What liability exposures should I be aware of, and how can I protect myself?

By Ronald R. Assise, CIC, CPRM

We live in a litigious and “sue-happy” society—a sad (but true) fact. Court verdicts (both bench and jury) are at record highs, as is the number of lawsuits.

The exposures high net worth individuals face are vast and broad in nature. These range from the obvious (a guest in your home falling, a dog bite, or at-fault vehicle accident that causes injury) to the more obscure (a suit brought for personal injury from an internet posting gone bad).

Liability exposures come in many shapes and sizes. Each comes with its own “issues,” but all have in common the capacity to wipe out a lifetime of asset accumulation in an instant. One of our most common conversation starters with a client is, “You don’t have to be careless to be negligent.” Examples of factors beyond individuals’ control that may be triggered by the inappropriate acts of another, but still leave them liable, include:

• A neighbor is visiting and dives into the pool at the shallow end, breaking his neck.
• An uncle playing with the family dog at a holiday celebration antagonizes it,  is bitten and maimed.
• The furnace repairman inadvertently steps between floor joints in the attic, falls and is paralyzed.

Unfortunately, these are real examples of claims that occurred in homes which most would have deemed “safe havens,” yet they produced significant settlements for those injured.

Weather (black ice, rain, snowdrifts) is another huge factor, particularly in vehicular accidents.

The internet is another major exposure due to the popularity of Facebook (757 million users daily), Twitter (280 million active users) and newer offer- ings like Vine and Snapchat. These public sites leave clients exposed to a plethora of potential liabilities, not even contemplated 15 years ago. And this exposure is made worse by the speed with which one can post (instantly) using a smartphone or tablet.

Finally, the higher your profile (personally or via your business), and the greater your net worth, the bigger the target you become.

COVERAGE OPTIONS

Your personal auto or home insurance extends one layer of coverage but will not come close to affording the protection you likely need. Personal excess (umbrella) policies, however, offer coverage ranging from $1 million to $10 million and are inexpensive, relative to the valuable protection they afford. These policies also offer important options, such as uninsured/underinsured motorist liability coverage, protecting you against your injuries, lost wages and pain/ suffering caused by the negligence of an inadequately insured driver.

Even the most frivolous lawsuit can cost hundreds of thousands of dollars to defend. Making certain that the assets you have worked so hard to accumulate are properly protected is crucial.