When designing your insurance portfolio, you may want to consider how excess liability insurance fits in. Excess liability can come in the form of an umbrella policy with limits that exceed those of your property and automobile policies.

While this insurance coverage is very affordable, it does add an extra cost that you need to evaluate in terms of practicality with both your needs and your budget. In order to determine whether it’s a practical expense for your family, ask yourself the following three questions:

1. What is the cost of a liability? When you consider the various liabilities you face, try to imagine the total potential cost should some of them come to fruition. For example, if your neighbor is injured on your property while delivering a package left at their door while you weren’t home, how much could the potential damages be? Consider the cost of medical expenses, lost wages and even negligence should you be found guilty. If your current insurance limits cannot bear the upper estimates of these costs, you might consider excess liability.
2. What is your likelihood of realized liability? Insurance sometimes protects you from events that never occur because it’s there to shelter you from the risk exposure you encounter each day. But it’s a good idea to consider how likely you are to be considered liable for something. To do this, consider all the risks that could end up resulting in damages and think about how often you are directly exposed to these risks. This can include your risk of hitting a pedestrian or another car while driving, having someone slip and fall at your home, damaging the property of another and so on.
3. Can you afford to self-insure the additional risk? Without excess liability coverage, you are pitting your family’s assets against the risks of liability faced each day. If you are willing to liquidate savings and retirement accounts and sell off assets in order to compensate for liabilities then you might not need additional coverage.

If you think excess liability might be a good choice for your family, give us a call. We can help you fill the gaps in your current insurance plan at a price your budget can afford.