If you have homeowners or renters insurance, personal liability insurance is included. It can protect you in the event that you become liable for an accident in or outside your home and are responsible for an injured party’s medical expenses. It can also protect you from costs associated with damages for which you may be liable outside the home.
What could be wrong with that?
The problem, you see, is that a standard home or renter policy only covers costs up to the insurance limits that come with it. If you’re stuck with a larger account that exceeds these limits, there’s no one else to cover you but… yourself and your wallet.
So the obvious question arises.
Should I or shouldn’t I buy better personal liability coverage than standard homeowners and renters insurance?
To properly assess the situation, you need to know how a personal umbrella liability insurance works.
Personal Umbrella Liability Coverage can protect you from costs you may owe – doctor’s, hospital and other medical expenses above standard insurance limits – in connection with an accident or event on your property that resulted in injury to another person. It may also pay for expenses that exceed standard insurance limits related to property damage. In addition, it can help pay insurance claims that would otherwise not be covered.
Following are the associated claim scenarios to study:
1. A homeowner had visitors at his home. The visitor slipped and fell on the driveway, sustaining serious injuries. Although he was liable for medical expenses, the homeowners personal umbrella liability policy picked up the $150,000 tab.
2. A policyholder was walking his dog when a young person approached them. The dog shot forward and bit the boy’s ear. Coverage began and paid the $60,000 medical bill.
3. A policyholder organized a graduation party. One of the guests drove off after drinking a few glasses of alcohol. His impaired driving skills caused him to drive erratically and eventually collide with oncoming traffic, resulting in a fatality. The victim’s family sued the party host for $1,000,000.
4. With the intention of moving into a home he rented out, a landlord sent his tenants 60 days’ notice. Because he disregarded a particular law requiring him to move into the vacant property under the circumstances within 90 days of notification, the landlord was sued for $20,000 for wrongful eviction by his former tenants.
5. It poured and poured and poured until a condominium owner’s drain line got clogged. Unfortunately, the water has accumulated and overflowed causing damage to the ground floor home and liability to the first condo owner. The $120,000 damage was covered by personal umbrella insurance.