The study titled ‘Targeting the Rich: Liability Lawsuits and the Threat to Families with Emerging and Established Wealth’ included a survey of individuals from households with more than US$5 million of investable assets that queried them about their perceptions and behavior regarding the threat of personal liability lawsuits.
The study revealed that the wealthy Americans lacked adequate liability insurance and that they increasingly worry about their wealth making them a prime target for a high-stakes liability lawsuit during the prevailing uncertain economy.
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Despite the worry, they are not adequately prepared for such lawsuits, apart from failing to appreciate the different aspects of their lifestyle that can lead to a lawsuit, the study found.
According to the study, the wealthy Americans underestimate the cost of the potential damages, and they misunderstand the affordability of effective protection resulting in them lacking the proper types and amounts of liability insurance.
Bob Courtemanche, division president of ACE Private Risk Services, said, "Wealthy families feel increasingly targeted, especially given the national discourse over disparities in wealth, income, and taxation."
"Half of the people we surveyed thought the worst-case lawsuit would be less than US$5 million. But our experience is that awards for lawsuits involving serious injury can equal many times that amount," added Jim Hageman, ACE senior vice president of claims for global personal and small commercial insurance.
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By GlobalDataMore than 40% of the respondents in the survey said that they had less than US$5 million in umbrella liability insurance, including 21% who have none.
An umbrella liability insurance is considered to be essential for an individual as the liability coverage in automobile and homeowner policies rarely exceeds US$500,000 and the umbrella policy provides additional coverage on top of those policies.
