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    March 2013
    M T W T F S S
    « Feb   Apr »


    Personal Liability Insurance & Umbrella

    Guy Conger

    What is personal liability insurance and do I have it?

    Personal liability insurance
    protects your assets if you
    injure another person or
    damage someone else’s
    property. It’s also known as
    third-party insurance because it protects you if
    a third party files a claim against you. Personal
    liability insurance can be purchased as part of a
    package policy (such as a homeowners or
    automobile insurance policy) or as a separate
    policy (such as a personal umbrella liability
    Today, lawsuits are everywhere. What if your
    dog bites a neighbor? What would happen if
    someone slips and falls on your front walk?
    While you may not be able to avoid all
    accidents, you can transfer some of the
    financial risk of the resulting loss to an
    insurance company by buying personal liability
    How much liability coverage do you need?
    Probably more than you think you do. Because
    there’s no optimum amount that applies to
    everyone, how much personal liability coverage
    you need depends partly on your tolerance for
    risk. Can you afford to pay the cost of a claim
    out of pocket or would even a small claim
    threaten your finances? If you already have
    liability coverage, take a look at your current
    policy. Determine whether your liability limits
    are high enough, or if there are any coverage
    gaps you’d like to fill.
    If you own a homeowners or automobile
    insurance policy or another type of property
    insurance (e.g., mobile home insurance or
    renters insurance), you have basic personal
    liability coverage. These policies will protect
    you against many liability claims. Your
    insurance company will defend or settle claims
    and lawsuits brought against you and pay the
    sum owed for covered damages (bodily injury
    or property damage), up to the liability limits of
    the policy. If you want greater liability coverage
    limits or if you want broader coverage that
    includes more types of claims, consider buying
    a personal umbrella liability policy.
    No personal liability insurance policy will protect
    you against every loss you might face.
    Generally, personal liability policies don’t cover
    claims stemming from your business or
    profession, claims resulting from an act
    intended to cause injury or damage, and
    damage to property owned by you.

    Paying exttra premium for an umbrella policy is a cheap way to get some personal liability coverage-
    Umbrella liability insurance
    (ULI) provides additional
    liability coverage in excess of
    the liability coverage provided
    by other insurance policies,
    such as homeowners, renters, and auto
    insurance. By providing liability protection
    above and beyond these basic coverages, ULI
    can protect you against the catastrophic losses
    that can occur if you are sued. Although ULI
    can be purchased as a separate policy, your
    insurer will require that you have basic liability
    coverage (i.e., homeowners/renters insurance,
    auto insurance, or both) before you can
    purchase an umbrella liability policy.
    A typical umbrella liability policy provides
    protection, up to the coverage limits specified in
    the policy, for vehicle-related liabilities above
    your basic auto policy; for claims of bodily
    injuries or property damage caused by you or
    members of your household; for incidents that
    occur on or off your property; for
    non-business-related personal injury claims,
    such as slander, libel, wrongful eviction, and
    false arrest; and for legal defense costs for a
    covered loss, including lawyers’ fees and
    associated court costs.
    Policy exclusions vary from one insurer to
    another, but typically, basic umbrella liability
    insurance doesn’t cover intentional damage
    caused by you or a member of your family or
    household; damages arising out of business or
    professional pursuits; liability that you accept
    under the terms of a contract or agreement;
    liability related to the ownership, maintenance,
    and use of aircraft, nontraditional watercraft
    (e.g., jet skis), and most recreational vehicles;
    damage to property owned, used, or
    maintained by you; damage covered under a
    workers’ compensation policy; and liability
    arising as a result of war or insurrection.
    How much liability insurance do you need? A
    large judgment against you could easily wipe
    out your assets and put your future earnings in
    jeopardy. That’s why you should also consider
    factors such as how often you have guests in
    your home, whether you operate a home-based
    business, how much you drive, whether you
    have teenage drivers in your home, and
    whether your lifestyle gives the impression that
    you have “deep pockets.” Your insurance
    professional can help you determine how much
    coverage you need

    The MONEY® Network