In today's litigious society, anyone can be the target of a potentially devastating lawsuit. It's important to consider the possibility that the basic coverage under your auto and homeowners policies might not be enough.

Why adequate liability coverage is important
Standard homeowners policies usually provide $100,000 to $300,000 worth of liability coverage. Most states require you to carry auto insurance with minimum liability coverage (which varies from state to state). It is possible to purchase additional liability coverage under these policies, but amounts may be limited. In today's society, it's not unusual to hear of $1-million, $2-million, and even $10-million liability judgments against individuals. If someone is injured in your home, or if you cause a serious auto accident, you could be hit with such a judgment. Without additional liability insurance, anything beyond the liability coverage limits of your homeowners/renters or auto insurance policy will have to come out of your pockets.

How to increase your personal liability coverage
The best way to make sure you have adequate liability coverage is to purchase a personal umbrella liability policy (sometimes called an excess liability policy). This coverage works in conjunction with the basic liability coverage provided by your auto insurance and homeowners/renters insurance. A personal umbrella liability policy increases your level of liability protection by providing expanded coverage beyond the basic coverage under your homeowners/renters and auto insurance policies.

If you don't own a house, rent an apartment, or own a car, you have no reason to purchase homeowners, renters, or auto insurance. Thus, you don't have the basic liability coverage provided by these types of insurance. You also can't purchase a personal umbrella policy, because this type of insurance is designed to supplement the basic coverage provided by auto, homeowners, and renters insurance. However, you can still get liability coverage by purchasing a comprehensive liability policy. Like personal umbrella policies, comprehensive liability insurance provides protection against liability claims, including legal and medical costs. But unlike personal umbrella liability policies, comprehensive liability insurance stands alone.

So, how much is enough?
There is no exact science when it comes to determining the appropriate level of personal liability insurance coverage. You might think that you only need enough liability insurance to protect your assets, but this figure is practically irrelevant when deciding how much liability coverage you need. A large judgment against you could easily wipe out your assets and put your future earnings in jeopardy. Instead, consider factors such as the following:

• Do you entertain often? (Having guests in your home, serving alcohol, etc., can open the door to potential liability claims.)
• Do you operate a home-based business that is covered under your homeowners policy?
• Do you have a long commute to work? Do you take frequent auto trips?
• Do you have teenage children? Do they drive?
• Does your lifestyle make you a likely target for a lawsuit (i.e., do you give the appearance of having "deep pockets")?

Personal umbrella liability policies are typically available in coverage amounts ranging from $1 million to $10 million. The amount of coverage you should have depends on the factors mentioned above, as well as your risk tolerance and your financial ability to weather a liability judgment.

Learn More...

Overview | Understanding The Basics | Coverage You Already Have?
Amounts Of Coverage | Personal Umbrella Policy

Please Note: The information contained in this Web site is provided solely as a source of general  information and resource.  It is a not a statement of contract and coverage may not apply in all areas or circumstances.  For a complete description of coverages, always read the insurance policy, including all endorsements.