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˳
What is personal liability insurance?
Your homeowner’s and auto insurance policies have added liability protection within their contracts˳ If you are found negligent in a situation where someone was injured, your liability protection will pay for things like personal medical bills, rehabilitation, lost wages, etc˳
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˳
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 work˳ Her medical bills are $50,000˳
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…
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She can no longer work and provide for her family˳
She can no longer fund her retirement˳
She has ongoing medical bills she will have to pay because of her disability˳
Along with financial hardship comes emotional distress˳
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, 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˳
This article isn’t meant to scare you˳ It isn’t meant to invoke fear˳ We encourage you to take preventative measures˳ We want to inspire you to take action in protecting your wealth˳ Like putting on your seatbelt in a car, an umbrella policy is an additional layer of protection˳
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 these policies˳ Use an umbrella policy to cover your assets˳ Remember…sometimes when it rains, it pours˳
Source by https://ezinearticles˳com/?The-Importance-of-Personal-Liability-Insurance&id=1692013
