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Do You Have Enough Liability Insurance?

I want you to take a minute to consider whether you have enough liability insurance coverage. Did you know there are 90 million lawsuits outstanding in the US right now? That’s almost one for every three people! It’s incredible! Plus, judgments are normally in the hundreds of thousands of dollars, if not in the millions!

Mostly everyone has anywhere from $100,000 – $300,000 of liability insurance on their auto and homeowner’s policies. You should normally have a minimum of $250,000 – $500,000 of underlying coverage in our opinion.

And, you should consider buying an “umbrella” policy, which is triggered when your other liability insurance isn’t enough to cover you. (Which is usually a minimum of $1,000,000, and if possible, you should get a $2,000,000!) Let’s say you were in a car accident and owed $500,000 in a liability claim. If you had $100,000 of liability coverage on your auto policy, it would pay the first $100,000…then your umbrella policy would kick in and cover the rest. Without the umbrella policy, you’d have to come up with the other $400,000 on your own.

An umbrella policy is a relatively cheap (you should be able to buy a $1 million policy for around $100-$300) and simple way to make sure you and your family are protected. You should call your agent and ask how much an umbrella policy would cost. If you have your auto and homeowner’s policy with two different companies, call them both and ask what your rates would be if you had all three policies with them. Chances are, you’ll get a package deal if you put all the business with one company.

The best way to afford to pay for the umbrella raise the deductible on your auto and homeowners policies. The money you’ll save by raising your auto deductible to $500 or $1,000 and your homeowners deductible to $1,000 should more than pay for your new umbrella policy. Plus, if you get an umbrella policy for $2,000,000, and it only requires a $300,000 underlying coverage, and you currently have $500,000…you could drop the underlying coverage to $300,000 and save money there as well.

The point of auto and homeowner’s insurance is not to cover a $100 broken window, or a $200 dent…but rather, to pay for BIG DISASTERS! Anyone can afford $200 to fix a windshield…but how many of you could come up with hundreds of thousands of dollars to pay a judgment from a lawsuit?

Please keep in mind that this tip is designed to be of help for you, but is not to be relied upon as advice. It is merely a reminder that there are many choices you have available to you, and that planning is the only way to find the right answers for your situation!  As with any financial issues, make sure you get the right information before making a decision!  If you have any questions, we’ll be glad to help you!