Let's Talk First

Tips & Resources

Liability Insurance: Do You Need It?


If someone asks you if you carry liability insurance, you’ll probably say yes – you have liability coverage under your auto and homeowner’s policies, right? But if someone sues you for a million dollars, will those policies protect you? Not likely.

Most people don’t give a second thought to the possibility of being sued. But liability lawsuits are on the rise and attorneys are eager for big settlements, so the risk is real – and the stakes are getting higher all the time.

What if you were found at fault in an auto accident that resulted in serious injury to the other driver? Most homeowner’s policies only cover liability claims up to $300,000 for personal liability, and most auto policies provide up to $250,000 per person and $500,000 per accident for bodily injury. But if you get sued and found liable for a $2 million settlement, you have a very expensive problem. Now your personal assets could be at risk – your home, property, vehicles, bank accounts, and investments – even your future earnings if a judge allows a plaintiff to garnish your wages to pay off a settlement.

There are so many ways it can happen.

Lawsuits happen all the time and there are seemingly endless ways you can get sued today. Consider just a few of the scenarios that could end up in a costly lawsuit:

  • You seriously injure someone in an auto accident and the medical bills exceed your auto insurance limits.
  • You host a Christmas party and serve alcohol to someone who later drives drunk and kills a pedestrian.
  • Your dog tackles a motorcycle rider on your street, causing serious injury and property damage.
  • You crash a rented boat into a pier while on vacation and get sued for the damages.

And consider these simple, everyday activities that could get you sued:

  1. Owning a swimming pool (personal injury to a neighbor’s child or other guest)
  2. Hiring domestic help (personal injury, harassment, wrongful termination)
  3. Owning a dog (personal injury)
  4. Volunteering as a board member for a nonprofit (professional liability)
  5. Hosting a holiday party (personal injury to a guest)

You can’t be too careful when it comes to protecting your personal assets, and you can’t count on the liability coverage in your auto and homeowner’s policies to protect you. Not only are those limits likely to be insufficient, there are many types of liability claims not covered by those policies, such as defamation of character, libel, slander, and false arrest.

That’s why you need personal liability coverage above and beyond what those policies provide. Umbrella liability or personal excess liability insurance is the ideal supplement to your existing policies. Personal excess liability policies are available in increments of $1 million to $2 million, and these policies provide coverage for bodily injury, property damage, or personal injury including defamation and invasion of privacy, kicking in when the limits on your basic policies have been reached. They can even provide coverage for liabilities arising from serving on a board of a civic, charitable, religious, or nonprofit organization.

How much coverage do you need?

That depends on your situation and your assets. Do you have a family? Own a home? Have savings or retirement investments? You should carry excess liability coverage in an amount at least equal to your net worth. How about your reputation? Just because you don’t have a high net worth doesn’t mean you don’t have anything worth protecting.

Bottom line: if you’re not carrying personal umbrella coverage, you could be flirting with financial disaster.

What’s the easiest way to make sure your assets are protected? Contact a FICOH agent for a FirstSelect Portfolio quote. FirstSelect Portfolio is a package policy from FICOH that combines multiple coverages, including homeowner's, auto and personal umbrella, under one policy with the convenience of one bill.