Personal Liability Insurance
by Takara Alexis

Senseless lawsuits and outlandish settlements got people's blood boiling recently when a judge - yes, a judge - sued a little, family-owned dry cleaners for $65 million for misplacing a pair of his pants. Small businesses, this goes to show, are just as open to attack as their deep-pocket peers. A recent study by NERA Economic Consulting concluded that small businesses pay for 69 percent of civil lawsuit liability costs, even though they generate only about 19 percent of business profits.

Not a small business owner or big business executive? You could still face significant loss of property from damages and court costs in a liability claim. You get some protection through your homeowners, renters and auto insurance, but every policy has limits and your policies may leave you exposed where you least expect it.

Umbrella policies dispense extra, coverage overall beyond these specific policies. Usually the amounts range from $1 million to $5 million and cover any loss past what your other policies will pay. The coverage is not bound to your property or vehicle so it can go where you go. It typically does not cover business activities, even if its a home-operated business.

The need for personal liability insurance can depend on two different factors: the amount of equity you have and the risks that are associated with your particular lifestyle. Is there a pool on your property? Allow hunting on your farm or ranch? Have people employed at your home like a nanny or housekeeper? These factors can expose you to risks that go past those policies of a typical homeowner.

Do other factors make you a victim for lawsuits? Even crazy claims might cost you time and emotional agony. If people are aware of your assets, recent inheritance, land holdings, or salary - or even mistaken assumptions about these things - could very well bring out claims from the classic slip and fall to more involved deceptions.

Typically, umbrella liability coverage extends to your kids, your spouse and relatives that live in your household, being cared for by you or under the care of a family member living with you. That can be a big reassurance especially if you have teenagers that drive or college students living away from home.

Umbrella liability insurance could protect money you have saved. Your financial counselor or insurance professional will be able to help you examine your coverages and potential risks to decide just big your umbrella should be.