If you are accumulating wealth quickly and live the comfortable life with a large house, luxury car and other expensive assets, you’ve no doubt already insured all of those belongings.
But while most high-net-worth individuals have their possessions properly covered, they often overlook their largest risk: liability. In fact, they often over-insure against minor threats and underinsure for major ones.
Many people will carry low minimums on their auto and homeowner’s policies, which leaves them exposed to any liability lawsuits that may surface. If the maximum payout on your homeowner’s or car insurance is less than the attachment point of your umbrella policy, you could be left having to cover the gap between the two. The Wealth Trap: Underinsuring Liability, Over-insuring Assets