While anyone who owns a home or drives a properly insured vehicle has a good idea of ​​what the respective liability insurance plans protect them for, many have no idea what personal liability policies are all about. and who should buy such protection. Also known as blanket insurance, such policies pay for costs that go beyond what traditional protection is provided through auto or homeowners insurance policies and pay for costs that those types of coverages can’t.

An auto insurance or homeowners plan comes with marginal levels of liability protection in case someone is injured or property is damaged by an event caused on or by the insured property. If one vehicle swerves and hits another, for example, the cost of damage and injuries inflicted would be covered up to the policy limits.

But those limits can be too low compared to the potential cost of medical bills, damage claims, laws, and court judgments against vehicle owners. And in such situations, many people could file for bankruptcy and have their homes and other assets turned over to the accident victims and their attorneys.

And if someone is injured or killed or their property damaged or destroyed while in an insured home or on policyholder property, the costs could wipe out those assets. While the potential for a total loss could be alleviated by a simple bankruptcy filing for many people who own very little and could rent out their homes rather than own, those who own much more and have a great deal of funds, as well as many tangible assets. benefit greatly from personal liability insurance plans.

Personal liability insurance plans are generally very affordable for the levels of protection they can provide. Policy limits can be as high as $1 million or more, and they have relatively low premiums due to the fact that home, auto, and other property plans already provide a measure of such protection, limiting the number of likely claims it will pay. the broader industry. personal liability coverage. Because of the broad protection provided, such plans have earned the name “umbrella” insurance due to the wide range of coverage provided.

People who can benefit most from umbrella policies include owners of large, expensive homes and other property, business owners, and those who have large amounts of cash or investments that would be vulnerable to costly lawsuits and legal settlements without the protection of coverage. general. While it’s unfortunate to admit, the more assets a person has, the more likely they are to be the target of a lawsuit, whether or not it has merit.

But even the cost of a frivolous lawsuit can be high. And the right kind of protection can keep homes and family assets in family hands instead of liquidating them to pay for a legal challenge or possible settlement. When the potential cost of losing a home or other assets far outweighs the cost of having general coverage, purchasing such protection is a necessity.