Personal liability insurance, also referred to as personal umbrella insurance, is one other product we use to keep our assets in tact. Considering that we reside in a litigious society, we think that it is a great method to have an insurance policy that can withstand a monetary blunder brought on by a lawsuit.
What is personal liability insurance?
Your homeowner's and automobile insurance policies have added liability protection inside their contracts. If you are identified negligent in a circumstance exactly where an individual was injured, your liability protection will spend for factors like individual medical bills, rehabilitation, lost wages, etc.
Nonetheless, the coverage amounts are fairly low and can be swiftly exhausted based on the severity of the other party's injuries.
Protection from a personal liability umbrella insurance policy will trigger once the liability protection from your other policies are no longer enough. It gives you and your assets added protection.
How about an example of where this policy is important?
Let's say Bill injures Anne in a car accident. Due to the severity of Anne's injuries, she is now disabled and cannot return to operate. Her medical bills are $50,000.
Really good news and poor news. Very good news: Bill's automobile insurance policy has liability coverage of $50,000. Bad news: Do you assume Anne and her attorney will only go following $50,000?
Not most likely. Don't forget...
She can no longer operate and give for her family. She can no longer fund her retirement. She has ongoing medical bills she will have to pay given that of her disability. Along with financial hardship comes emotional distress.
So if you give some thought to her lost wages for 20 years, medical bills, retirement, and individual therapy, you're searching at the possibility of millions of dollars. If Bill doesn't have personal liability insurance coverage, then his assets are exposed.
So what does exposed mean? They could go soon after your residence, cars, boat, bank accounts, 401k, etc. Any asset owned under your name is at threat.
But you do not even have to be "physically" involved in the scene of the injury to be at threat. If a person gets injured at your household and you are held liable of the damages, then your assets are at risk if you do not have adequate coverage.
This article isn't meant to scare you. It isn't meant to invoke worry. We encourage you to take preventative measures. We want to inspire you to take action in guarding your wealth. Like putting on your seatbelt in a vehicle, an umbrella policy is an further layer of protection.
My wife and I have an umbrella policy that offers $five million in excess, above the coverage that our home and automobile policies supply. We only pay $531 a year for the policy. As you can see, the premiums are fairly low.
So, give consideration to the positive aspects from these policies. Use an umbrella policy to cover your assets. Bear in mind...in some cases when it rains, it pours.
