Last month I used the phrase “sweat the big stuff” and it doesn’t get bigger than liability risk. In the US in general, and California specifically, you can get sued for just about anything and the legal concept of “fault” frequently defies common sense. And unlike property coverage, a liability loss can exceed the value of your assets. So the risk is important and complicated, but it can be managed.
Here are some questions for your liability coverage checklist:
Do I have enough coverage?
The maximums your carrier will pay out in lawsuits are known as your “limits”. Your limits should at least cover your net worth and perhaps more. Auto, homeowners and business general liability policies have base limits and you buy excess coverage through “umbrellas”. Umbrellas are relatively low cost and probably the best deals in insurance today.
Do I have the right kind of coverage?
For example, you might have high basic auto and a healthy umbrella, so if you’re sued you’re ok. But a more likely scenario is that you get hit by a beat up car driven by some young kid, you sue him and win, but there is no money. You then would need to look to your own uninsured motorist coverage which has a separate limit. And your umbrella only applies to your uninsured motorist coverage through special endorsement.
Are the coverages coordinated?
Your underlying auto and HO limits need to be a certain level for your umbrella to kick in without gaps. And if you second home owners have the same underlying carrier on both homes, you can save money by endorsing your primary umbrella to cover both homes rather than buying two umbrellas.
What are the exclusions?
In personal lines like homeowners, more specialized carriers like Chubb will have fewer exclusions than the average carrier. Carriers vary but examples of possible exclusions include domestic employees, non-profit board exposure, libel/slander, international travel, etc. In the business world, general liability covers slips and falls, but separate policies are required for employee practices, professional liability, directors and officers, cyber liability, etc.
Am I comfortable with my carrier?
You want a carrier with a solid rating agency grade (solvency/ability to pay). But also keep in mind that in the event of lawsuit you will be represented by the legal staff of that insurance company. You want legal pros with solutions…you don’t want to be going to court for years.
Liability risk is real, but it is manageable. The best way to sleep at night is to coordinate all your risk exposures through an experienced independent agent you can trust. Call me on 760-564-6800 with questions, issues or referrals.