This article was contributed by Alistair Lynch of The Lynch Agency, Farm Bureau
When was the last time you had a real conversation about your insurance coverage? Not a renewal notice. Not a rate increase. An actual review of whether what you carry still matches what you’ve built.
For most high-net-worth families, the honest answer is: it was set up a while ago and nobody has looked closely since. That gap is more expensive than most people realize. Jury verdicts in personal liability cases have reached levels that blow through standard policy limits with regularity. According to research from Marathon Strategies, the number of verdicts exceeding $10 million rose by more than 52% in 2024, with a median award of $51 million. These are not just corporate cases. Car accidents, property incidents, and social media-related claims are in that mix.
Below are the five mistakes I see most often. None of them are obscure. Most are correctable quickly. But left unaddressed, any one of them can do serious damage.
Mistake #1: Liability Limits That Don’t Match Your Net Worth
The most common mistake is also the quietest: a family with $5 million in assets carrying the same auto liability limits they set up ten years ago, or worse, state minimums.
The benchmark figure for the economic value of a human life in a fatal car accident, used by attorneys and courts when calculating damages, currently sits around $1.5 million. Five years ago it was closer to $1.2 million. It’s going up. And that’s a floor, not a ceiling.
The old assumption was that plaintiff attorneys would stop at liquid assets. That framing is outdated. Attorneys are more aggressive, juries are more sympathetic to plaintiffs than at any recent point, and what’s considered worth pursuing has changed. Your combined liability limits across all policies should be in the range of your total net worth. If there’s a significant gap, that’s the problem to solve.
Mistake #2: Umbrella Policies That Fall Apart in Real Scenarios
An umbrella policy’s primary job is lawsuit protection: bodily injury, property damage, and personal injury claims including libel and slander. That last category matters more than most people expect.
There are cases where parents were named in lawsuits stemming from social media activity, including liking a post, because the underlying claim involved a minor. Standard home policies typically exclude libel and slander. Umbrella policies cover it. The distinction is invisible until it isn’t.
The cost case for umbrella coverage is almost impossible to argue against. For a typical household, a million dollars of umbrella coverage runs a few hundred dollars per year. Scaled to $3 to 5 million, it’s still modest relative to the exposure it eliminates. There’s also a practical benefit: in many cases, plaintiff attorneys will settle at the policy limits rather than pursue a judgment enforcement process. The umbrella functions as a ceiling on the dispute, keeping it from reaching other assets.
Mistake #3: Trusts and LLCs That Quietly Void Coverage
The rule in insurance is simple: you can only insure what you own. Ownership is defined by titling, not intent, not who pays the premiums, not who uses the asset.
As families accumulate assets and work with estate attorneys on trusts, LLCs, and other structures, it’s common for titling to get ahead of the insurance. A property moves into a family trust. A boat gets titled in a holding entity. A seasonal home ends up in a jointly-owned arrangement across multiple family branches. Each of those moves may be exactly right from a planning standpoint. But if the insurance policy still names you personally, and you no longer personally own the asset, you may have no coverage at all.
Nobody intends to create this gap. The estate attorney focused on the structure. The insurance agent wasn’t in the conversation. According to Insurance Business Magazine, roughly two-thirds of high-net-worth clients who seek a specialized insurance review either lack proper coverage for a lawsuit or carry only minimal protection, largely because ownership structures and insurance policies have drifted apart over time.
Mistake #4: Assuming a Lawsuit Stops at Your Assets
Most people know a lawsuit can threaten a house or a savings account. Far fewer know it can follow them into their paycheck for years.
Under federal law, creditors with a civil judgment can garnish up to 25% of a person’s disposable weekly earnings. If you lose a lawsuit and the judgment exceeds your coverage, a court can order your employer to redirect a quarter of your take-home pay to the plaintiff until the balance is satisfied. Some states offer additional protections, but the mechanism is broadly available across most of the country.
This is not theoretical. Garnishments that run a decade are not unusual. Thousands of dollars a month, structured like a court-ordered support payment, coming out of compensation regardless of anything else happening in a person’s financial life. For executives and high earners, the exposure is proportional to the income. The higher the salary, the more there is to take.
Mistake #5: Treating Insurance as a Separate Conversation
The most structurally expensive mistake isn’t a specific coverage gap. It’s treating insurance as a standalone item, disconnected from your estate plan, your tax strategy, your investments, and the rest of your financial picture.
When your insurance agent doesn’t know about a new trust, a retitled vehicle, or a vacation property that just got added to the portfolio, coverage gaps form by default. No single person made a bad decision. There just wasn’t a coordinated one. An Oliver Wyman study found that fewer than 30% of high-net-worth individuals have had a professional insurance review integrated with their broader financial plan. That number is lower than it should be.
The families with real protection are the ones where the insurance specialist is part of the planning conversation, not brought in after the fact. Insurance can only cover what it knows about. If the people around your financial plan are working in silos, the protection has silos in it too.
The Bottom Line
A review doesn’t take long. The right questions, the right documents, an hour or two. That’s usually enough to find out whether the structure is solid or whether something needs attention.
The litigation environment isn’t going to get less aggressive. Coverage that made sense five years ago may not match the life you’re living or the assets you’re protecting now. The families who get this right aren’t the ones with the most policies. They’re the ones where the coverage has kept pace with the plan.
About the Author
Alistair Lynch is the founder of the Lynch Agency in the Grand Rapids area. He specializes in insurance planning for high-net-worth individuals and families, with a focus on liability coverage, ownership structures, and coordinated protection strategies: www.lynchfbi.com.
Voisard Asset Management Group is a fee-only fiduciary wealth advisory firm based in Grand Rapids, Michigan. This article reflects the views of the guest author and is provided for informational purposes only. It does not constitute insurance advice specific to your situation.