Liability Insurance

Every day there are all sorts of things that you could do or fail to do or just be accused of doing or not doing that could turn your world upside down.

These are things that you could be found to be financially and or legally liable (responsible) for.

Risks of all kinds can be addressed in four ways.

  • They can be ignored (accepted)
  • They can be reduced
  • They can be eliminated
  • They can be transferred

With the assistance of a property and casualty insurance agent you should take a look at the professional and personal life that you lead and determine your unique risk profile. Once you do that you can determine which of the four techniques or combination of techniques you should use to address your risks.

There are two components to each risk that you face. They are probability and potential loss. The create a box like this:

Low ProbabilityHigh Probability
Low Potential LossLPL / LPLPL / HP
High Potential LossHPL / LPHPL / HP

The combination that is most suitable for insurance (transference of risk) is low probability and high potential loss.

There is one type of coverage you should give careful consideration to. That is umbrella coverage. Umbrella coverage is liability insurance that sits over your other liability insurance coverage providing a benefit should your liability exceed the maximum benefit of your homeowners or auto insurance coverage. This makes a lot of sense if you have one or more youthful drivers or a swimming pool or if you have substantial personal assets you would like to protect.

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