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

Related Articles
  1. Insurance

    Is It Safe To Be Without Umbrella Insurance Today?

    At low cost, you can buy significant extra liability coverage in case you're sued due to an accident or other trouble. See it as bankruptcy protection.
  2. Insurance

    Do You Need Casualty Insurance?

    Find out how different types of coverages can protect you and which policy is right for you.
  3. Investing

    Understanding Total Liabilities

    Total liabilities are the combined debts an individual or company owes.
  4. Insurance

    Insurance, Excess Insurance and Reinsurance: What's the Difference? (ALL)

    Understanding the differences might help you avoid being overinsured or underinsured.
  5. Financial Advisor

    What Kind of Insurance Do RIAs Need?

    Advisors spend a lot of time discussing insurance with clients but they also need to consider their own coverage needs as small-business owners
  6. Insurance

    How to Protect Your Assets From Litigation

    Personal umbrella liability insurance can offer you big-time legal protection relatively cheaply, in case your existing policies aren't enough.
  7. Insurance

    It's Raining Lawsuits: Do You Need An Umbrella Policy?

    This type of insurance protects your assets and future wages against lawsuits. Find out if it might benefit you.
  8. Insurance

    6 Types Of Insurance Coverage You Didn't Think You Needed

    These different types of insurance coverage can be beneficial, but they're often overlooked and misunderstood.
  9. Small Business

    Understanding Limited Liability

    Limited liability is a legal concept that protects equity owners from personal losses due to their ownership interest in the company.
  10. Managing Wealth

    Asset Protection for High Net Worth Individuals

    OK, you've made it. Here's how to hang onto it.
Frequently Asked Questions
  1. Depreciation Can Shield Taxes, Bolster Cash Flow

    Depreciation can be used as a tax-deductible expense to reduce tax costs, bolstering cash flow
  2. What schools did Warren Buffett attend on his way to getting his science and economics degrees?

    Learn how Warren Buffett became so successful through his attendance at multiple prestigious schools and his real-world experiences.
  3. How many attempts at each CFA exam is a candidate permitted?

    The CFA Institute allows an individual an unlimited amount of attempts at each examination.Although you can attempt the examination ...
  4. What's the average salary of a market research analyst?

    Learn about average stock market analyst salaries in the U.S. and different factors that affect salaries and overall levels ...
Trading Center