Extending Property Insurance

Over the last decade, we’ve seen a dramatic increase in judgments of $1 million or more awarded to plaintiffs against individuals. In this litigious society, no one is immune from potential lawsuits. Young professional families and retirees alike need to protect themselves from the devastating effects of liability lawsuits.

Elected officials or members of boards are especially vulnerable. It’s not unusual for plaintiffs to name everyone connected with an incident by perceived authority, responsibility, and ability to pay.

Personal liability suits sometimes award the future earnings of the defendant. This makes self-employed people, and sometimes corporate officers, vulnerable to personal liability suits.

Fortunately, there is a way to shield yourself. You can supplement both your auto and homeowners policies with excess liability insurance, or an "umbrella policy".

Umbrella Policy Expands Protection

For a few hundred dollars per year, this provides $1 million to $5 million of protection for you and your household members for negligence claims, libel, slander, or defamation. And buying your auto, homeowners, and excess liability policies from the same company can often reduce the total cost by as much as 15 percent.

One caution: most individual liability policies do not cover occupational risks like professional malpractice. In many cases, professional organizations like the American Medical Association and the American Bar Association offer group policies for their members. The state equivalents of these organizations are usually quite aggressive in finding group providers to protect their members. In some professions, a local member takes the additional responsibility of helping to administer the group insurance for the state’s participants — overseeing and monitoring the coverage and costs and helping watch for abuses.

Since this is an area closely connected with ongoing litigation, it changes almost monthly. Professionals must follow developments in their own fields closely in order to avoid expensive mistakes. In most businesses and professions, watchdogs are appointed to exercise this vigilance and provide current information. It is not unusual for a large group to evaluate competitive policies as frequently as once a year to be sure the performance of their group’s insurance company is the best they can find for the money. If your organization is like this, don’t be alarmed if your group changes companies often. This is a very competitive area.

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A Few Things to Look for in Your Policy:

Everyone in your household should be covered, including those who don’t live at home.

Your policy should cover physical injuries, libel, slander, invasion of privacy, malicious prosecution, wrongful eviction, defamation of character, and discrimination.

Shop around for the lowest number of exclusions. Many policies will not help you if you are sued as a result of your participation on a board or less formal committee.

Finally, beware of wording that limits coverage to exclusive causes of injury.