Events that trigger a review of your liability coverage

The following is a list of some common events that should trigger a review of your personal liability coverage:

  • Your family status changes--Because a liability policy may cover not only you, but also family members who live with you, it's time to review your liability coverage when you get married, have children, get divorced, are widowed, or become an empty-nester. You may become more concerned about protecting your assets after you get married, or you may want more liability coverage when your son gets his driver's license.
  • Your property increases in value--How much homeowners insurance you can buy is tied to how much your home is worth. As your property increases in value, you will need to consider not only how much it would cost to rebuild your home if it was damaged, but also whether you should increase your liability coverage under your homeowners policy. It's a good idea to review your homeowners coverage annually, particularly if property values in your area are increasing every year.
  • Your net worth increases--As your net worth increases, you will have more assets to protect, and you may become increasingly concerned about protecting those assets. It's unfortunate that wealthy people are sometimes targeted by lawsuits.
  • Your risk of being sued increases--Anyone can be sued, but your risk of being sued increases if you become wealthy (particularly if you are well known), if you are in the public eye, or if your actions potentially cause harm to others.
  • Your housing needs change--If you move into a new house, you will need to purchase liability coverage, usually as part of a homeowners package. If you move into an apartment, you should consider purchasing a renter's policy, even if you have few assets, because of the liability coverage it offers.
  • You buy a new car--When you buy a new car, you'll need to buy an automobile policy to insure it. Take a few minutes to review your liability coverage under that policy, and make sure that your liability limits are adequate.
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