We are often asked about liability insurance and specifically about how much the limit of coverage should be. That’s a tough question to answer and often will depend on individual circumstances, but I can tell you for sure that it’s probably higher than you might think.
For many years we have seen Court awards in the US that seem to defy logic – a compelling argument & a sympathetic jury has led to court awards that are staggering, both in terms of the decision rendered & the amount of the award.
This trend has woven its way into Canadian Court awards in some cases, and it is not uncommon to see awards against home owners or small business owners hit the multi- million dollar mark.
A guest on your property that is seriously and permanently injured can face lost earnings and additional care costs that easily reach into the millions of dollars. The idea that my friends would never do that to me just doesn’t hold water – they may not have a choice if their family is facing the loss of financial stability.
When you are contemplating the limit of liability coverage you should purchase, consider the following –
• The cost in premium to purchase the 2nd, 3rd, or 4th Million in coverage is much less than the first Million – most often liability coverage payouts will be less than $1,000,000, so it makes sense that higher limits should be less expensive than the basic limit. Additionally, there may be an option to include a deductible in the policy which will bring the premium cost down.
• Your policy normally provides coverage for your defense – whether or not you are found liable, often the policy provides coverage to defend you. This coverage can be subject to the limit of liability coverage and ultimately will reduce the amount of coverage available to you if you are liable.
• A major award against you or your business can be devastating – very few of us have enough liquid assets to sustain ourselves in the event of such an occurrence. If we have a savings nest egg, we can manage & recover from a minor loss (ie. Damage to an automobile, minor damage to your house, etc.); a major liability loss is not the same.
We encourage you to contact us to discuss this further – we can assist you in making this important decision.