Why all insureds need a personal liability policy

Expert reveals the biggest mistake people make when purchasing the coverage

Why all insureds need a personal liability policy

Life & Health

By Alicja Grzadkowska

With the average national hourly rate for lawyers with two to five years’ experience coming in at $257.39, according to Canadian Lawyer’s 2019 Legal Fees Survey, the cost of dealing with unexpected events can place a significant burden on families. Moreover, individuals and businesses in Ontario pursuing legal issues on their own could now be hit with heftier bills, after nearly 80 new court fees were introduced back in April. 

With this in mind, it’s crucial that individuals purchase personal liability insurance.

“Liability policies come into play when there has been a catastrophic event, so a very serious car accident, a serious injury that’s occurred in your home – these are very large claims,” said Bill Gatewood, corporate vice president and national practice leader for personal insurance at Burns & Wilcox. “The liability policy is there to provide you with a high amount of policy limit to make sure that you don’t end up paying out of pocket for what can end up being an extremely large damage settlement.”

Most importantly, Gatewood underscores that people need to purchase high enough limits to cover their assets so that they don’t have to dip into their personal finances to cover a lawsuit or judgement.

“The biggest mistake people make is that they don’t purchase [personal liability insurance] to begin with, leaving themselves very exposed, or they don’t purchase enough to cover themselves in the event of a severe loss,” he told Insurance Business.

As for who should purchase a personal liability policy, Gatewood says the answer is all insureds.

“What I tell people all the time is if you own a car, if you own a home, if you own a boat, you need to have a personal umbrella policy. It’s something that almost everybody needs coverage for,” explained Gatewood. “If you don’t have any of those things, but you have a large amount of assets, you need an umbrella as well because the umbrella can protect your financial assets. You can make the case that just about everybody should purchase an umbrella policy, and in the world of insurance products it is the cheapest insurance policy that you can purchase dollar for dollar.”

A personal liability policy can also protect people from emerging risks, such as libel and slander suits that can arise from social media use.

“Even though social media has been around for a while, there hasn’t been a lot of regulatory action that has kept up with its growth, so the laws are really old as it pertains to social media and what you can be held liable for,” said Gatewood. “In the past, libel and slander was fairly easy. You say something or write something that is up for public consumption and you can then demonstrate that you suffered damage because of it. Your umbrella policy covers that, but the difference with social media is that it’s much more widespread. You can write something and it can be around the world in a matter of hours, so millions and millions of people see something whereas before it was very difficult to get that exposure.”

Whether the risks are new or old, individuals can’t go wrong purchasing a personal liability policy, either as an add-on to a renters’ or homeowners’ policy, or as standalone coverage. In fact, Burns & Wilcox can provide access to comprehensive personal liability coverage, which is a standalone liability coverage that addresses a myriad of risks and is sold alongside a comprehensive homeowners’ policy.

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