Personal Liability Insurance may be necessary not only in case you are a careless millionaire. Accidents do happen and anyone can be sued for accidental injury caused to someone or damage to someone's property. Standard Homeowners, Rental or Auto Insurance policies provide some liability protection; however they often cannot fully protect you, your family and your assets in case of serious lawsuits.
Additional Personal Liability Insurance adds a higher level of protection and forms a so called umbrella. It means that it provides liability protection above and beyond the basic coverage of your standard Homeowners and Auto Insurance policies and comes to the fore in catastrophic situations when primary Liability Insurance is exhausted and a legal award could exceed its limits. You, your spouse and any relatives in your household insured by your primary policies will be protected by this coverage.
You may be thinking, "It happens to others. It can't happen to me." You are right. It really does happen to others. Therefore, the risk of similar disaster happening to you may be as great. If you have to drive often, have teenagers in your family, who drive, you may need additional Liability Insurance. The parents of reckless teenage drivers are often sued by the injured parties. If you often have guests at your home, or other people working on your premises, if you have a swimming pool or some other rooms for active sports and rest, if there is already a history of accidents occurred in your house, you need additional Liability coverage. Your Fido may bite a neighbor, or a visitor to your home may slip and fall on your ladder, injuring their leg or back.
Your kids accidentally hitting a baseball through a school window, your friend getting severely injured in your garden etc. - the list of similar situations which can lead to expensive lawsuits and take away your assets can be very long.
It is crucial to assess how much you can lose and rate yourself, your family, and your lifestyle.
You should know the monetary total of your assets and estimate how much legal fees would cost you. If your lifestyle makes you a possible target for a lawsuit, it may be worth purchasing an Umbrella Personal Liability policy. Umbrella policies typically offer more liability coverage at lower premiums than individual policies such as Automobile, Homeowner's, and Renter's.
Your personal assets are vulnerable in any legal action and Personal Umbrella Liability policies can be used as a way to protect yourself against expensive judgments. Make sure you meet liability limits on your Auto and Homeowners Insurance policies before you can buy a Personal Umbrella Liability policy.
Not only things related to cars and homes can be covered by Personal Liability. Umbrella policies will provide coverage in case of false arrest, malicious prosecution, invasion of privacy, defamation of character, libel, slander, wrongful entry, or eviction. For an extra premium it can also protect you if you are a member of any charitable organization and are sued for some activities in connection with it.
Note that a
Personal Liability policy does not cover activities related to your business, no matter if it is an in-home or out-of-home business. You will need Business Insurance to cover any possible losses. Consult with your insurance agent to choose the adequate Umbrella policy to protect your business.
The amount of Personal Liability coverage you should purchase largely depends on your financial ability to sustain a possible liability judgment as well as on your risk tolerance. The coverage amounts of Personal Umbrella Liability available usually range from $1 million to $10 million. Additional coverage to provide cars, boats, homeowners, or renters insurance may cost from $200 to $300 a year for additional protection of 1 million dollars.
Many people tend to think that they only need enough Liability Insurance to protect their assets. However the minimum turns out irrelevant when actually estimating how much liability coverage is required in your situation. There is a certain rule which helps determining how much Personal Liability Insurance you need. First, consider how much you have to lose if you are sued. Then add up the value of your home, your possessions, and your financial assets. Consider the costs of legal defense and add it to the result you have. Your ultimate task is to prevent a lawsuit from causing you a financial ruin.
Standard Home Insurance policies normally provide $100,000 to $300,000 worth of liability coverage. However you might have heard of $2-million, $10-million, and $20-million liability judgments. If someone was severely injured in your home, a large judgment against you can cost you not only all the assets you possess at present, but also possible future earnings as well.
If you crashed into a pedestrian who was walking on the sidewalk, and this crash resulted in great medical expenses for that pedestrian, you should be ready for paying those expenses as your existing Auto policy coverage would not be enough. Without a Personal Umbrella Liability policy, you incur a great risk in such and similar situations.
The premium you will have to pay depends basically on the state of your residence and the number of liability exposures you have. When you insure both your home and car with the same insurer and purchase the Personal Umbrella Liability policy, you are likely to get the best rates.
If you are the one who cares for what the future will bring, it is a smart idea to review all your insurance coverages on a regular basis, and research new options in cooperation with a reputable insurance agent. You may also seek recommendations from a certified public accountant who charges for the office visit and the advice. Use the Internet as a source of valuable information on the point of your research. Compare all options before you make a final decision. Make sure you understand every word on your policy. Remember that Personal Liability Insurance can save you a lot of stress and money in case the worst has happened.
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