Top 5 Reasons People Get Liability Insurance

Liability insurance is in place to protect you from damages you cause to another person. The insurance protects you from civil charges. They result when a person sues you for a problem you caused by not exercising reasonable caution. There are a number of reasons why liability insurance is required, here are a few:

#1 - Our Litigious Society

The United States is known as one of the most litigious countries in the world. There are many lawyers, and many lawyers means there are many lawsuits. Many people sue each other for frivolous claims, so although you may find something frivolous, if there is a legal standing, you can be sued. There is no way to avoid this. Some states, like California, have more liability suits than others. 

#2 - The Appearance of Wealth

The appearance of "deep pockets," or endless wealth, can be caused by a large house, an expensive car or a flashy outfit. If your acquaintances have reason to believe you are wealthy, than so does the average guy on the street. Once wealth is publicized or inferred, you are a target for a lawsuit because people will sue only the wealthy.

#3 - Limitless Exposure

When you file a property claim for your home, there is a limit to how much you can potentially lose. Even if you live in a very expensive, $5 million dollar house, you will only lose that $5 million if it is destroyed completely. On the other hand, a liability law suit can threaten all of your wealth. This means you may see a plaintiff who wants to take your savings, your investments and even your children's college funds. Liability has very few limits; most lawyers will encourage clients to go after the biggest payoff possible.

#4 - They Have a Powerful Position

CEOs, members of the board of directors or business owners need to have more liability coverage than others individuals. They will often be held liable for an accident at the office. In certain professions, such as wealth management or law, there is an even higher risk of loss. For example, if a wealth manager loses money for a number of clients, these people can form a class action lawsuit in a nearly limitless amount. The board of directors of any company may be held liable if the stock devalues or pension funds are mismanaged.

#5 - They Have Enemies

It is hard to imagine that a person would be willing to come after you for money in response to a personal feud. However, this is not as uncommon as it sounds. You may have people who do not like you due to your profession; for example, if you are a police officer, individuals you have arrested may attempt to sue you. Even neighbors may try to sue you to resolve a feud over your dog's parking or your unsightly solar panels, for example. Liability insurance can protect you from these personal vendettas.

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