So when can a court go after records for the defendant's total net worth? If a case goes to full trial and a judgment is rendered-and if that judgment exceeds the policy limits of the defendant-then the court can go after the defendant's financial information. In other words, they can only go after net worth to execute a judgment. An important note here (one that further illuminates why there is no correlation between judgments and the amount of insurance carried) is that jurors in a trial do not know the policy limits of the defendants. In a jury trial, they base awards on the damages incurred by the plaintiff, not on insurance policy limits.

But wait, you say: We determined earlier that most cases never make it to trial and are settled through negotiation. Since they can know my client's liability policy limits at the outset, doesn't having high policy limits make my client a target? While there has been no specific study to answer this question, attorneys report that having high policy limits would make you a more attractive defendant to negotiate with than one with low policy limits.

However, even a negotiated settlement outside of a court trial would be determined by the amount of the damages incurred by the plaintiff and not by the defendant's insurance. Therefore, one should select coverage limits based on the protection needed and not on the fear of being a target.

Somebody with high net worth and assets to protect should have higher policy limits for two additional reasons. Number one, in umbrella and excess liability policies, attorneys' fees are not subject to policy limits. So as your insurer is defending you, you are not incurring legal fees that you would be if you were defending yourself.

Attorneys polled for this article report that even small cases settled out of court take considerable time and billable hours, which can seriously erode somebody's assets.

Secondly, umbrella liability policies have the lowest ratio of premium to maximum claim payout in personal lines insurance, making these policies a bargain for asset protection. One would be remiss not to recommend that high-net-worth clients use this relatively low-cost tool.

Now that you're armed with a better understanding about the reality of liability cases, what can you do to help protect your high-net-worth client?

First and foremost, if you run a successful wealth management practice or are in the process of building one, incorporate a good independent property and casualty agent into your team. This person should have access to high-end insurance providers that can underwrite luxury homes and autos and can offer high-policy-limit umbrella policies and excess liability policies. Mass-market insurers, by contrast, will not be able to address the needs of most high-net-worth clients. Your own team's agent and underwriters could help blunt many liability exposures with preventative measures at the outset of underwriting. They have the tools to assess risks-how likely those risks are and what kind of financial impact they can have. Furthermore, these agents can assess your client's risk tolerance and help figure out coverage amounts that will best serve the client's needs. Such specialists allow you to refine the wealth protection side of your practice.

Also, you should help your client see that the wealth protection side of wealth management is very important in itself-help them see insurance not as an expense but as an investment in liability protection. That said, clients need not overpay for insurance. Umbrella and excess liability policies are extremely cost effective for the coverage obtained. Meanwhile, the insurance industry is responding to the demands of the high-net-worth marketplace by creating higher limit policies and specialty products. Group personal excess/umbrella policies (GPEs) have recently come to the market to address liabilities for individuals in corporate situations. Their group pricing structure helps to lower costs while providing large coverage amounts.

As our court system and culture continue to expand the definition of liability, those people with assets to protect will need the services of wealth managers who include this crucial protection as a standard part of a sound financial plan.