As summertime is in full swing it is officially the season of travel, backyard barbecues, pool parties and fireworks. With many young people out of school, summer can be a great time for loved ones to come together and enjoy time with one another. Whatever your plans are this summer, now’s the perfect time to check your liability coverage.
With lawsuits becoming more common and costly, having the appropriate amount of liability insurance is a great way to protect the assets you’ve worked hard to build. Today, we’re covering the three most common types of liability insurance you should know about.
Auto Liability Insurance
Texas drivers are required to have minimum coverage amounts of liability insurance within their auto policy to legally drive. This liability insurance is required in case you cause or are found at fault for an accident. These minimum coverage amounts are called limits and are often shown in 3 separate numbers like so 30/60/25. These numbers also represent the minimum required limits for Texas drivers.
The first number “30” above is the amount of liability coverage, quoted in thousands of dollars, represents the maximum coverage per injured person. Simply put, if you caused an accident and injured another person, the policy would cover up to $30,000 of injuries per person involved in the accident.
The second number, “60”, states the amount of coverage can be provided in total for an accident.
The last number, “25”, refers to how much coverage in thousands is available for property damage.
According to CarEdge the average cost of a new car in the US in June is $48,699. Due to the risk of multicar accidents, as well as the rising cost of vehicles, a more common policy that provides better protection would be 100/300/100. If you are only carrying the minimum required limits, it may be worth considering increasing your coverage.
Homeowners Liability Insurance
Another area of liability insurance worth reviewing is within your homeowner’s policy. This can be found in part E of your current policy. This part of the homeowner’s policy can help protect you if a guest accidentally injures themselves at your home or if you are found at fault for damaging another’s property while away from home. Most homeowners’ policies offer limits between $100,000 and $500,000. While for some this may be enough, for others it could be far less than the assets they need to protect. This is where the last primary form of liability insurance, Umbrella policies, come in handy.
Choosing the Right Deductible
While evaluating your liability limits it’s also important to consider your deductible for any damage your own property may have suffered in an accident. Deductibles have an inverse relationship with the premium you pay to your insurer. The higher your deductible the lower your premium and vice versa.
A higher deductible tends to lower premiums, so it works well if you have sufficient savings and don’t expect to file frequent claims.
Some homeowner’s policies will have special deductibles for things like windstorms or hurricanes. Make sure to have an understanding of these when reviewing your policies.
Simply put, your deductible should never be lower than an amount you’d consider a minor expense. If so, you’re likely paying more in premiums than you should be.
Umbrella Insurance
Umbrella insurance is a type of insurance that provides liability coverage beyond homeowners and auto policies. These policies will typically require you to have a minimum amount of liability coverage from your auto and homeowner’s insurance policy. Umbrella insurance can be a valuable safeguard for many clients, particularly those with substantial assets to protect.
Even if you feel like you have enough protection without an umbrella policy if one or more of these circumstances apply to you, we think it is worth reconsidering:
- You are a landlord.
- You own things that can lead to injury lawsuits ex). Pools, Trampolines, Guns.
- You often host others at your home for parties or events.
- You coach youth sports.
- You serve on a board or nonprofit.
- You drive a luxury vehicle.
- You participate in sports where you could potentially injure others.
How much liability coverage is enough?
Everyone’s situation is different however a good rule of thumb is to at least have enough to match the same level of assets you have, not including any employer sponsored retirement plans. Most umbrella policies are sold in million dollar increments and are very affordable.
Not sure if your coverage is adequate or appropriate? Let’s take a look at it together.
Liability insurance is more important than ever—help your friends, family, and colleagues stay protected by sharing this guide with them today!
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