Personal liability insurance, also referred to as personal umbrella insurance, is another product we use to keep our assets in tact. Since we live in a litigious society, we believe that it's a good strategy to have an insurance policy that can withstand a financial blunder caused by a lawsuit.
However, the coverage amounts are relatively low and can be quickly exhausted depending 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 sufficient. It gives you and your assets added protection.
Good news and bad news. Good news: Bill's auto insurance policy has liability coverage of $50,000. Bad news: Do you think Anne and her attorney will only go after $50,000?
Not likely. Remember...
So if you consider her lost wages for 20 years, medical bills, retirement, and personal therapy, you're looking at the possibility of millions of dollars. If Bill doesn't have personal liability insurance, then his assets are exposed.
So what does exposed mean?
They could go after your house, cars, boat, bank accounts, 401k retirement plan, etc. Any asset owned under your name is at risk.
But you don't even have to be "physically" involved in the scene of the injury to be at risk. If someone gets injured at your home and you are held liable of the damages, then your assets are at risk if you don't have sufficient coverage.
My wife and I have an umbrella policy that provides $5 million in excess, above the coverage that our home and auto policies provide. We only pay $531 a year for the policy. As you can see, the premiums are relatively low.
So, consider the benefits from personal liability insurance policies. Use an umbrella policy to cover your assets. Remember...sometimes when it rains, it pours.
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