesn't cover every situation. 121 00:08:01,306 --> 00:08:04,096 Umbrella protection applies to personal liability. 122 00:08:04,426 --> 00:08:09,646 It doesn't cover damage to your own assets and some policies have exclusions like auto collision coverage. 123 00:08:09,946 --> 00:08:12,226 So you want to make sure you understand the fine print. 124 00:08:12,646 --> 00:08:15,556 Number two, there is greater insurer scrutiny. 125 00:08:15,876 --> 00:08:20,536 due to the high coverage limits insurers, thoroughly vet applicants, reviewing driving records. 126 00:08:20,776 --> 00:08:24,196 They look at your violation history and more, which can be tedious. 127 00:08:24,196 --> 00:08:26,476 So it might take a little bit more to get this insurance. 128 00:08:26,806 --> 00:08:31,336 So you might ask Ralph does this type of insurance align with biblical financial principles. 129 00:08:31,636 --> 00:08:34,456 And the simple answer is absolutely it does. 130 00:08:34,756 --> 00:08:39,196 Having appropriate insurance aligns with biblical wisdom on managing risk responsibly. 131 00:08:39,646 --> 00:08:45,016 The book of Ecclesiastes chapter 11 verse two says invest in seven ventures. 132 00:08:45,016 --> 00:08:45,346 Yes. 133 00:08:45,376 --> 00:08:46,096 In eight. 134 00:08:46,486 --> 00:08:48,826 You don't know what disaster may come upon the land. 135 00:08:49,546 --> 00:09:03,356 Just as we diversify investments, having umbrella coverage, diversifies our protection in the event of a financial disaster and by shielding our hard-earned assets, we eliminate a stressful burden, which scripture advises us against in Matthew 6:25. 136 00:09:03,376 --> 00:09:04,846 And I encourage you to go read that. 137 00:09:05,296 --> 00:09:11,896 So now that we've considered the pros and cons of these policies, let's move on to some action steps, some action items that you can take. 138 00:09:12,316 --> 00:09:15,406 The first step is to find an umbrella policy that fits your needs. 139 00:09:15,406 --> 00:09:16,696 Well, how do you do that? 140 00:09:16,876 --> 00:09:17,926 Here's what I recommend. 141 00:09:18,286 --> 00:09:24,136 I recommend connecting with a knowledgeable insurance agent to discuss needs before picking a coverage amount. 142 00:09:24,136 --> 00:09:30,106 You need to talk to them about your assets, the properties that you own, the cars you have, the boats and other liability exposures. 143 00:09:30,406 --> 00:09:32,296 To customize the right policy. 144 00:09:32,656 --> 00:09:40,756 I would highly recommend you start with your auto carrier or with your homeowners insurance and ask them if they offer these umbrella policies. 145 00:09:41,206 --> 00:09:44,956 Then they'll be able to compare options from top providers for the best fit. 146 00:09:45,616 --> 00:09:51,136 You need to assess if your liability risk warrant, extra coverage above the existing policies. 147 00:09:51,136 --> 00:10:01,246 As we talked about, we use that standard rule of 500,000 net worth, or if you have rental properties and that's when you decide if umbrella protection brings value, peace of mind. 148 00:10:01,726 --> 00:10:06,616 If so calculate potential costs based on a 1 million to $5 million policy, 149 00:10:06,916 --> 00:10:12,136 And finally discuss options with an agent to secure the right umbrella policy for your situation. 150 00:10:12,436 --> 00:10:16,066 Now, before we wrap up on remind all of our listeners to visit our podcast page. 151 00:10:16,366 --> 00:10:23,866 You do that at askralphpodcast.com there you can leave a review, share your thoughts, or even send us a message with questions for future episodes. 152 00:10:24,076 --> 00:10:25,396 We're starting to get some of those. 153 00:10:25,396 --> 00:10:27,526 So I encourage you to do that while you're there. 154 00:10:27,556 --> 00:10:32,176 Make sure you join our email list so we can send you our daily email with what's going on with this show. 155 00:10:32,536 --> 00:10:34,096 You can also schedule a consultation. 156 00:10:34,096 --> 00:10:39,256 Me, if you have some specific items that you want to talk about, and here's what I'm going to ask you to do. 157 00:10:39,556 --> 00:10:42,766 If you know someone who may need this type of insurance coverage. 158 00:10:43,066 --> 00:10:45,106 I asked you to share this with them. 159 00:10:45,346 --> 00:10:48,166 I also ask you to share the show with all of your family and friends. 160 00:10:48,196 --> 00:10:48,976 The truth is folks. 161 00:10:49,336 --> 00:11:01,156 If each person will share it with just one person, we'll be able to double our listeners and reach more people with a positive message of how to master their finances and their life from a Christian perspective. 162 00:11:01,426 --> 00:11:02,776 So let's do a quick recap. 163 00:11:03,106 --> 00:11:10,066 On today's show we defined what umbrella policy is and why higher net worth individuals may opt for extra liability coverage. 164 00:11:10,336 --> 00:11:20,626 We highlighted the value umbrella policies provide in defending your assets in the event of a serious accident or lawsuit or rental property exposure beyond your normal policy limits. 165 00:11:21,106 --> 00:11:25,756 And we covered who generally needs it most plus weighed the advantages against a few potential disadvantages. 166 00:11:25,786 --> 00:11:31,576 Now, listen, most importantly, we connected prudent umbrella insurance to biblically based financial wisdom. 167 00:11:31,576 --> 00:11:36,586 And that's my goal in every program is how do we tie the finance and the faith together? 168 00:11:37,226 --> 00:11:37,726 In closing. 169 00:11:37,726 --> 00:11:38,056 I pray. 170 00:11:38,056 --> 00:11:47,516 The wisdom shared today gives you confidence in safeguarding, your hard work As first Timothy chapter five, verse eight, reminds us anyone who does not provide for their relatives. 171 00:11:47,786 --> 00:11:49,886 And especially for their own household. 172 00:11:50,156 --> 00:11:53,156 Has denied the faith and is worse than an unbeliever. 173 00:11:53,306 --> 00:11:53,576 Wow. 174 00:11:53,576 --> 00:11:54,386 That's harsh. 175 00:11:54,686 --> 00:11:55,916 But that's from the Bible folks. 176 00:11:56,246 --> 00:12:00,506 Let's continue making every effort to protect our livelihoods, through proper coverage. 177 00:12:00,806 --> 00:12:05,396 And as I always say, stay financially savvy my friends and may God bless you. 178 00:12:05,396 --> 00:12:06,552 Enjoy your Saturday.