Renters Insurance Liability Coverage - It's Crucial To Have!

 Beside your possessions, renter's insurance is about liability. Liability is a big deal in today's world. Part of your worth factors into liability, or how much you're legally responsible for occurrences at home. Anyone can sue you - an angry neighbor, the UPS guy who slips on your front porch, the parents of a kid in your daughter's Girl Scout troop. If the person suing you wins a judgment in court, you either have to reach a cash settlement or face the court seizing any assets you have including your future income. That's why the liability part of renters insurance is so important!

The issue of how much liability coverage you need has a lot to do with your financial condition. The claims against you don't even have to hold open court to hurt you financially. The cost of hiring an attorney to defend you in a civil lawsuit can easily reach $10,000. This is another reason liability renters insurance is valuable, it covers the cost of mounting your legal defense.

It's a little easier to gauge how much you need to protect yourself from liability when you're a renter. People who own homes, for example, worry about being insured against their non-mortgaged equity or the total assessed. Those people who have a house worth several hundred thousand dollars have a large enough investment there - and probably elsewhere too - that they need as much coverage as they can buy at a reasonable price.

Renters, all the other hand, don't have equity in their dwellings. When you rent, you don't have to worry about a court putting a lien against any equity. So you have to think about what the court could take away from you to help pay for damages should you be held liable. Among the things to consider when you calculate your insurable net worth:

• major personal assets such as jewelry collectables except for a
• savings or liquid investments
• pension funds (IRA, 401(k), ESOP or traditional pension plans
• automobiles
• income

Pension benefits are not usually exposed to legal judgments. But they have been called into question, occasionally, when calculating damages levied against someone. For this reason, you should probably include pension benefits when calculating your insurable net worth.

If you find that you are worth a great deal more than what your renters insurance policy can provide for the price, you may want to consider an umbrella liability policy. This pays up to a predetermined limit (usually one million dollars) for liability claims made against you were family.