Whether you are a business entity or an individual, you are exposed to many risks in everyday life. Even if you are a meticulous person, be aware that a lawsuit can arise from all sorts of situations. In order to make sure you and your financials are safe, check out these ways to protect yourself against lawsuit.
Increase Your Liability Insurance
Having substantial assets or experiencing a sudden wealth event means that you should increase your liability limits. The amount of your new net worth should correspond to the amount of your personal Umbrella Liability Insurance. It is best to consult a licensed independent agent at Tipton Hill Insurance before receiving the windfall or inheritance, as this way our experience agents can help you protect your assets in a timely manner. The rates for such type of insurance are usually between $200 and $300 per $1 million in coverage.
Create Business Entities
Partnering with your friend or colleague to do business together is a great opportunity to increase your assets. However, make sure to have all informal partnerships formalized and create business entities for any small business or relevant work you do on the side. If you are the only person involved in a business, you are operating as a sole proprietor, meaning that in the event of a lawsuit your personal assets are in danger. Consider instead arranging a formal business structure, such as a Limited Liability Company or a corporation. This way, your personal assets will be protected from lawsuit against your company.
Keep Assets Separate from Your Spouse
In the event you have gained sudden wealth, by depositing the money into a joint account, you automatically give the spouse the right to the half of that money. This might not be a problem unless there is an issue of divorce and splitting inheritance between children. Talking to an attorney can help you in establishing a plan to keep your personal assets in a separate account.
Own Relevant Types of Insurance
Whether you are an individual or a business owner, you should be knowledgeable about and own the relevant types of insurance policies. Here are the must-have insurance policies for individuals:
- Auto Insurance – Apart from being required by the law, having auto insurance offers essential protection for you and your vehicle in the event of an accident. When choosing an auto insurance policy, it is best to look into full coverage, which offers not only liability protection, but also comprehensive and collision coverage.
- Homeowner’s Insurance or Renter’s Insurance – These insurance types will protect your property and personal belongings. If you live in areas at risk for flood or earthquake, you can also have relevant Flood Insurance and Earthquake Insurance policies looked up by a licensed independent insurance agent.
- Life Insurance – Life insurance is essential for the protection of your loved ones in the event of your sudden passing. Since younger people receive better rates on life insurance policies, it is best to look into a policy early.