Insurance is NOT Asset Protection

If you live in California, New York, Oregon, or Washington, you’re in one of the most creditor-friendly environments in the country. Lawsuits are common, and asset protection laws are weak—especially for real estate investors, business owners, and professionals with high liability exposure.

Many turn to insurance and domestic irrevocable trusts as protection. But here’s the problem:

❌ Insurance doesn’t cover everything—and companies often deny claims.

❌ Domestic trusts can be pierced by courts—leaving assets unprotected.

❌ Creditors exploit legal loopholes to access personal wealth.

So what actually works? This guide breaks down:

✔ Where insurance and domestic trusts fail

✔ Real-life examples of investors losing assets despite insurance

✔ Why The Bridge Trust® is the strongest solution for West Coast investors

The Hidden Risks of Relying on Insurance

Insurance is an essential tool, but it’s not asset protection. It transfers some risk but does not shield wealth from lawsuits.

Where Insurance Works:

✔ Negligence claims (auto accidents, slip-and-falls)

✔ Property damage

✔ Specific liability coverage (up to policy limits)

Where Insurance Fails:

1️⃣ Intentional Acts Are Excluded

• Even self-defense cases are often denied under “intentional act” exclusions.

• Courts have upheld these exclusions under the False Claims Act (18 U.S.C. § 1033).

2️⃣ Policy Limits Leave Gaps

• High-net-worth individuals often face lawsuits exceeding policy limits.

• Umbrella policies still have exclusions and payout limits.

3️⃣ Insurers Can Deny Claims at Any Time

• Reservation of rights letters allow insurers to investigate claims and later deny coverage—even if you initially qualify.

Case Study: When Insurance Fails

Business Owner Sued for Self-Defense

📌 Hassan, a successful car dealership owner in Washington, was enjoying dinner when a group racially harassed and attacked him. He defended himself, restraining his attacker.

🔹 Lawsuit Filed: Despite video evidence of self-defense, the attacker sued Hassan for injuries.

🔹 Insurance Denial: His liability insurer denied coverage, citing intentional act exclusions.

🔹 Legal Costs: Hassan had to defend himself with his personal assets—without insurance support.

💡 Takeaway: Even clear-cut self-defense cases aren’t covered. Insurance companies prioritize profit, not protection.

More Real-Life Cases of Insurance Denial

1. Real Estate Investor Denied Coverage for Alleged “Fraud”

📌 Sarah, a landlord, was sued when a tenant tripped on loose flooring in one of her rentals.

🔹 Insurer’s Response: They denied coverage, arguing she intentionally deferred maintenance—turning negligence into an excluded “fraudulent” act.

🔹 Outcome: Sarah had to cover legal costs and settlements out of pocket.

2. Venture Capitalist Faces Personal Liability

📌 Michael, a startup investor, was sued after one of his portfolio companies collapsed and creditors claimed fraudulent misrepresentation.

🔹 Insurance Denial: His business liability policy excluded fraud claims, leaving him personally responsible.

💡 Takeaway: Allegations alone are enough for insurers to deny coverage—even without proof of wrongdoing.

Why Domestic Irrevocable Trusts Fail

Many believe a domestic trust will protect their assets from lawsuits. However, states like California, New York, Oregon, and Washington do NOT allow self-settled spendthrift trusts.

3 Reasons Domestic Trusts Fail:

1️⃣ No Self-Settled Spendthrift Protection

• These states do not allow you to create a trust for yourself that shields assets from creditors.

2️⃣ Fraudulent Transfer Risks

• If a court suspects you moved assets to avoid creditors, it can invalidate the trust.

3️⃣ Judges Can Pierce Domestic Trusts

• Even in states that allow them, courts frequently override asset protection trusts on public policy grounds.

📌 Key Legal Case: Kilker v. Stillman (2012, California)

• A Nevada Asset Protection Trust was invalidated in California courts.

• Lesson: Out-of-state trusts don’t work against in-state creditors.

📌 Key Legal Case: Dahl v. Dahl (2015, Utah)

• A domestic trust failed to protect assets due to improper structuring.

• Lesson: Courts can pierce weak domestic trusts.

💡 Bottom Line: If you live in a state that doesn’t recognize self-settled trusts, domestic asset protection is weak.

What Actually Works? The Bridge Trust®

The Bridge Trust® is a hybrid asset protection trust that combines domestic flexibility with offshore legal strength.

What Makes the Bridge Trust® Different?

✅ Offshore Strength – Holds assets in jurisdictions like the Cook Islands, where U.S. judgments are not enforceable.

✅ Retained Control – You control assets until the trust needs to activate.

✅ Fraudulent Transfer Defense – The strict legal structure ensures compliance with asset protection laws.

✅ Judgment-Proof Shielding – Creditors must sue offshore, a costly and nearly impossible process.

💡 Example: If Hassan had a Bridge Trust®, his assets would have been:

✔ Legally protected offshore beyond the reach of Washington courts.

✔ Unattractive for lawsuits, deterring the case entirely.

✔ Shielded from judgment enforcement, keeping his wealth secure.

Key Takeaways: How to Actually Protect Your Assets

✔ Insurance is NOT asset protection—policies have exclusions and limits.

✔ Domestic trusts fail in states that don’t recognize self-settled spendthrift protections.

✔ The Bridge Trust® provides real security—combining domestic accessibility with offshore strength.

💡 If you’re serious about protecting your wealth, you need more than just insurance or a domestic trust.