When most people consider their insurance needs, only certain types of coverage typically come to mind. Health insurance and life (or sometimes disability) insurance protect you and your loved ones; car and homeowner’s or renter’s insurance protect your major tangible assets. Personal liability insurance, frequently called an “umbrella” policy, seldom makes this list. But when a rainy day – or an expensive lawsuit – turns up, sometimes nothing but an umbrella will do.Look At professional liability insurance London website to get more
As the name suggests, personal liability coverage mainly exists to protect against claims of liability. In most cases, that means finding yourself, and your assets, the target of a civil lawsuit. A personal liability policy may seem like overkill for individuals who already hold three or four insurance policies. It is true that not everyone needs such protection. But an umbrella policy effectively defends your assets and future income against damage claims that can arise from a wide variety of scenarios. Much like flood insurance for beachfront property, liability insurance is a product you hope you never need to use, but one which can create substantial peace of mind in the meantime.
Some level of personal liability coverage is built into homeowner’s (or renter’s) insurance and auto insurance. For many people, this may be sufficient. In part, this is because some types of assets are shielded by state and federal law. For instance, a court cannot force you to use qualified retirement accounts, such as 401(k)s, to pay a legal judgment, and most states have laws protecting traditional IRAs. Some states protect Roth IRAs and other retirement accounts, too. Many states also protect your primary residence, though the precise rules vary; Florida, for instance, offers very strong protections in this area, while other states may only shield a certain level of home equity.
You can also protect certain assets from lawsuits through estate planning tools, such as properly structured and funded irrevocable trusts. However, be wary of setting up such trusts directly after an incident you fear may trigger a lawsuit. If it looks as if you are simply trying to dodge future creditors, the courts could determine that the asset transfer is fraudulent, rendering these assets available to pay a judgment.
Most people think of car accidents as the main trigger for such lawsuits, and with good reason, since car accidents are relatively common and can cause a lot of damage. But there are a wide variety of situations in which you can find yourself liable for an accident. You may host a party at your home where one of the guests is seriously injured. Your dog may bite a stranger or acquaintance. If you employ household staff, such as a nanny or home health aide, the employee could sue not only because of physical harm, but also for wrongful termination or harassment.
There are other liability risks that may not spring to mind so easily. For instance, the hyperconnected world of social media creates many more opportunities to libel or defame someone, even without deliberately setting out to do so. Your teenage or preteen children could also create such problems; in a worst case scenario, they could end up involved with a cyberbullying incident or harassment that takes a tragic turn. Teenagers also increase your liability when they get behind the wheel. Even adult children can trigger “vicarious liability” statutes that may leave you personally liable in certain circumstances, such as if they borrow your car and are then involved in an accident.