Personal Liability Insurance & Umbrella

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
policy).
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
insurance.
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