When’s the last time you thought about your risk of being sued?
If you were involved in a car accident that caused serious injuries and you were at fault, you might have worried about being sued.
Or if your family dog, who normally loves nothing more than to cuddle with visitors, suddenly attacks a child in your neighborhood, you might expect to receive suit papers.
But in reality, these types of scenarios aren’t a common occurrence so most of us go about our daily lives never considering what would happen if we found ourselves in a lawsuit situation.
And that’s the danger! Just because it’s unlikely to happen doesn’t mean it can’t happen.
We need to plan for the worst-case scenario because if we don’t, our assets, our financial future and our entire estate could be at risk.
What’s the role of Liability Insurance?
If you have an auto insurance policy or homeowners insurance policy, it’s almost a guarantee that liability insurance is a component of these policies.
And the liability insurance portion of these policies is designed to protect you in the event you injure someone in an auto accident, or someone is injured while on your property.
Sounds great, right?
Not so fast.
The fact is, far too many drivers on the road today have limits of liability coverage that are dangerously inadequate. For example, the minimum required amount of coverage in Ohio is only $25,000.
If you cause serious injuries in an accident, how far do you think $25,000 is going to go to protect you and your assets?
And many homeowners policies only provide $100,000 of liability coverage. How long will that protect you if your dog severely injured a child?
So how much Liability Coverage should you have?
Based on increasing medical costs, the rise in auto insurance incurred losses, and the general lawsuit-happy society we’re living in today, we recommend the following limits of coverage, at a minimum:
- $250,000 per person injured
- $500,000 total for the accident
- $100,000 for property you damage in the accident
These limits of coverage are often expressed as $250,000/$500,000/$100,000.
Beyond these limits of liability, you should seriously consider the benefits of including an Umbrella Insurance policy. This policy would provide an additional $1,000,000 (or more) of liability protection over and above both your auto and home policies.
And as far as insurance goes, Umbrella Insurance is one of the ‘best buys’ available, often costing less than $200 per year. Not too bad for an additional $1,000,000 of protection.
We all hope we never find ourselves on the wrong end of a lawsuit, but for the sake of our assets and our future estate, we need to do the proper planning today. Securing adequate liability insurance is one of the most critical steps you need to complete in this planning process.