It is important to note that automobile liability policies and homeowner’s policies only provide coverage up to a certain limit set forth in each policy. Additionally, auto policies do not cover homeowner’s losses and homeowner’s policies do not cover liability for car accidents. What can you do to protect yourself against the personal exposure of a liability claim which exceeds your auto or homeowner’s policy limits?
To protect yourself from personal liability, you should consider purchasing umbrella or excess insurance coverage. This coverage is primarily extra liability insurance, which is designed to protect you from personal liability in the event that damages from an accident to another person exceeds your primary auto or homeowner’s policy limit. A lawsuit that exceeds your auto or homeowner’s coverage puts your personal assets at risk, your bank accounts, your retirement savings, your home and even your wages. Umbrella or Excess coverage provides protection for these assets. This type of coverage kicks in to pay after your primary coverage limits, either from an auto or homeowner’s policy is exhausted.
Keep in mind that in order to purchase Umbrella or Excess coverage, such insurer’s require that you maintain specific liability limits on your existing homeowner and auto policies. Lastly, the premiums for this type of coverage are generally very low and affordable.