Do You Need a Personal Liability Insurance Plan?

If you recently purchased a new car or are evaluating your current car, boat, home or other insurance coverage options, or if you want to protect your assets, you may be wondering if you really need personal liability insurance. Car insurance requirements vary from state to state, and every state has a minimum requirement for liability car insurance. If you don't have at least the minimum amount liability coverage, you could end up paying heavy penalties and fines when you are involved in a car accident. Other types of personal liability insurance are equally important, but are usually not required.

When you purchase personal liability coverage as an umbrella policy or extended coverage on your car insurance, your personal assets cannot be seized if you owe more than what your regular car insurance policy covers.

Why People Carry Personal Liability Insurance
Many people choose to purchase personal liability insurance to prevent losing their home, car, boat and other personal assets in the event of a serious car accident. This type of insurance coverage is often defined as "supplemental" coverage because it does not replace an existing car insurance policy.

Anyone who wants to avoid losing their personal assets if they are being sued can get this type of policy for added protection.

When your regular line of insurance ends, any supplemental coverage you have kicks in to pay for the additional costs not covered by your regular insurance policy. If you don't carry an umbrella policy or supplemental car insurance, you will owe a significant amount of money out of pocket and may need to sell your personal assets in order to come up with the money. If end up being sued, the courts have the legal right to seize your personal assets.

Purchasing a Personal Liability Insurance Plan
If you are interested in purchasing a personal liability insurance plan, you will need to review the terms of coverage and limitations on your policy. Most of these insurance policies provide coverage for any damage you cause, including bodily injury, personal injury and property damage.

Personal injury coverage may also provide coverage for eviction, defamation and invasion of privacy.

Even though these policies serve as extended coverage, they still have some exclusions and limitations. You may still be subject to a lawsuit and end up being sued for damages that are not covered by your regular insurance and a personal liability insurance plan, so make sure you review the terms in detail and are aware of how much protection you actually have in the event of a serious accident.

Sources:
CarInsurance.com: The Basics of a Personal Liability Umbrella Policy
PublicLiabilityInsuranceGuide.com: Is Personal Liability Insurance Worth It?
CarInsuranceRates.com: Guide to Liability Only Car Insurance Coverage