The first tip anyone well-versed in the world of investing will give you is “diversify your investments”. The goal here is to invest your money into a variety of instruments to create a mixed bag. This ensures you do not take a financial hit if one category is performing badly. While this is sound advice, you can also leverage insurance policies to protect your assets and other belongings.
Let’s go through a few options.
Home Insurance Provisions
Your home is your sanctuary, and you likely store a lot of valuable belongings in it. Despite taking security measures, there is always a possibility that your assets may be compromised; Through theft for example. In 2021, over 899,700 cases of theft and burglary were reported in the United States.
Luckily, more often than not, your home insurance policy has provisions made for theft. If you experience theft, you can file a claim with your insurance provider to seek compensation. Provisions for theft are included under the personal property protection your insurance provides.
Byrnes Agency points out how affluent individuals with valuable art and jewelry stored at home avail of Jewelry and art insurance policies to protect their valuable assets in case of theft or damage.
Make sure to read the terms and conditions of your home insurance policy before you sign the papers to make sure that all your requirements are met.
Car Insurance Provisions
You can also make use of your car insurance policy to protect your personal belongings. There are two primary types of car insurance: Third-party insurance, and comprehensive insurance. The latter provides more extensive coverage.
If your car is stolen, your comprehensive car insurance policy will help you recoup losses you have incurred, up until a certain amount. Here, a comprehensive car insurance policy is better suited to cover the theft of your vehicle.
When it comes to auto insurance or even home insurance policies, there are several types of policies you can avail of, each built to serve a different platter of needs. Click here to find out more about the types of insurance policies that exist, and which one could be right for you.
Property Insurance
Unfortunately, car insurance doesn’t often offer coverage for items that could be stolen from your vehicle. A nifty trick here is to leverage your homeowners insurance which provides coverage for personal property. This coverage is not always limited to the confines of your home, and you can use it to file a claim if items are stolen from your car, or while you are out and about.
Personal Liability Insurance
This provision in your insurance policy is developed solely by keeping the protection of your assets in mind. Personal liability insurance is designed to protect the policyholder from a loss of assets that could result from lawsuits or other such claims.
It is possible that we may be at fault during some incidents. If you are in a car accident, or if a visitor is injured at your home, for example. In this case, the person held liable for the damage will have to pay out of pocket for things like :
- Injury/Physical damage incurred
- Settlement for lawsuits you may be involved in
- Damage to personal property caused by you
Check the terms of personal liability coverage in your existing home and car insurance policies to better understand what coverage you are being offered, and if you need more add-ons etc.
Umbrella Insurance
A more extensive version of the aforementioned personal liability insurance is known as umbrella insurance. This type of insurance policy is designed to protect your assets from legal fees and other costs you may incur.
Umbrella insurance can be looked at as ‘added security’, and is often availed of by High Net-worth Individuals (HNIs) to protect their assets and belongings.
The key here is that an umbrella insurance policy is activated after you have exhausted the coverage of your home or car insurance policy. These policies are limited to personal liability payouts, and an umbrella insurance policy is built to provide coverage over and above this.
There are, however, certain requirements you have to meet before you can get umbrella insurance. Applicants have to have existing auto insurance of up to $150,000- $250,000, and $250,000 to $300,000 of coverage in homeowners insurance.
Generally, umbrella insurance is more suited for those who are part of lawsuits, or are at risk of being sued.
Conclusion
Building a strong portfolio of assets is a taxing process. The feeling of losing your hard-earned assets, however, is even worse. Luckily, if your home and car security systems are unable to protect your assets (there is always a chance of this happening), your insurance policy has your back.
Perhaps the most important aspect of using insurance policies to protect your assets is to assess your liabilities beforehand. Make sure your insurance policies cover the areas where you could be left financially vulnerable.