What Is Personal Excess Liability Coverage and Why Do You Need It

Personal excess liability coverage is a type of insurance that helps protect your assets in case of a lawsuit.

It's designed to kick in when your standard liability coverage is exhausted, providing an extra layer of protection.

The standard liability coverage that comes with most insurance policies is often woefully inadequate to cover the costs of a lawsuit.

Most people don't realize that their standard liability coverage is often limited to just $300,000, which can be easily exceeded in a serious lawsuit.

This is why many experts recommend having at least $1 million in personal excess liability coverage to be truly protected.

Worth a look: Excess versus Umbrella Insurance

Personal excess liability coverage is a type of insurance that protects your assets from personal injury, bodily injury, and property damage lawsuits.

High-limit coverage options are available, ranging from $1 million to $100 million, providing broad umbrella liability limits.

Legal counsel and defense costs are included, even if a lawsuit is groundless, false, or fraudulent.

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You can also get protection from lawsuits involving accusations of libel, slander, or negligent injuries, including cases originating from social networks, websites, or blogs.

This type of insurance provides additional protection if you're involved in an accident with an uninsured or underinsured driver.

It also covers you if you're liable for someone getting injured on your property, such as falling on your sidewalk or slipping near your pool.

Here are some key benefits of personal excess liability coverage:

Choosing the right amount of protection is crucial, and it's essential to consider your unique circumstances. Your current net worth is a good place to start, but keep in mind that an unfavorable verdict may also put your future assets at risk.

Your personal risk advisor can help you understand the differences between the coverages and services offered by different insurance carriers, some of which may not offer the high liability limits you require. An excess liability policy, also known as an umbrella policy, supplements your basic personal liability coverage to better protect you from large losses.

To determine the right limit for you, consider your assets, risk tolerance, and the potential magnitude of loss associated with the risks you're subject to. The extent to which underlying insurance policies would respond to the identified risks should also be taken into account.

Here are some factors to consider when determining the right limit for your excess liability policy:

As you navigate the world of personal liability coverage, it's essential to understand the various sources of risk that can leave you vulnerable to costly lawsuits.

Having teenage drivers in your household can significantly increase your liability risk, as they may be involved in accidents that can result in large damages.

Not-for-profit board membership can also expose you to liability risks, as you may be held accountable for the actions of the organization.

Social media use can be a source of liability risk, especially if you inadvertently spread false information or defame someone online.

Home entertaining can also lead to liability risks, particularly if you serve alcohol and someone gets injured.

Dog ownership can be a source of liability risk, especially if your dog bites someone and causes injuries.

Home swimming pool ownership can also expose you to liability risks, as accidents can happen when children or adults use the pool.

Here are some common sources of liability risk to consider:

Coverage is a crucial aspect of personal insurance, and it's essential to understand the basics before making a decision. Excess liability insurance, also known as an umbrella policy, provides protection after primary coverage limits are exhausted.

Excess liability coverage offers protection for large losses that can put your personal assets at risk. This type of coverage supplements your basic personal liability coverage provided under homeowners and auto policies.

Personal liability protection is an important part of financial planning, especially if you have significant assets to protect. An excess liability policy can provide exceptional coverage that costs significantly less than an independent policy.

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Excess liability limits are a judgment call and setting the right limit for you will depend on many factors, including your net worth, risk tolerance, and financial situation.

Here are some key benefits of excess liability coverage:

In the event of a claim, excess liability coverage can help cover damages such as loss of income, future earnings, short-term and long-term medical expenses, and pain and suffering. It's essential to have a clear understanding of what's covered and what's not.

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