Excess and Umbrella Liability
How much liability coverage is enough? Typical home, auto, boat, and other personal insurance policies carry a maximum limit of coverage per occurrence. At the high end, that limit is $500,000. Is that enough if someone drowns in your pool or is permanently disabled due to an auto accident you caused?
Anyone can be sued, regardless of income level, for just about any reason. If you do not carry extra liability protection over and above your other personal policies, you may be risking everything — your car, your home, the lifestyle to which you and your family are accustomed, and possibly even your future income.
Good Coverage = Peace of Mind
An example may help here. A friend had an auto policy with bodily injury limits of $100,000 per person and $300,000 per accident. Her daughter caused an accident that seriously injured the other driver. This friend was forced to hire her own attorney to "shadow" the insurance company attorney, because the injured party was looking for more than the $100,000 of coverage provided by the policy. If she had had an umbrella liability policy, this would have been unnecessary, as the auto and umbrella policies would have worked together to represent her interests. She was fortunate that her only expense was a huge legal bill, and not an additional judgment.
Customized Coverage to Suit Your Lifestyle
Excess or umbrella liability is available in increments of $1,000,000 up to $50,000,000. Rule of thumb within the industry is to at least cover your net worth. Another way to determine how much liability coverage you need is to look at your exposures. How many cars do you have on the road? Do you have young, inexperienced drivers? Do you have any rental property? Do you have a pool or body of water on your property? Do you have a dog? Do you entertain often?
The cost of the coverage depends on the exposures underneath it. In other words, the more properties, cars and drivers you have, the higher the cost. Some insurance companies surcharge for young drivers and swimming pools. The coverage is relatively inexpensive. For one house and two cars, the annual premium would be roughly $200 for the first million dollars of coverage.
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