One of the toughest things to put a finger on when it comes to insurance is choosing liability limits. Liability starts with owning assets that could potentially harm the public—your automobile could hurt someone in an accident, your home’s front steps could be a tripping hazard to a visitor, or your boat could collide with another boat on the water. Liability coverage generally is part of your Auto or Home insurance, as well as being included in your other insurance policies for items like Boats, Motorcycles, Snowmobiles, or Rental Dwellings.
Most liability coverages start with a basic limit of insurance like $50,000 or $100,000 limits. Sounds good, right? But for many people, basic limits might not be adequate. If you’re involved in a serious incident, and a claimant hires an attorney to look into your assets, depending on the nature of the damages, there’s a chance they could sue you for more than your liability insurance limits are covering you for. In that case, once your insurance limits are fully paid out, you could end up potentially paying additional damages out of pocket above and beyond your policy limits.
The basic rule of thumb is to make sure you’re carrying liability limits across your policies that are high enough to cover your owned assets. Often those primary policies can be increased to $500,000 liability limits, and if that’s not sufficient, Umbrella policies will provide excess coverage across your various personal policies in additional $1 million increments. Often Umbrella policies start around a premium of $200 annually, so they’re fairly affordable and can increase your liability limits across multiple policies if needed.
Now, there are some protections under the law for certain assets from seizure in a lawsuit in Michigan. For instance, typically your primary residence property is protected if under 40 acres. Also, some retirement accounts can be protected as well. However, your owned assets such as second homes, farm property, rental property, or cash assets or investments could be very much at risk in a lawsuit. So basically the more you own, the higher you’ll want to push those liability limits to match up with what you own.
Obviously, this blog cannot replace legal advice, and we are not attorneys nor can provide any legal advice. The best place for advice in this space for your specific situation is to consult your personal attorney. But when it comes to seeking quotes on coverage options and limits for various assets like your Autos or Home, we are here to help!