While anyone who owns a home or drives a properly insured vehicle has a good idea of ​​what the respective liability insurance plans that protect each are for, many have no idea what personal liability policies are all about. and who should buy such protection. Also known as general insurance, these policies pay costs that go beyond the traditional protection provided through vehicle or homeowners insurance policies and pay costs that those types of coverages cannot.

An auto or homeowners insurance plan comes with marginal levels of liability protection in the event someone is injured or property is damaged by an event caused on or by the insured property. If one vehicle swerves and hits another, for example, the cost of damages and injuries inflicted would be covered up to the policy limits.

But those limits can be very low compared to the potential cost of medical payments, damage claims, lawsuits, and court judgments against vehicle owners. And in such situations, many people could file for bankruptcy and see their houses and other assets turned over to the accident victims and their attorneys.

And if someone is injured or killed or their property damaged or destroyed while in an insured home or on policyholder property, the costs could wipe out those assets. While the potential for a total loss could be alleviated by a simple bankruptcy for many people who own very little and can rent their homes instead of owning them, those who own much more and have a large amount of funds, as well as many assets. tangible. benefit greatly from personal liability insurance plans.

Personal liability insurance plans are generally very affordable for the levels of protection they can provide. Policy limits can go as high as $ 1 million or more, and have relatively low premiums due to the fact that home, auto, and other property plans already provide a measure of such protection, limiting the number of potential claims that it will pay for the most comprehensive personal liability coverage. Due to the extensive protection provided, such plans earned the name of “umbrella” insurance due to the wide range of coverage provided.

The people who can benefit the most from blanket policies are owners of large and expensive homes and other properties, business owners, and those with a large amount of cash or investments that would be vulnerable to costly lawsuits and legal settlements without the protection of general coverage. While it’s unfortunate to admit, the more active a person is, the more likely they are to be the subject of a lawsuit, merit or not.

But even the cost of a frivolous lawsuit can be high. And the right kind of protection can keep the homes and family assets in the hands of the family rather than being liquidated to pay for a legal challenge or potential court settlement. When the potential cost of losing a home or other assets greatly outweighs the cost of carrying general coverage, purchasing such protection is a must.