Safeguarding Your Financial Health
Liability coverage is the most important part of your insurance policy—and often the least understood and most undervalued.
In our agency, we refer to liability as your "lawsuit protection." It represents the maximum dollar amount your insurance company will pay if you’re found at fault for an accident that causes injuries, property damage, or financial loss to someone else.
In my experience, most people believe their property—vehicles, home, and personal belongings—are the most important things to insure. While that coverage is essential, it’s just as important not to overlook what you’ve worked so hard to build. For most people, their largest assets include home equity, savings and investments, retirement accounts, and future earning potential. Without adequate lawsuit protection, all of this could be at risk.
That naturally leads to the next question: How much liability coverage is enough?
A good rule of thumb is to carry enough liability protection to cover your assets. This requires a bit of math, but when you add together your home equity, savings, investments, and retirement savings, your liability coverage should be at least that amount.
It’s also important to note that in Indiana, wages can be garnished up to 25% following a lawsuit settlement. Factoring in future income (annual income × 25% × remaining working years) can provide a more complete picture of your exposure.
For many people, this means increasing liability limits or adding an umbrella policy to their insurance portfolio. An umbrella policy provides an additional layer of protection—typically starting at $1 million—on top of your auto and home policies. The good news? Liability coverage is usually the least expensive part of your policy, and an umbrella policy can cost as little as $20 per month.
If budgeting for increased liability coverage feels challenging, consider opting for a higher deductible. This can lower your premium and free up funds to allocate toward stronger liability protection. Just remember: your deductible should be included in your emergency savings. Claims may be infrequent, but being financially prepared is exactly what an emergency fund is for.
If you have questions or want to make sure you’re properly protected, we offer complimentary insurance reviews. Call or text us at 765-838-2781 or schedule a meeting directly using the link below.
Schedule a Meeting – www.calendly.com/jisch