Personal liability insurance coverage protects a person, and possibly that person’s immediate family from unexpected losses arising from civil claims against the insured. It is also known as umbrella coverage, as it provides protection above and beyond that of regular liability insurance.
Insurance coverage amounts are based on expectation of loss. A personal liability umbrella provides protection for unexpected losses. If a person’s liability coverage is not enough to fully protect his assets in the case of unusually high lawsuit settlements or other unexpected situations that the insured is liable for, the personal liability coverage kicks in after the limits of the regular liability policy is reached.
Business require professional liability and professional umbrella coverages. This is extremely important to know for those people who run their own businesses. Especially if a business is a one-man operation, possibly run out of the home, one might think that personal liability will cover him completely, but in fact, any claims made against the business will require a professional policy, as a personal one only applies to an individual, his family and their personal assets.
The key word is liability. Property insurance is based on the value of one’s home and property. Auto insurance covers a person’s car. Liability insurance, in essence, covers someone for when they are sued. The insurance pays out to protect their assets from being lost in payment of civil lawsuit settlements. Personal liability covers losses above and beyond the limits of the liability policy.
Umbrella coverage is usually placed in millions. Policy coverages range in average cases from $1 to $10 million per occurrence with a $2 to $20 million aggregate. Per occurrence means that the insurance will pay up to that limit on any one loss. Aggregate means the total amount that could be paid out during the policy term. A $1 million per occurrence, $2 million aggregate policy essentially protects the insured for two losses of $1 million each. Any single loss over $1 million or any losses after the aggregate has been exhausted is not covered. Generally, how much coverage you need will depend on the value of your assets. The more valuable your assets, the more liability you will need, and the more personal liability you will need to have to fully protect you and your family against loss.
Beyond lawsuit settlement amounts, personal liability can also pay for medical expenses for injuries to guests resulting from negligence of the owners.