Civil liability lawsuits
How vulnerable are you to prosecution? Do you have significant financial means? Are you or members of your family public figures? Do you have servants? Do you organize events at home? Do your service providers (eg caterers, florists, valet parking) have insurance to protect you and your guests from any damage or injury for which they may be responsible?
Personal injury or property damage is not the only reason for a multi-million dollar lawsuit. Talking badly about someone on social media or in a public meeting can result in a libel suit. A person holding a position on the board of directors of a not-for-profit organization could be charged with discrimination or misrepresentation. Private employees can sue you and be sued.
It could happen to you
Even the most mundane lawsuits can result in significant legal costs. Lawyers for plaintiffs often proceed on a contingency basis; anyone can sue someone without worrying about lawyers' fees if there is any reason to believe that the consequences of the judgment will be significant. Defendants, on the other hand, must pay the lawyers defending them for each hour they devote to a case. It is not only assets that are at risk, but future income as well. If you do not have sufficient resources to reimburse the assessed damages, the court may grant the plaintiff a portion of your future income to enforce the judgment.
Protection from lawsuits
Extensive protection against potential lawsuits is possible with additional liability insurance (also known as an “umbrella” policy). Such insurance complements home and auto policies by offering higher limits and additional coverages such as:
claims for damage caused by you, family members (at home or at school) and even your pets, whether on your property or elsewhere;
civil liability for personal damages that did not occur at work, including verbal or written defamation, damage to reputation or privacy, illegitimate expulsion and unlawful arrest;
civil liability during a trip abroad, such as an accident with a rental car, and
legal defense costs for an insured claimant.
Protection related to volunteering activities
Some supplemental liability insurance policies provide coverage for volunteer work performed on behalf of a non-profit organization. It is also possible that the insurance of the organization in question offers sufficient cover. If not, philanthropic activities (such as holding a position on the board of a not-for-profit organization) can put personal assets at risk. A supplemental liability insurance policy may include coverage that protects directors and officers (D&O) who serve on the board of a not-for-profit organization. It would also be prudent to opt for an additional A&D policy that covers other civil liabilities such as errors, omissions, misrepresentation and breaches of moral rights.
Private employees
Private employees (such as domestic workers, health care providers, and personal assistants) raise two types of liability considerations. First, the damage caused by the employee. Home, auto and supplemental liability policies should provide coverage when an employee is involved in an accident while driving your vehicle or injures a guest in your home. Part-time and contract employees who are not covered by your insurance should provide you with proof that they have workers' compensation insurance and liability insurance; thus, you will not be responsible if your caterer spills coffee on a guest, severely scalding them.
The second type of consideration concerns the amounts claimed by the employee for damages. Worker's compensation insurance protects you from claims if an employee is injured while on the job. You should also purchase insurance to guard against charges of improper termination, sexual harassment, and misconduct.
Liability can be your most serious insurance problem due to the threats it poses to your assets and income.
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