I have $30 million in net worth, but is $10 million in general liability insurance enough for me?

Controversial podcaster Alex Jones recently lost his appeal in CT to contest the $1.4 billion judgment against him regarding his comments on the 2012 Sandy Hook massacre case. Jones alleged that the shooting was “faked”, and aggrieved parents and families of the victims sued for defamation and emotional distress.  Despite the fact that Jones’ net worth is considerably less than the awarded amount, the Alex Jones case, if anything emboldens further prospective class warfare abuse of the legal system to serve as a prospective jackpot lottery to squeeze the wealthy.

General Liability Insurance could have helped to ameliorate the damage, but Jones’ policy from West Bend Mutual denied coverage as the policy excluded “personal and advertising injury.” While there are many wealthy people with far less public profiles than Alex Jones, General Liability Insurance can be an invaluable, and relatively inexpensive way to protect one’s net worth if it grows substantial enough to make it a target for nuisance lawsuits and shakedown extortion plots by those looking to game the legal system. 

General Liability Insurance = Lawfare Protection

The current politically partisan climate has unfortunately rendered the legal system no longer blind. The biases of juries and judges has become increasingly pronounced, and this has become noticeable on multiple levels, through appellate courts, all the way up to SCOTUS. As a result, those who have been able to build their wealth may find themselves in the crosshairs for frivolous lawsuits or other types of targeted theft scams through the legal system. 

In order to protect against unforeseen future claims, General Liability Insurance can certainly be a good shield from asset loss in legal cases that may arise, including:

• Property Damage
• Bodily Injury
• Lawsuits against accidents for which the insured can be held liable.

Other types of General Liability Insurance for businesses, which is the type of policy owned by  Alex Jones, may also extend to product liability protection and shield against libel and slander suits.  

A successful business person who has amassed a $30 million net worth posted on Reddit to garner opinions on the degree of General Liability Insurance coverage he should have. His current policy was for $10 million, but recent research has led him to fear that sum might be insufficient. His details are as follows:

• The poster owns 2 homes (both are in FEMA flood zones) – insured, including for floods
• Wife owns an expensive jewelry collection – insured
• The family owns 3 cars – insured
• Poser owns a boat-insured
• $5 million is in an irrevocable trust for the children
• Some assets are in a revocable trust for both the poster and his wife

Protection From Claims, Both Real and Fake

The movie Consenting Adults (1992) starred Kevin Spacey as an insurance claims scam artist whose schemes escalate into blackmail and murder. Wealthy individuals like the Reddit poster would be a prime target for Spacey’s predator. Reddit respondents, including a personal injury attorney, offered a number of helpful tips for consideration by the poster and others in a similar situation:

• Umbrella Policies: Umbrella policies were suggested as an ancillary overall shortfall contingency for coverage beyond the current standing insurance policies. The umbrella policy could add several million dollars of additional coverage to encompass earnings, property, investments, cars, boats, auto accidents, and injuries sustained on the poster’s property. For example, if his automobile insurance covered up to $500,000 and a lawsuit award for $1.5 million is adjudicated against him, the umbrella policy can pay the additional $1million, instead of forcing the poster to tap savings or liquidate other assets to pay the difference.
• Revocable Trust Assets: While assets such as a house, collectible art, cars, or other valuable items can be protected in a trust from being claimed in a lawsuit, the assets themselves still require insurance protection against fire, theft, and other types of potential damage. 

1-2X net worth liability coverage: The notion of 1-2X net worth as a rule of thumb for wealthy individuals and/or families is debatable. On the pro side:

• A personal injury attorney suggested getting as much coverage as one could afford, since the cost of mitigating a $10 million or more verdict is relatively lower than having to pay it out of pocket.
• The attorney admits that they routinely seek verdicts above policy limits, especially if the limits are not tendered. Since a majority of verdicts are not reduced, umbrella policies make a lot of sense for high net worth people.

On the con side:

• Some respondents suspect that the 1-2X net worth coverage amount was created by insurance salespeople to scare customers into buying larger policies.
• Others stated that parenting styles contributed to risk liability, such as, for example, whether or not to trust one’s teenager to take a boat with friends out to party and drink, which escalates risk considerably higher. 
• Location and jurisdiction were also important factors, since states like California and New York were inherently more litigious than others.

This article is written solely for informational purposes. An insurance professional should be consulted for more comprehensive advice.

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