Friday, July 29, 2011

Summer 2011

Personal liability protection is part of your homeowners insurance policy and covers you against lawsuits for injury or property damage that you or your family members cause to other people.  It also pays for damages caused by your pets.  The coverage will pay for legal defense costs as well as any damages the court rules you must pay.  There is no deductible requirement for liability insurance. 

What is covered by personal liability insurance? 
Most standard homeowners policies provide a basic limit of liability of at least $100,000 for property damages or injuries.  In addition, medical payments coverage is included in most policies and reimburses you for basic medial bills incurred under a liability claim, such as a neighbor being bit by your dog or being injured on your property.

How much personal liability insurance do I need? 
Consider the property and investments you own that are worth a significant amount.  What would be at stake if you had a claim or lawsuit filed against you?  You should purchase enough personal liability insurance to protect these assets.  The standard amount that is included in your homeowners policy might be sufficient to meet your needs.  However, if the value of your assets exceeds the value of the coverage, you need to consider a higher limit.

How can I secure more coverage?
You may be able to obtain additional liability coverage by simply increasing the amount of liability insurance on your homeowners policy.  You should also consider an umbrella policy, which is an inexpensive way to obtain a significantly higher amount of coverage.


Do you ever wonder if you have enough insurance to cover a large insurance claim against you? And do you know where the money would come from if you weren’t adequately insured? The answers to these questions come from insurance agents who recommend that clients get umbrella policies, which kick in when policyholders reach the limit on the liability coverage in their home or auto policies.

Consider the risk in the following scenarios:

  • Your teenage son is in a car accident and you are sued for $1 million.
  • A neighbor is injured or drowns in your swimming pool.
  • A passerby trips and falls on the sidewalk at your house.
  • Your dog bites a friend’s child.
What’s My Exposure?
Today, anyone can be sued, and million-dollar judgments are becoming more common. And, alarmingly, any amount exceeding your standard liability policy would fall to you. In order to cover the costs, you could be forced to use money from your current assets, such as savings accounts, 401(k)s, or even your home. And your future earnings could be applied as well. So, while these types of catastrophic events are unlikely, insurance companies offer umbrella policies for customers who want to protect their assets and feel more secure.   The good news is, this insurance is relatively affordable.  Policies are generally available for $1 million, $2 million, and $5 million in coverage (availability varies by state).

How the Coverage Works
If there is a covered liability claim under your auto or homeowners policy and the dollar amount of the judgment is greater than the coverage limits you have purchased on those policies, the umbrella goes into effect. Certain coverage limits must be met on your auto and home policies before you can purchase an umbrella policy. The big question is often: How much coverage should I carry? The answer usually depends on your net worth. Calculating the value of your home, stocks, mutual funds, and retirement accounts is the first step.

Contact your Leavitt Group insurance representative for more information on umbrella insurance and for a review of your coverage options. 

Source:  The Hartford