The importance of personal liability insurance

Personal liability insurance, also known as general personal insurance, is another product we use to keep our assets intact. Since we live in a litigious society, we believe it is a good strategy to have an insurance policy that can withstand a financial error caused by a lawsuit.

What is personal liability insurance?

Your auto and homeowners insurance policies have additional liability protection built into their contracts. If you are found negligent in a situation where someone was injured, your liability protection will pay for things like personal medical bills, rehabilitation, lost wages, etc.

However, the coverage amounts are relatively low and can be depleted quickly depending on the severity of the other party’s injuries.

The protection of a general personal liability insurance policy will kick in once the liability protection of your other policies is no longer sufficient. gives you and your goods additional protection.

How about an example of where this policy is important?

Let’s say Bill insults Anne in a car accident. Due to the severity of Anne’s injuries, she is now disabled and unable to return to work. Her medical bills are $50,000.

Good and bad news. Good news: Bill’s car insurance policy has $50,000 liability coverage. Bad news: Do you think Anne and her attorney will only be looking for $50,000?

Not likely. Remember…

He can no longer work or support his family. You can no longer finance your retirement. You have ongoing medical bills that you will have to pay due to your disability. Along with financial difficulties comes emotional distress.

So if you factor in your lost wages over 20 years, medical bills, retirement, and personal therapy, you’re looking at the possibility of millions of dollars. If Bill does not have personal liability insurance, then his assets are exposed.

So what does he do exposed mean? They could go after your house, cars, boats, bank accounts, 401k, etc. Any assets held in your name are at risk.

But you don’t even have to be “physically” involved in the scene of the injury to be at risk. If someone is injured in your home and you are responsible for the damage, then your assets are at risk if you do not have enough coverage.

This article is not meant to scare you. It is not intended to invoke fear. We encourage you to take preventive measures. We want to inspire you to take action to protect your wealth. Just like wearing a seatbelt in a car, an umbrella policy is an added layer of protection.

My wife and I have a general policy that provides $5 million in excess of the coverage provided by our home and auto policies. We only pay $531 a year for the policy. As you can see, the premiums are relatively low.

Therefore, consider the benefits of these policies. Use a blanket policy to cover your assets. Remember… sometimes when it rains, it pours.