There’s nothing I like more than writing my annual checks for all my insurance protection…cough.
What is Personal Liability Coverage?Chances are that you already have some liability coverage. Most homeowners policies and auto policies include a certain amount of personal liability coverage. If someone is injured at your home, or if you ruin someone’s property with your car, the insurance company pays the claims, up to the amount that you are covered for. Personal liability coverage helps you protect your assets since the insurance company pays out the claim, and you don’t have to dip into your savings, or into your other assets. However, the personal liability coverage that comes with your more common insurance coverage isn’t always enough.
Consider Umbrella InsuranceOne way to augment your personal liability coverage is to purchase an umbrella policy. Umbrella insurance protects you in larger amounts than what is usually offered with your other policies, but the premium increase isn’t as bad. You can usually buy a popular umbrella coverage amount for about $150 a year, and an increase of $50 for each additional $1 million. Many consumers find that boosting the deductible on auto or home insurance can offset the cost of umbrella insurance. If you have factors that increase your chances of damaging property or injuring others, it can be worth it to get umbrella insurance — especially if you have a high net worth. Someone who knows you have more assets might be more willing to sue you for $2 million after a slip and fall at your home. Umbrella coverage kicks in after your regular insurance is tapped out. So, if your homeowner’s policy has $750,000 in liability coverage, and you have $3 million in umbrella insurance if you are sued for $2 million, your homeowner’s policy will be tapped first. Once the $750,000 has been paid out, the remaining $1.25 million will be paid from your umbrella policy. We initially started with a $1m umbrella policy but recently increased that to $2m of total coverage. I also have an umbrella policy for my business, too.
Errors and OmissionsWhen you are self-employed, you have to be aware of some of the liability issues that can come with your job. If a client holds you responsible for a service you provided, or if the promised results were not realized, or if you are considered liable for a service you didn’t provide, this can become an issue. Financial planners, lawyers, cosmetologists, and others who are in positions to provide advice and some services to clients can benefit from this type of liability insurance. This is my whopper of a premium, but with my profession; it’s a necessity. My total premium is $3,654 per year for E&O coverage…gulp. Some additional benefits that my E&O coverage policy covers on top of the $1m of coverage are:
- Business travel Accidental Death Benefit: $25,000
- Emergency Real Estate Consulting Fee: $25,000
- Identity Theft Expense: $25,000
- Key Individual Replacement Expense: $25,000
- Kidnap Expense: $25,000
- Theft of Work Materials: $2,500