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Why is Liability Insurance so Unappreciated?

By November 25, 2020Personal Insurance

When we buy home or auto insurance, we focus primarily on the values of our home or auto, having the insurance policy pay to repair or replace them, etc.  Usually, we discuss our property-related concerns with our insurance agent first. Discussions about liability insurance come up last when most people have lost interest in discussing anything to do with insurance!

Why is liability insurance so unappreciated?

It’s easier to imagine your auto being banged up after an auto accident or your house after a fire.  We see images like this in various media quite often.  What we don’t see are headlines such as “Nice Person Sued” with an image of the legal documents nicely typed on an attorney’s letterhead telling someone about their court date.  Usually, lawsuits are rarely discussed in public, but they happen every day.  You can be, in your opinion, in the right, innocent, etc., and still be sued, lose the case, and be deemed responsible (liable) for heavy monetary damages.  Your liability coverage protects you by providing legal defense and paying awarded damages on your behalf.

Liability insurance is designed to address events that are unintentional, accidental, and not considered illegal acts.  Liability coverage on the home policy is intended for everyday situations that don’t involve an auto because auto insurance is designed to cover auto-related events.  Liability coverage comes in a variety of dollar limits, with higher limits costing you more.  Umbrella policies provide additional limits of liability coverage to both the home and auto policies.

The need for auto liability took a sharp increase when No-Fault Auto Reform took effect this past July and (1) people began opting out of unlimited personal injury protection (PIP) to save money on their insurance, and (2) the auto policy’s PIP was constrained to covering only named insureds and resident relatives.  You’re now more likely to get sued after an auto accident because fewer people will have the PIP coverage they need to pay for their auto accident medical expenses and they’ll need to turn to the legal system to get these expenses paid for.

Talk to your agent about liability insurance and see how much you currently have. You might be surprised about how little that “next step up” in liability insurance costs you!