Although liability coverage comes with most auto and homeowners insurance, will it be enough to protect your retirement savings and other assets if you get sued beyond the limits of your policies?
For example, if the limit on your car insurance for bodily injury is $300,000, can you cover the difference if you’re found liable in a lawsuit for $600,000? In this scenario, if you carry Excess Liability Insurance (also known as Umbrella Insurance) it will provide the additional coverage you need.
How Excess Liability Insurance Works
When the coverage limits of your home or vehicle insurance are exhausted, your Excess Liability policy covers the remaining cost of damages. This includes legal costs, settlements, and judgments that exceed the limits of your car and homeowners insurance. In the event of lawsuits due to extremely serious car accidents, you can be assured your assets are protected. Excess Liability Insurance coverage includes:
- Bodily injury to others
- Property damage to others
- The legal costs to defend you in lawsuits related to these problems
- Lawsuits such as defamation, libel, slander, and invasion of privacy
- Incidents that happen outside the U.S.
Also note that if you own rental properties, Excess Liability Insurance can help protect you as a landlord against excessive tenant liability lawsuits.
Excess Liability Insurance Is Highly Affordable
Since your Excess Liability insurance only kicks in when the limit of your primary insurance is exhausted, the coverage it can provide is highly affordable. Before you can purchase a policy, your homeowner’s insurance must have at least $300,000 of coverage and your auto insurance must have $250,000 for injuries and $100,000 for property damage. Depending on where you live, the cost of $1 million worth of coverage can average $350 per year for a person with one home, two cars, and two drivers. Of course, if you also have a vacation home and a boat, your yearly cost will be higher.
“Without it, you put yourself at risk for a significant loss, if you’re liable for damages that exceed the limits of your car and home insurance.”
Is Excess Liability Insurance Worth It?
Considering that you can buy a $1 million policy for just over $30 per month, this type of insurance can protect your Thrift Savings Plan (TSP) nest egg and other assets you’ve accumulated over your lifetime. Without it, you put yourself at risk for a significant loss if you’re liable for damages that exceed the limits of your car and home insurance.
Meet with an FRC® trained advisor to learn more about Excess Liability Insurance and other types of insurance products that can protect your retirement nest egg.
