Accidents happen, whether it’s a slip and fall on your property or a social media comment that results in a defamation lawsuit, ensuring you have the correct insurance coverage is key to helping preserve your financial security.
Here is what you should know about personal excess liability coverage (also known as umbrella insurance) to help protect your assets as a high-net-worth individual.
Canadians are becoming more litigious
We’ve all heard the stories about ridiculous legal battles in the States, but unfortunately lawsuits are on the rise in Canada as well – especially when it comes to auto insurance claims.
This in turn is having a direct impact on insurance premiums with legal fees climbing as courts award higher settlements. As a result, you could be facing legal claims that exceed your standard home and auto insurance policies.
If you’re a high-net-worth individual involved in an accident or a defamation lawsuit, this can make you a bigger target for lawsuits due to your perceived wealth.
What is excess liability insurance?
Excess liability is designed to act as a financial safety net by extending the liability coverage of your existing home, auto and recreational vehicle policies. If you are facing a claim, excess liability will kick in when the underlying limits of your policies are reached.
For example, suppose an insured family member was involved in a serious car accident and the court awards $2.5 million in damages. If your regular auto insurance policy has a $1-million liability limit, your excess liability policy would cover the remaining $1.5 million.
Excess liability will typically cover:
- Bodily injury and property damage
- Legal costs
- Personal liability
The liability risks for high-net-worth Canadians
Excess liability policies help by ensuring that coverage matches the amount of assets you have. Due to wealth, property and public visibility, high-net-worth individuals are at a higher risk of being targeted in lawsuits with large damage claims. The policy is essential if you:
- Own multiple properties
- Employ domestic staff
- Host guests or public events at your home
- Are a prominent public figure
An example of a claim would be if you are hosting a large party where alcohol is involved, a guest slips and suffers a spinal injury. The resulting legal fees and compensation could potentially surpass your home’s liability policy limits. This is where excess liability would cover the added expenses.
How much coverage do you need?
Excess liability policies typically range from $1 million to $10 million or more. Your Signature advisor will help determine the appropriate amount depending on your net worth, lifestyle, public exposure and the value of your assets.
Depending on your needs, you may also want to consider optional coverage such as worldwide rental vehicle insurance, directors’ and officers’ liability, or “personal injury” coverage for allegations of slander or defamation of character.
Your Signature advisor can also provide insights into how you can optimize your high-net-worth individual insurability.
Providing Peace of Mind
Excess liability is a smart and strategic move to help provide you with peace of mind for when the unexpected happens. It can help preserve your financial security by protecting your assets.
Contact your Signature advisor today to review your current liability limits and to discuss how excess liability coverage can be tailored to your lifestyle.
Information and services provided by Acera Insurance, Acera Benefits and any other tradename and/or subsidiary or affiliate of Acera Insurance Services Ltd. (“Acera”), should not be considered legal, tax, or financial advice. While we strive to provide accurate and up-to-date information, we recommend consulting a qualified financial planner, lawyer, accountant, tax advisor or other professional for advice specific to your situation. Tax, employment, pension, disability and investment laws and regulations vary by jurisdiction and are subject to change. Acera is not responsible for any decisions made based on the information provided.