When accidents happen on your property, you can be held responsible for medical costs, pain and suffering, and other damages to an injured party. As reported by the Insurance Information Institute (III), about 5% of insured homes file a claim every year. With liability losses amounting to hundreds of thousands of dollars, a single lawsuit can threaten your finances.
To protect yourself from a heavy financial burden after an accident, you need personal liability insurance. Read on to learn more about personal liability coverage and why you would need the same.
Personal Liability Insurance – An Overview
Available through renters and homeowners insurance policies, personal liability insurance protects you and your family members against third-party bodily injuries and property damage that happens within your property. However, it can also protect you from liabilities that arise away from home.
It is worth noting that you will be held liable for all such medical expenses that arise out of injuries caused by your negligence. For example, failure to make a repair that leads to injuries would cause you to be responsible for the victim’s medical bills. In 2018, about 37.6 million Americans suffered medically consulted injuries at home, as reported by the National Safety Council (NSC).
A standard personal liability insurance policy would serve the following purpose:
• Cover Legal Costs – After an accident on your property, you will most likely need a lawyer. Personal liability insurance covers legal fees when faced with a lawsuit regardless of whether you are found responsible for the damages or not.
• Cover Lost Wages Claims – The insurance covers lost wages if a person is injured on your property and cannot work. Similarly, if the person succumbs to injuries sustained while on your property, the bereaved family can sue your insurer for death benefits.
• Protect Your Assets – An ideal insurance policy should protect you and your assets adequately from potentially large financial losses. Fortunately, increasing personal liability policy is inexpensive. With little increase in premiums, you can increase the coverage amount significantly.
• Protect Your Family – You can’t fully control your pets and kids. Dogs can get wild, causing harm to passersby and neighbors. Similarly, kids can cause severe damage to other people’s property. Compensation from an insurance company protects your family from such financial liabilities.
Additional Personal Liability Insurance Coverage –Umbrella Insurance Policy
An aggrieved party can sue you for damages exceeding the coverage limit of your personal liability insurance policy. Thus, if the court awards a judgment against you, you could potentially lose your personal possessions and savings. To avoid such situations, you should purchase an additional personal liability insurance coverage policy called umbrella insurance.
An umbrella insurance policy provides additional liability coverage above the limit of your standard insurance policy. An umbrella policy can be purchased in $1million increments. Hence, it kicks in once the underlying policy has been exhausted. For instance, if your liability policy amounts to $500,000 and you are sued for $2.5million, the claims will first tap the liability insurance. A $1 million umbrella policy will cover an additional$1 million. Any uncovered portion of the claim or lawsuit will be your responsibility to pay for. You should think of an umbrella policy as a last line of defense against bankruptcy. For this reason, you should carry at least as much personal liability insurance to match the value of your assets. An umbrella policy can usually be purchased for nearly 1/10th of the cost of an auto/home insurance policy and often times as low as $150 per year, however the price varies on the individual circumstances and level of risk.
Liability insurance also covers false arrests, personal injury, and wrongful eviction expenses. However, basic renters and home liability coverage excludes injuries caused while operating a vehicle, such damages are covered by the liability found on a car insurance policy. When you purchase an umbrella policy, the additional liability coverage it provides extends over all insurance policies in your name. For this reason, you can only own one umbrella policy; it will cover all of your homes, rental properties, all of your automobiles, and all of your household drivers, even if your property extends across multiple states.
Thus, personal liability insurance coverage serves multiple purposes and provides benefits over and above the standard insurance policy. For assistance with your personal liability insurance, contact the experts at CIA Insurance and Risk Management. We are ready to help you with all your coverage needs.
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