Retirement & Financial Planning Report

While retirees may no longer have a need for professional liability insurance—commonly purchased by federal employees with managerial or supervisory responsibilities in case they are sued for actions arising out of their official duties and the government doesn’t step in as the defendant—the need for other types of liability insurance doesn’t end.

If anything, the need may be greater because retirees don’t have working years ahead of them to make up for any financial losses due to liability suits.

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First, your homeowner’s insurance should include ample liability coverage. If a visitor trips on your steps or a family member accidentally causes an injury to a house guest, this coverage obligates your insurance company to pay for your legal defense and to pay any damages, up to your policy limits. You’ll probably want to maximize this liability coverage; often, this means buying $300,000 worth or more.

Similarly, you probably should maximize the liability coverage when you buy auto insurance. This liability insurance, which protects you if you cause an auto accident, is actually made up of two different policies:

1. Bodily injury insurance pays claims if you or a member of your household causes personal injury to others.

2. Property damage insurance will pay if you cause damage to someone’s property.

Auto liability coverage generally is expressed by three numbers, such as 50/100/25. This means that your coverage goes up to $50,000 for injuries caused to one person; up to $100,000 for injuries caused to everyone in one incident; and up to $25,000 for property damage.

State laws may require a minimum level of auto liability insurance but you’re better off paying more for more coverage. You might want to pay for liability coverage of 150/300/50, for example. Other types of liability coverage (medical payments, uninsured motorist) can provide extra protection.

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