What is liability insurance?
Liability insurance protects your assets in the event that you (or a member of your household) accidentally injure another person or damage someone's property. It's known as "third-party insurance," because it protects you if a third party files a claim against you. Liability insurance will pay for a legal defense in the event of a lawsuit, and pay medical and/or property claims for which you are found legally liable, up to the limits of the policy. Personal liability insurance can be purchased as part of a package policy (such as homeowners, renters, or auto insurance), or as a separate policy (such as a personal umbrella liability policy).

Why do you need liability insurance?
Some people mistakenly believe that personal liability insurance is necessary only if you are wealthy (and thus more likely to be sued because you have "deep pockets") or if you are reckless (and therefore more likely to be responsible for some type of accident). But accidents can happen anywhere, to anyone. For instance, you might hit a bicycle messenger, or accidentally spill hot coffee on a client's arm while meeting in your home office. Your son might hit a baseball through a church window, or a delivery person might slip on your icy porch. No matter how careful you are, you may one day be sued because you (or a member of your household) injure someone or damage someone's property. And in today's litigious society, it's better to be safe (by having adequate liability coverage) than sorry (when you lose all your assets in a lawsuit).

What do you need to know about liability insurance?
First of all, you should know that you probably need more liability insurance than you think. Even if you don't have a lot of assets, you could be the target of a major lawsuit if you cause an automobile accident, or if someone is injured either on your property or as a result of your negligence. Without adequate liability insurance, a large judgment against you could cost you all the assets you have now, as well as possible future earnings and inheritances.

You should also know that there are several types of liability insurance. Basic liability coverage is included in some of the insurance policies you probably already have. Auto insurance, homeowners insurance, renters insurance, and some types of boat insurance all provide basic liability coverage. However, if you need additional liability coverage, you should look into a personal umbrella liability policy. This type of insurance works in conjunction with your existing liability coverage in the event of a large judgment against you.

When should you get it?
Your homeowners, renters, and/or auto insurance policies include some liability coverage. So the question is, when should you consider purchasing additional liability coverage (typically in the form of a personal umbrella liability policy)? There is no hard-and-fast answer, but there's no time like the present because almost anyone can be the target of a huge liability lawsuit. Certain events increase your liability exposure--such as starting a home-based business, or having a teenaged child who gets his or her drivers license--so you should definitely re-examine your liability coverage at these times.

While it is possible to be overinsured, it's much more likely that you're underinsured for liability purposes. Don't learn the hard way that you need more liability insurance. Accidents and injuries don't happen on a schedule, and once you're the target of a liability suit it's too late to increase your coverage.

Learn More...

Overview | Understanding The Basics | Coverage You Already Have?
Amounts Of Coverage | Personal Umbrella Policy

Please Note: The information contained in this Web site is provided solely as a source of general  information and resource.  It is a not a statement of contract and coverage may not apply in all areas or circumstances.  For a complete description of coverages, always read the insurance policy, including all endorsements.