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Asset Protection Plan
If you’re like most people, you own a decent amount of stuff; stuff that holds sentimental value, monetary value, or both. Losing it all, in a fire or flood, for example, is what common nightmares are made of. But what if it wasn’t a natural disaster at all, but rather a team of movers that came to steal everything you owned away? Believe it or not, it’s a common scene across this great litigious land that we call America. It’s so common in fact, that we’ve now developed ways to protect ourselves against man-made disasters the same way we do against the natural sort. It’s called Asset Protection Insurance.
What is Asset Protection?
Asset Protection Insurance was created to protect professionals, their spouses, and beneficiaries (when applicable) vulnerable to catastrophic lawsuits. This coverage helps protect the professional’s property interest by insuring 90% of the loss in the fair market value of the property caused by a legal judgment.
Here’s an important thing to note: Asset Protection Insurance is NOT malpractice or professional errors & omissions insurance. Malpractice policies generally cover only the first $1,000,000 of a catastrophic claim. Asset Protection Insurance is designed to protect personal assets when a rendered legal judgment exceeds existing insurance limits – an outcome that is becoming increasingly common. When a judgment causes personal assets to be lost (home, property, cash, securities, etc.), the Asset Protection Insurance policy will replace up to 90%* of the loss in value of the assets to the named beneficiaries.
So next time you wake up in a cold sweat over a fictional fire or flooding, you might want to think about asking your insurance agent if they would also recommend Asset Insurance Protection for your situation.
Some people unknowingly place too much confidence in prepaid legal services – a first attempt at legal protection. Prepaid legal services are useful at the basic level. However, there are some things that a prepaid legal plan can’t do. Times when something more sophisticated is required. Its limitations apply in tort litigation, criminal cases, and are of little help in traffic cases. Additionally, there are catastrophic lawsuits where the existing insurance limits are exceeded and additional liability insurance is necessary.
Asset protection (sometimes also referred to as debtor-creditor law) is a set of legal techniques and laws in protecting assets of individuals and business entities from civil money judgments. The goal of all asset protection planning is to insulate assets from claims of creditors.
Employee Assets Protection
If you are named personally in a lawsuit for something your policy excludes, your personal assets become fair game– home, financial accounts, life insurance policies that have a cash value, real estate, businesses, cars, electronics, investment portfolios, collections of art, antiques, etc. Lawyers are experts at identifying gaps and exclusions in insurance policies and consequently will go after damages that exceed your policy coverage. They will come to huff and puff until they blow your house, your bank account, and any other personal assets all down. An additional insurance policy may be necessary to make sure you don’t lose everything to the big bad wolf.
Most insurance policies cover general areas of liability but within those areas are dozens of exclusions. An XINSURANCE agent can help you determine areas of your business that may need extra coverage to protect your personal assets from being up for grabs. If you have a commercial general liability policy, for example, you may be covered for bodily injury or property damage to a third party but any instance involving pollution or transportation liability would be excluded. Another area of coverage is personal and advertising liability but you would not be covered for breach of contract, or libel.
Personal Asset Protection
Your assets are vulnerable as long as they are not protected. A simple accident could mean a total loss. For example, if your neighbor stepped in a hole on your property in the dark and broke his hip– you could be liable. If you have a trampoline– you are vulnerable and may be paying for your neighbor’s broken arm. If you own a dangerous dog breed and it bites someone– right again– you are vulnerable.
If you are a professional in a high-risk field such as a surgeon, attorney, or dentist, your personal assets become vulnerable if a lawsuit or claim is filed against you. If you are a business owner with sole ownership, your risk is extremely high. All of your personal assets become vulnerable to any kind of lawsuit while operating your business. If your business is an LLC (limited liability corporation) your assets are a little safer but it is not absolute protection. Your assets also become exposed and vulnerable in bankruptcy, divorce, or civil lawsuit.
Protect What You’ve Worked For
Ironically, through all that work you’ve put in, you are vulnerable; vulnerable to losing your assets to taxes, creditors and abusive claims. That’s when Asset Protection steps in. While there are ample suppliers of asset protection insurance against taxes and creditors, there is an underestimation of the need for protection against abusive claims.
The lure to processing frivolous lawsuits is the fact that the cost of even defending them (even before trial) is $94,000 according to Lodmell & Lodmell. In all honesty, the settlements that result from a majority of these cases seem more and more like legal extortion. And one of the most luring locations for unsubstantiated claims is in the employee world – wrongful termination, sexual harassment, and more.
So, what is the best method for protecting your assets in these cases? It’s called deterrence. If there’s little chance of receiving a settlement in a frivolous case, then there is little motivation to process the claim. The deterrence strategy protects business and family assets from the risk of potential liability while maintaining asset control. The process includes a workplace policy for resolving disputes and claims through arbitration. And, finally, it puts your assets out of reach, if necessary.
There are two major factors in this asset protection process: Asset Management Limited Partnership (AMLP) and the International Wealth Management Trust (IWMT). The AMLP puts a legal barrier between your assets and anyone trying to get them. The IWMT can, in the case of necessity, completely remove the asset from the reach of the U.S. Court System.
The key point is that the strategy needs to be established prior to any lawsuit or claim. Planning and preparation are crucial. So instead of leaving all your hard work out there to be grabbed by frauds, contact a company that knows how to properly structure a plan for truly protecting your assets—an insurance partner like XINSURANCE.
“How to Protect Your Assets from Abusive Claims” By Douglass S. Lodmell, J.D., LL.M. Co-founder, and Managing Partner, Lodmell & Lodmell, P.C.
Rick J. Lindsey hails from Salt Lake City, Utah. He began working in the mailroom of his father’s Salt Lake City insurance firm, getting his introduction to the business that became his lifelong career. Rick J. Lindsey quickly rose through the ranks while working in nearly every imaginable insurance industry job. As an entrepreneur, specialty lines underwriter, claims specialist, risk manager, and a licensed surplus lines broker, Rick J. Lindsey is highly skilled in all levels of leadership and execution. As he progressed on his career path, Rick J. Lindsey discovered an urgent need for insurers willing to write policies for high-risk individuals and businesses. He was frequently frustrated that he could not provide the liability protection these entities desperately needed to safeguard their assets. He also formed the belief that insurance companies acted too quickly to settle frivolous claims. Rick J. Lindsey decided to try a different approach. He started an insurance company and became the newly formed entity’s CEO. This opportunity has enabled Rick J. Lindsey to fill a void in the market and provide a valuable service to businesses, individuals, and insurance agents who write high-risk business. XINSURANCE also specializes in helping individuals and businesses who live a lifestyle or participate in activities that make them difficult for traditional carriers to insure. If you’ve been denied, non-renewed, or canceled coverage, don’t give up quite yet. Chances are XINSURANCE can help.