Do you actually know what personal liability insurance is? Do you think you might need to?
Well, the answer to this second question probably should be yes.
Also known as personal accident insurance, personal liability insurance is one of the most important types of insurance policies you can take out in your lifetime. It might even be more important than the insurance you have on your house and your car.
Why? For the simple reason that it can end up saving you a lot more money than all of your other insurance policies combined.
Well, this article will explain exactly why that’s the case, while also walking you through the essential types of personal liability insurance. So, let’s learn!
What Is Personal Liability Insurance and Why Is It Important?
Personal insurance is a type of cover that people take out to protect themselves from the financial liability associated with harm caused to third parties.
The reason personal liability insurance is so important is that, if you hurt someone, it can actually end up costing you millions. Imagine, for example, that you badly injure someone in a car crash, they could sue you for a lot of money.
Even worse, if someone dies as a result of your driving negligence, the victim’s family may end up suing you for the loss of life. These types of suits are known to clear people out entirely.
So, if anything horrible like this were to happen in the future, at the very least you can be insured against the financial ruin associated with it.
What Are the Types of Personal Liability Insurance?
There are two main types of personal insurance plans. One is for bodily harm and the other is for property damage.
Sometimes, these two types of cover will be combined in one policy, while other times people will take them out individually. Let’s look at both of these options individually.
Personal Property Insurance
There are many situations in which it is possible that your negligence can lead to the damage of another person’s property. For example, if you are burning some trash in your yard and the flames end up destroying your neighbor’s home, then personal liability home insurance could end up saving you hundreds of thousands of dollars.
It’s different from personal property insurance, which is for your own property (view page for more info).
Personal Injury Insurance
Personal liability insurance of bodily harm is usually considered a more serious type of insurance. This is because the financial costs that these policies cover are much higher.
They will cover, for example, court-ordered payments related to you accidentally causing someone to have a broken bone or be paralyzed. These policies can also cover accidental death.
Since you can’t really put a price on someone’s life or their ability to walk, courts will often order payments of millions for these issues.
Think Ahead with Insurance
Personal liability insurance is often neglected in favor of other types of policies like home contents insurance. However, this doesn’t make much sense from a financial perspective.
Of course, it’s hard to see in advance why personal liability insurance is so important. But that’s why you have to think ahead!
If you’ve found this information useful, why not check out some of our other great articles on personal financial topics?