Three new reasons you may need excess liability insurance
If you are returning to commuting or road travel, host guests, or sit on a board, it’s a good time to review your excess liability insurance
How much do you know about excess liability insurance? Whether your answer is “a lot,” or “not much,” recent trends make this always-important area worth a closer look.
Liability coverage is a must-have for many family’s financial plans. Why? Personal excess liability insurance can help cover some of the largest losses you and your family may face. Even so, this coverage (which is similar to umbrella insurance) is often overlooked or undervalued by individuals when considering their insurance plan.
Consider this: if you host social gatherings, own a home, drive a vehicle, are involved in philanthropy or sit on a board, liability insurance is important for you to consider. We’ve rounded up three emerging reasons why this coverage is especially important right now.
A 101 on excess liability coverage
Let’s start at the top, with the basics of why this insurance can be so critical. “Excess liability is a layer of protection that can help clients in case the unexpected occurs,” notes Bryan Raup, Casualty Claims Manager at Berkley One. “It can help protect you and your assets in the event of a lawsuit, and is therefore important to consider across a wide variety of potential scenarios.”
Excess liability coverage limits sit atop the limits you have for your homeowners, automobile or watercraft insurance policies. The excess policy can respond in situations where you may be liable for damages that are higher than those policy limits, providing extra financial protection for you and your family.
What can it help cover? You may know some of the most commonly identified and talked about scenarios, such as a slip and fall accident that happens at your property or an injury to a guest caused by a family pet. But there are other exposures that can be—just like our own driving blind spots—a bit harder to see. Be it through parties, driving or philanthropy, here are three emerging activities you may be taking part in that could bring unforeseen liability risk that’s worth consideration.
1. If you host guests or entertain…
As it turns out, a little hospitality (by way of birthday parties, graduation celebrations, bridal or baby showers and beyond) can bring with it more responsibility than just creating an epic charcuterie spread or the perfect cocktail—much of which comes back to the latter. “If someone is at your house, drinks a little too much, and gets in their car to drive home and causes an accident, it is possible that you, the host, could be sued for supplying the alcohol or letting them leave,” notes Raup. Though homeowner’s insurance policies can provide coverage in these situations, they provide coverage only up to the limits purchased — typically $300,0001 (or $500,000 for many high net worth clients)—an amount that may not be sufficient in covering the full extent of damages.
Along with reviewing an excess liability policy as a layer of financial protection in such a scenario, it’s also wise to consider a variety of factors before hosting a social gathering, including limiting your own alcohol intake (as a way of remaining attentive to your guests and their well-being), serving ample amounts of food, coordinating safe rides home for guests (be it with other sober guests or with a taxi service), or for larger events, hiring a professional bartender (who can better recognize the signs of an overserved guest and doesn’t have to worry about the social implications of “cutting someone off”).
And while serving alcohol can be a big risk in hosting gatherings, it’s important to consider other potential at-home hazards, too, from pets and attractive nuisances (including pools or trampolines) to slips and falls (caused by icy walkways or neglected repairs).
2. If you are returning to commuting or road travel…
The last two and a half years have seen many changes to how (and how much) we get around. Initially, the pandemic saw fewer drivers on the road, fewer miles driven and fewer accidents—yet those trends were quickly reversed. Today, the frequency of accidents is rising, and motorists are causing more severe accidents. Collision frequency is up 42% year over year, and severity is up 43%, according to the Insurance Information Institute.2
While it’s difficult to know what exactly is driving this increase, Raup notes that a number of factors are likely contributors. “It may be a result of more aggressive driving since there are fewer vehicles on the road, driving skills decreasing since people aren’t driving as much anymore or the day-to-day unpredictability of traffic patterns as a result of hybrid work schedules,” he notes.
What does that mean for drivers? In addition to the need to remain even more careful and vigilant on the roads, it’s smart to make sure you have adequate coverage in case of an accident. “Severe accidents can result in more lawsuits and potentially higher verdicts against drivers,” Raup notes. “In the event you’re named in a lawsuit, excess liability insurance can provide that additional layer of protection above your primary auto insurance.”
3. If you are active on a homeowner’s association board (or board of any kind)…
When it comes to sitting on your homeowner’s association board, it’s important to note that while most associations have their own insurance policies, you are not exempt from personal lawsuits—even for disputes that seem to arise from decisions that are collectively based (from common issues of neglected repairs, such as to steps, railings, and decks, to the process of narrowing parking spaces in a garage).
In fact, if you sit on a board of any kind—be it at a school, educational foundation, or local philanthropy chapter—your actions on that board could be under scrutiny, even if your participation is on a strictly volunteer basis. Because you are visible in the community as a board member, the law could see you as having a responsibility as a public individual in this role, opening up the potential for your actions and decisions to be under close watch and to possibly instigate legal matters. To ensure you have coverage to account for these scenarios, it’s best to review your board activities and ensure that your policy includes broad coverage, and, specifically, that it includes coverage for non-compensated Nonprofit Directors & Officers insurance (D&O).
Let’s talk limits
When it comes to liability insurance, it’s not a question of whether you need coverage, but how much.
Liability insurance is an important aspect of your financial plan. It’s a coverage that makes sense, can help protect you in some of the most costly scenarios you may face and it is, in most cases, quite cost effective.
Depending on who you are, what activities you engage in and where they go, your liability needs will vary significantly.
An insurance provider like Berkley One, together with your independent insurance agent, can help you create a solid liability plan customized to you and your family. They’ll ask questions to better understand you, and help make sure your coverage accounts for activities that are part of your lifestyle.
To learn more, request an insurance quote from Berkley One—or read more about our liability coverage and how it can help you stay better protected as you engage with your world—from taking an active role in your neighborhood to hosting friends for your next barbeque.
Berkley One is a Berkley Company.