What Is Personal Liability Insurance?
Sad to say, these days it seems just about anyone can be sued for any number of reasons. Personal liability insurance serves as a protection for you and your family in the event of an unexpected legal case against you. You may not find it necessary to have personal liability insurance, but it only takes one frivolous lawsuit to put you in enough debt to last a lifetime.
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Purpose
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Every insurance policy has its limits and the idea behind personal liability insurance is to fill the gaps your homeowners, renters or auto insurance leave behind. Umbrella policies, as personal liability plans are called, cover losses that your other policies won't. In addition, because coverage isn't tied to your property or your vehicle, it travels with you wherever you go.
Features
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Personal liability insurance often covers not only you personally, but your spouse, children and any other relative living in your household. It includes those living in your home under you care, or under the care of a relative that is currently living with you. Personal liability does not cover any activities related to your business, whether or not it is run in or out of the home. It can, however, augment your standard insurance policies and provide protection against severe liability judgments.
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Considerations
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It is good to examine your lifestyle to see if you would be at risk for a lawsuit. How much personal liability insurance you purchase will depend on your financial situation as well as your risk of being sued. Umbrella policies usually cover from $1 million to $10 million. Additional insurance coverage may be purchased to provide coverage on cars, boats, or homes. That can cost around $200 to $300 annually and adds another $1 million in coverage.
Expert Insight
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To figure out how much personal liability coverage you need you should think about more than just protecting your possessions. The best way to figure out how big of an umbrella you will need is by first counting up how much you stand to lose if you are sued. Next, total the value of all your material things, your house and any financial assets you have. How much will a legal defense cost you? Basically your goal is to have enough coverage through personal liability insurance that being sued will not ruin you financially.
Benefits
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Personal liability insurance provides you with a sense of extra security, especially if you are at high risk of being sued. A comprehensive umbrella plan is more reasonably priced than many imagine, and is actually a quite practical investment for many individuals. Make sure and discuss thoroughly with an insurance agent or financial advisor to set up a personal liability insurance policy that gives you the coverage you need at a price you can afford.
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References
- Photo Credit Dollars image by Jakub Niezabitowski from Fotolia.com
