Personal Liability Insurance

Personal Liability Insurance
by Takara Alexis

Senseless lawsuits and outlandish settlements got people's blood boiling recently when a judge - yes, a judge - sued a little, family-owned dry cleaners for $65 million for misplacing a pair of his pants. Small businesses, this goes to show, are just as open to attack as their deep-pocket peers. A recent study by NERA Economic Consulting concluded that small businesses pay for 69 percent of civil lawsuit liability costs, even though they generate only about 19 percent of business profits.

Not a small business owner or big business executive? You could still face significant loss of property from damages and court costs in a liability claim. You get some protection through your homeowners, renters and auto insurance, but every policy has limits and your policies may leave you exposed where you least expect it.

Umbrella policies give more, overall coverage past these specific policies. Commonly, amounts go from $1 million to $5 million and usually cover losses more then your other policies. The coverage goes with you where you go because it is not tired to your vehicle or property. Typically, it doesn't cover business activities, even if the business is operated from your home.

The need for personal liability insurance can depend on two different factors: the amount of equity you have and the risks that are associated with your particular lifestyle. Is there a pool on your property? Allow hunting on your farm or ranch? Have people employed at your home like a nanny or housekeeper? These factors can expose you to risks that go past those policies of a typical homeowner.

Do other factors make you a bulls eye for lawsuits? Even trivial claims can cost you in time and perceptual distress. Any public knowledge about your assets, family inheritance, land holdings, winning the lottery or income - or even assumptions about these certain things - could bring out claims to more elaborate tricks.

Typically, umbrella liability coverage extends to your kids, your spouse and relatives that live in your household, being cared for by you or under the care of a family member living with you. That can be a big reassurance especially if you have teenagers that drive or college students living away from home.

Umbrella liability insurance can guard what you have put away for a rainy day. Your financial advisor or insurance expert could help you take a look at your current coverages and possible risks to decide how large your umbrella has to be.