Dave Ramsey: Umbrella insurance policies can be a smart move | News

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Dear Dave: Are Umbrella Insurances Worth It? Or do they just get people to sue more frequently?

—Tami

Dear Tammi: I don’t think there’s any indication that the general policies encourage people to sue more frequently. If you haven’t noticed, we live in a happy world when it comes to litigation. There are plenty of greedy people out there who would try to sue absolutely anything, no matter how ridiculous.

I think these types of policies are worth the money. You can get a $1 million umbrella policy that’s on top of your car and homeowners liability coverage for $200-300 a year in most places. So if your original auto and home coverage was $500,000, you would have $1.5 million coverage.

If you have substantial net worth, or there’s just something that makes it look like someone could get a lot out of you, an umbrella insurance policy is a smart buy.

— Dave

Dear Dave: My husband and I own a small business. We have a large account supplying wholesale items to a customer. Our original agreement was to work on 30-day payment periods, but he is three months behind on the invoice. We live in a small town, and businesses here stick together and help each other, so we don’t want to ruin the relationship. Do you have any tips for dealing with this situation?

-Holli

Dear Hollie: From what you said, I’m guessing this guy isn’t a cheater or something. He’s probably like a lot of small business owners in that he’s just a little disorganized. Still, you need to correct this behavior.

If it was me, I would go to his office and have a friendly meeting about things. There’s no point in threatening, but he needs to understand that you can’t be his bank. You are also a small business and you need your money.

Ask a few questions and find out what’s really going on. Then let him know that it will help if he can be up to date on the bill by a certain date. You provided goods and services, and he owes you money, so it’s a fair request. You might consider adjusting your payment agreement to reflect that once it is current, payment must be made within 10 days of delivery from that time.

If that doesn’t work, you may need to switch to cash-only, where payment is due on delivery. and if none of those options work, well, you should probably tell them to find another provider.

— Dave

David Ramsey is a financial consultant, author and radio host.

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