Many people believe personal liability insurance is only important for the wealthy. The problem is accidents can happen to anyone and usually when least expected. In a split second any one of us might find ourselves behind the wheel of a car that just hit a bicyclist, a summer backyard ballgame might lead to a neighbor’s broken window and glass in the eye, or the pizza delivery person may slip on the rain soaked porch, break a hip and knock out three teeth.
Liability lawsuits are everywhere today and judges are awarding unpredictable amounts of money to injured parties. No matter how careful we are, there is a risk that one day we may be sued because we are liable for the injury of someone or damage we might cause to some one’s property. Liability insurance protects our assets in the event that we ourselves, or a member of our household, accidentally injures another person or damages some one’s property.
Standard homeowners insurance, renters insurance, auto insurance, and watercraft policies provide some protection but, there is a limit on the amount of liability protection a policyholder will have in the event of a claim or lawsuit. If an accident should happen that’s your fault, do you have enough liability insurance under your current policies to cover the costs for negligence?
Liability insurance is the portion of your insurance policies that pays for expenses such as medical bills, rehabilitative therapy, and lost wages due to the negligence or fault of the insured person. It also covers your legal defense if the negligence results in your being sued or prosecuted. When all the costs of medical expenses for the injured and the legal fees of the negligent (insured) person, are added up the standard liability limit on a homeowners or auto policy is often not enough. Umbrella insurance is no longer just for the wealthy, but a required tool for every one interested in managing their personal risks.
A personal umbrella liability insurance supplements the basic liability coverage included on other insurance policies. Exactly as it’s named an Umbrella policy is liability insurance that is above and over all the other insurance you may have. Umbrella’s are designed to protect against a catastrophic lawsuit or judgment. Umbrellas provide expanded coverage and increases the amount of liability protection beyond the basic coverage provided under your homeowners/renters, auto and other insurance policies.
It is hard to say how much liability insurance a person should carry, but in today’s society it’s not unusual to hear of $2-million, and even $20-million liability judgments. You probably need more liability insurance than you think the standard home insurance policies usually offer $100,000 to $300,000 in liability coverage.
If you are held liable because someone is injured while visiting your home, or if you are responsible for causing a serious accident, you could face a huge judgment. Without a personal umbrella liability policy, a large judgment against you may use up all your liability protection on your homeowner/renter, auto or watercraft policy and still cost you every assets you have now, and your future earnings and inheritances.
It’s a long standing line for insurance agents to advise clients to purchase enough liability insurance to protect their assets, but that figure isn’t relevant today when deciding how much liability coverage you may need. More important is to consider the amount of risk you take and exposures you have. Consider some of the following:
- Do you like having company and enjoy hosting parties?
- Do you server Alcohol to guests in your home?
- Do you have a long commute to work?
- Do you take road trips or long Sunday Drives?
- Do you help drive the Scouts to camp outs or take neighborhood kids to soccer practice?
- Do you have a teenage driver in your home?
- Are you the parent of a child away at college?
- Are you in the public eye, or have a lifestyle that makes you a target for a lawsuit?
Personal umbrella liability policies are usually available in coverage amounts from $1 million to $10 million. The amount of coverage you should have depends on the amount of exposure or risk you have, as well as your financial ability to pay for a liability judgment.
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