Protection for Other Property and Liability Loss Exposures

Some people need protection against property and liability losses that are not covered by homeowner’s or automobile insurance policies.
Comprehensive Personal Liability Insurance
Owning a home and driving a car are not the only sources of potential liability you may face. Consider the case of Will Crain, a pharmacist from Missoula, Montana. While climbing in a restricted area, he accidentally loosened some rocks, which fell down the slope and seriously injured hikers below. Because Will was in a restricted area and had failed to warn the hikers of his presence, he was held liable for their injuries and ordered to pay a court judgment of $178,000. Recall that the standard homeowner’s insurance policy provides comprehensive personal liability insurance up to a specified limit, usually $100,000. Individuals who lack such coverage can purchase a separate comprehensive personal liability policy. Those with homeowner’s (including renter’s) insurance who desire higher limits should ask their insurance agent to raise the limits on their existing policy.

Professional Liability Insurance
Professionals such as physicians, lawyers, and accountants can be held legally liable for losses suffered by their patients or clients. Professional liability insurance (sometimes called malpractice insurance) protects individuals and organizations that provideprofessional services when they are held liable for the losses of their clients. Policy limits, deductibles, premiums, and other characteristics of such policies vary widely depending on the profession involved. Professional liability policies are written with policy limits of $250,000 or more. A $1 million pro fessional liability policy written for a family therapist may cost as little as $300 per year; in contrast, some surgeons pay $60,000 or more per year for professional liability insurance.

Umbrella Liability Insurance 

It is possible to lose one’s entire life savings as a result of a single liability loss. Umbrella (or excess) liability insurance is a catastrophic liability policy that covers liability losses in excess of those covered by any underlying homeowner’s, automobile, or professional liability policy. Such policies provide two benefits. First, the types of losses covered are broader than those recognized by more narrowly defined policies. Second, these policies provide for high dollar amounts of coverage over and above the basic policies. To be covered for these higher limits, you must carry the basic coverages as well.
Figure 10.3 shows how umbrella policies work. In this example, the insured has an automobile insurance policy with total liability limits of $130,000 (the total liability coverage for one accident is $100,000 per bodily injury plus $30,000 for property damage), a homeowner’s insurance policy with liability protection of $100,000, and a $150,000 professional liability insurance policy. If the insured bought an umbrella policy with a $1 million limit and then experienced a $750,000 professional liability loss, the umbrella policy would provide protection of $600,000 after the professional liability policy limits were exceeded. Umbrella policies are relatively low in cost when purchased to supplement basic policies (perhaps $150 to $200 per year for an additional $1 million of protection) and protect against virtually all liability exposures that a person might face.

Floater Policies
Floater policies provide all-risk protection for accident and theft losses to movable property (such as cameras, sporting equipment, and clothing) regardless of where the loss occurs. Floater protection for personal property is part of the standard homeowner’s insurance policy. Property owned for business purposes is excluded. This means that a mechanic’s tools, a lawyer’s books, and a photographer’s equipment, for example, would not be covered. A separate floater policy would be required. Many items of personal property are transported in automobiles and kept at temporary residences such as motel rooms. Automobile insurance policies do not cover portable personal property. If it is covered under a homeowner’s policy at home, however, personal property will be covered elsewhere under the floater protection provided by the homeowner’s policy. For example, a compact disc player permanently installed in a car would not be considered portable and thus would be covered by the automobile policy. If it can be removed for use indoors, the CD player would be covered under the homeowner’s (or renter’s) policy.

SHARE

.

• 
• 
• 
• 
•