L

et's talk about your real life now.

Yours and your family's... and the "other kind" of gambling that people do.

This other kind of gambling is more than just about "How much?" It's also about "What if?"

"What if" is a game that involves imagining worst-case scenarios. Hardly a pleasant thought, but how can you know what you're gambling if you don't consider all the risks?

Could something happen today that would cause you to lose your house? Maybe. It happens to people every day.

T

he Question Is: How Can You Best Protect Your Family and What You Own

Before we start discussing insurance, which is designed to protect your assets and your future, there’s something you should know. All of us take some risks with our assets.

There’s really no way insurance can protect us from all the "What ifs?" and, even if it could, few of us could afford the cost to buy insurance for every possible calamity. Some of us are willing to accept a lot more risk than others are.

* Example: California was basically ground zero in the United States for earthquakes in the latter part of the 20th century. A major one hit the Bay Area in 1989 and an even more major one struck the San Fernando Valley in 1994.

H

ow do you know if you have enough insurance? Sure, there are certain risks you’re willing to assume -- earthquake might be one, landslide another -- but how can you be sure that you’re not facing risks you don’t want to assume?

You talk to a professional, someone who understands risk and can assess your willingness to assume it. Someone who can tell you whether you have enough insurance, based on your aversion to risk, or too much.

You talk to an insurance agent, someone who understands what coverage is out there and what is right for you. You talk to an insurance agent who has expertise in the specific coverages you need and the risks you face.

W

hile it’s one thing to have insurance for specific risks, it’s quite another matter to have enough insurance. How much is enough? The answer is different for everybody. It depends on what you want to protect and how much risk you’re willing to assume yourself.

Let’s say you have a net worth of $1 million. (Congratulations, by the way.) That’s the total value of your various possessions: home(s), car(s), furniture, art, stock and bond holdings, mutual funds, etc. One million dollars is also how much you have to lose.

* Imagine this. Say that famous person you hit in the intersection sues you for loss of income, pain and suffering, etc. Basically, the most this person can get from you is . . . $1 million.

Let’s say your current auto insurance policy has a limit of liability that will pay a maximum of $100,000 to any one person involved in an accident with you. (That’s a pretty common limit, by the way, although not for people with seven-figure net worths.) If you’re sued for $1 million, your auto insurance will pay a maximum of $100,000, which leaves you holding the bag for $900,000.