What's going to happen to these kids? Are we going to have a serious injury? It's Jon from Financial MD, welcome to today's didactic minute.
I'm going to talk about liability and the things that can happen – God forbid – but how to properly protect yourself and prepare yourself. As a financial planner, we think about these things. What kind of situations can happen that would cause some sort of financial hardship? Meaning, a lot of money having to go out suddenly, and, yes, human injury or sickness or those kinds of things are certainly more of a concern, but then we also have to think about the financial aspect. What is this going to cost if something like this were to happen? Should we try to just avoid these things or should we pass that risk off to somebody else, namely, insurance companies? Now, this is where, specifically, homeowners insurance comes into play. If somebody gets hurt on your property, if kids are playing with you, if you have a birthday party at a playground or some kind of facility like this, could you be held responsible? And it's not even somebody that's trying to be malicious or sue you. It could be your best friend, but they just need the money because they weren't insured or insured properly and they need help and you can't do it but they need to and this stuff just happens and hurts relationships. So the best way to maintain these relationships to keep yourself financially intact and the people you care about is when it comes to homeowners insurance and having the liability that you need. An umbrella policy is something we'll talk about later and we've talked about before but that stacks on top to give you more personal liability coverage because when these things happen as there's almost always an accident, nobody can predict these and nobody can predict how much of a financial toll these are going to take on you and your family and your financial goals and your future. They could change your life permanently.
So make sure you're looking into that. Make sure the liabilities on your homeowners insurance are at least three hundred thousand dollars or more. I recommend more, especially if you're a physician. This is something to consider. People think about this and they know they can sue physicians for much more. So look into an umbrella policy. This is something you can ask your home and auto agent about, but you should be pushing the one, two, three million dollars of total liability – personal liability coverage – for just such situations because you never know what's going to happen.
Again, this is Jon from Financial MD, we'll see you next time.