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Insurance Needs Approach - Liability Insurance

Liability insurance is the portion of an insured's policy for expenses such as the injured persons medical bills, rehabilitative therapy, and lost wages due to the negligence of the at-fault individual. After adding up all of the medical expenses for the injured and the legal fees of the negligent person, the standard liability in one's homeowners or auto policy is often not enough.

Solution:
Liability Insurance. A personal liability umbrella insurance policy can give an individual added liability protection without a large added cost. Additional liability insurance is often inexpensive, especially compared to the added coverage one gains. Furthermore, liability insurance covers one's non-business activities anywhere in the world.

Types

1. Personal property floater: Similar to a scheduled personal endorsement designed to provide "all risks" coverage for unscheduled property on a worldwide basis.

2. Umbrella liability policy: Designed to provide additional liability coverage for catastrophic legal claims and judgments. The umbrella will pay only after the limits of the underlying policy are exhausted (requires the policyowner to carry certain minimum amounts of insurance).

3. Professional liability: Also known as professional errors and omissions (E&O) insurance/Malpractice insurance. The purpose is designed to cover liability arising from the failure to use due care and the degree of skill expected from a person in the profession in which the insured is engaged.

An Introduction to Insurance Policy Selection

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