How much is enough

With liability insurance, you are offered the opportunity to transfer a portion of the risk of being sued; only you can decide how much of that risk you should transfer.  The experts say there are four factors everyone should take into consideration when making the decision:

·         What do you have to lose?

What are you saving for?  Retirement?  College?  A dream vacation?  How would you feel about turning your savings over to a total stranger?  Would you be able to continue to save if you had to pay an uncovered judgment?

·         How likely is it to happen to you?

Some people are more likely to face a large lawsuit.  Do you have teen-aged drivers, recreational vehicles, a swimming pool or a dog?  Are you active in the community or visibly successful?  Do you coach little league or play bocce ball?  Some people have more exposures to loss than others

·         What will it cost?

Higher limits of liability are usually affordable; your agent will be able to tell you the cost of increasing the limits on your policy.  Then, call a good defense attorney and ask what he would charge to defend you if you were to be sued for more than your limits.

·         How do I feel about risk?

Cautious people transfer more risk to an insurance company; risk takers are comfortable taking their chances with lower limits.  Remember to consider the risk tolerance of your entire family.  How would the dynamics of your family change if you faced a liability claim that was only partially covered?  Would your family’s sense of security be threatened if you were sued for more than your limit?

Only you can decide how much liability is right for you.  Consider these factors, make a decision, and adjust your insurance to what you consider appropriate for your circumstance.  Remember, today you do not have to be a millionaire to be sued like one.