Excess Liability Insurance: Is it for you?

Imagine you are involved in a million-dollar lawsuit. Would your family?s future be at risk? Could you afford the legal defense costs to win your case, or worse, the sum awarded by a jury should you lose?

Unfortunately, we live in a litigious society, and as such, many financial planners would suggest you obtain an Excess Liability policy as a buffer over the other policies you have. Here are some tips to help you learn if an Excess Liability policy is a practical purchase for you.

1. Define your liability costs. When you consider the various scenarios in which you could be held responsible, try to imagine the potential cost. Suppose your neighbor is walking his dog and is injured crossing your driveway on uneven pavement. How much would the potential damages be? Remember ?to include medical expenses, lost wages, and even negligence should you be found guilty. If your current insurance program would be bear the upper estimates of these costs, excess liability might be for you.
2. Understand the likelihood of your realized liability. Insurance often protects you from things that never happen because it?s purpose is to shield you from the risk exposures you face every day, but that doesn?t mean it?s not a good idea to consider how likely you are to be held liable for something.? Are you on the Board of Directors for a non-profit? Do you have teenage drivers in your household? Do you travel often, sometimes out of the country? These questions can help determine how often you are directly exposed to risks that could result in a lawsuit, and whether excess liability is something you should look into.
3. Can you afford to self-insure the additional risk? If you were able (and willing) to liquidate savings and retirement accounts, and sell off assets if necessary in order to compensate for the liabilities you face, you might not need Excess Liability insurance. If, however, that is a gamble you?re not willing to take, placing coverage in the form of an Umbrella policy that would sit over your current insurance program is something you should seriously think about.

An Excess Liability policy can give an extra layer of protection by providing liability coverage over and above your standard auto and homeowners insurance policies. You don?t have to be a multi-millionaire to be sued like one, but you also don?t have to be a multi-millionaire to be able to afford Excess Liability insurance. Speak to an independent agent today to assess your individual needs and see if this important coverage is right for you.

Source: http://www.mmins.com/excess-liability-insurance-is-it-for-you/

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