Taxes & Insurance

Many federal employees carry professional liability insurance coverage, which can help shield them against legal costs related to suits brought against them due to their official actions. Managers and supervisors, plus law enforcement officers, in particular commonly carry such coverage.

While retirees typically are no longer at risk of such suits—except possibly for an action taken while still working and for which a statute of limitations has not expired—another form of liability insurance can become all the more important for estate protection.

Your homeowner’s and auto insurance policies probably include liability protection. However, those policies generally provide only $300,000 to $500,000 worth of coverage—not much in these days of huge awards for damages.

You might want to consider taking on an excess liability (“umbrella”) policy that will take over if you incur damages beyond the limits of those policies. This could be a vital tool for protecting the assets you’ve built up over your life, and which you’ll need to live on for the rest of your life and want to pass on to your survivors as well.

Such coverage is relatively inexpensive, costing a few hundred dollars a year. However, if you want to buy an extremely large umbrella, most insurance companies will want to see financial statements to be sure you really need that much coverage.

Often, you’ll find that it pays to buy a package of home, auto and umbrella insurance. The lines may be blurred at times so it’s best to have the same company provide seamless coverage. Not only will you avoid gaps in coverage that way, you’ll likely get a discount on your premiums. In some cases, the same incident will affect your auto and your homeowners insurance—an item you normally keep at home might be stolen from your car, for example. If you have both policies from the same company, you may have to pay only one deductible instead of two.