Testing Your Liability Limits

This short quiz will test your understanding of personal liability.

1. Which of the following variables could indicate that you are an above-average liability risk?
   1. You have teenage children and/or dogs living in your home
   2. You have significant personal assets
   3. You employ workers in your home
   4. Any of the above
2. If you are found to be liable for a judgment that exceeds the limits of your auto and homeowners insurance policies, which of the following could be used to help satisfy the judgment?
   1. Your future earnings
   2. Your personal assets, including your house
   3. An umbrella liability insurance policy (if you have one)
   4. All of the above
3. Which of the following is typically a prerequisite when you purchase umbrella liability insurance coverage?
   1. You must submit to a blood test
   2. You must purchase the maximum liability coverage available on your auto and homeowners policies
   3. You must indemnify your employer
   4. None of the above
4. Umbrella liability insurance is usually sold in _________ increments.
   1. $1,000
   2. $10,000
   3. $1 million
   4. All of the above
5. The following liabilities are typically excluded in a standard homeowners policy, but which one is likely to be covered by umbrella liability insurance?
   1. Libel and slander
   2. Gambling losses
   3. Acts of war
   4. All of the above

Answers:

1. d) Any of the above could signify an above-average liability risk profile.
2. d) All of the above. Purchasing the appropriate umbrella policy could help you avoid tapping your personal assets and future earnings to satisfy a large judgment.
3. b) You must purchase the maximum liability coverage available on your auto and homeowners policies. An umbrella policy takes effect after the limits of your primary insurance policies are exhausted.
4. c) $1 million. Umbrella policies typically charge a few hundred dollars a year for $1 million of coverage. (Source: Insurance Information Institute, 2008)
5. a) Libel and slander. Umbrella policies commonly include coverage for liabilities excluded on standard auto, renters, and homeowners policies such as libel, slander, invasion of privacy, defamation of character, and other personal injuries.

This material was written and prepared by StoneRiver–Emerald.
© 2009 StoneRiver, Inc.