If you are an adult beginning to provide more oversight to a parent, proper insurance is often overlooked or neglected. While some changes in a senior’s lifestyle may seem to reduce liability exposure, the opposite may actually be true.
A family trust may be used for wealth management and estate planning. When you create this new entity, it also needs to be protected. Many times this is simple to do and free. Most insurance companies do not charge any to add a family trust to a homeowner insurance policy when the home has been titled in the name of the trust. Others may charge a nominal fee. However if you do not take this simple step, you are leaving the assets of the trust exposed in the event of a lawsuit. Any and all property titled in the name of trust should include the trust as an additional insured with the corresponding insurance policy. This will also make certain that any trustee acting for the trust is also covered by the insurance policy.
A senior who has lived in the same home for many years often has a significant net worth based only on the value of the home. With no mortgage, in many parts of the country they may have a net worth of over $1,000,000 only considering the value of the home. Other assets, like retirement savings, also add to the individual’s net worth. Those assets need to be protected with the proper limits of insurance. Home and auto insurance policies that haven’t been looked at in decades may be providing only a fraction of the amount needed to protect those assets. An umbrella policy can often be purchased for under $200 per year to provide this coverage.
When a senior realize that the home they’ve lived in for many years is too much to care for, they may choose to sell their beloved home and use the funds to live elsewhere. Whether rented or owned, and whether in a smaller, private residence, or an assisted living facility, the individual still has a significant liability exposure. If the smaller home is purchased in cash, there isn’t a lender to require insurance. The home still needs to be protected from physical loss and the owner still needs liability coverage to protect their assets. If the senior rents a residence, a renter’s insurance policy is still appropriate to provide the individual with personal liability insurance as the assets from the sale of the home are exposed without appropriate coverage.
While downsizing both a home and personal property may seem like it is limiting exposure, the increasing age of the individual may actually be increasing exposure. The greatest exposure for any regular individual is simply driving a car down the road. This is nearly every persons chance to cause serious bodily injury or death to others. Think of how many times you have heard of someone mistaking the gas and brake pedal and crashing through a storefront. Keeping limits appropriate to cover the assets of the individual will make sure that their assets are properly covered.
Working with an independent insurance agent who can evaluate all of the exposures, you can be assured that all of the exposures and assets are properly insured. One agent who can handle home, rental properties, renters insurance and auto insurance can also provide a comprehensive umbrella policy over all assets and help eliminate gaps in coverage that may otherwise exist because of placing individual coverage elsewhere. We are such an independent agent who specializes in all the above coverages, so call us for a free consultation at 925.737.1560.