The benefit of having liability insurance is that you might never know you need it until you do.
Suppose that you have homeowners insurance with a liability limit of $500,000. However, a neighbor falls down your steps, sustains a severe injury and sues you for $2 million worth of medical bills, lost income and other damages. That’s a $1.5 million difference between what you owe this neighbor and what your homeowners liability policy is going to pay.
Rather than paying $1.5 million yourself, you can turn to your umbrella policy to cover the difference. Anyone who wants to be prepared for a worst-case scenario should consider investing in umbrella coverage.