Opening a letter that says you are being sued has to be one of the least desirable moments in life. Unfortunately, it’s one that wealthy families increasingly fear. In an ACE survey of households with $5 million or more in investable assets, 82% felt their wealth alone made them an attractive target for lawsuits. Moreover, given the tepid economic recovery, many believed their likelihood of being sued had risen.
What do wealthy families fear most about being sued? Surprisingly, it’s not being insufficiently insured and having to sell off assets in a costly settlement or verdict. Rather, they fear the time, stress and expense of defending themselves from lawsuit. More than half the respondents in the ACE survey cited those concerns, compared to a third who cited insufficient insurance and financial loss. For some families, reputation damage tops their list.
To be sure, insufficient liability coverage poses a key threat to families with substantial assets. Jury awards and settlements for damages involving serious injury can reach into the tens of millions of dollars. Since liability coverage in auto and home policies rarely exceeds $500,000, a sound wealth protection plan must include adequate limits of umbrella liability coverage to protect assets at risk.