Why you should give liability insurance a second look

We're all familiar with health insurance and auto insurance, but what about liability insurance? When it comes to protecting your finances, liability can be a big deal.

Your homeowners and auto insurance policies probably have liability coverage built into them, but it's usually not enough.

Homeowner policies only offer $100,000 to $300,000 in coverage. And auto insurance only includes the minimum amount required by the state.

But the good news is that it doesn't cost much to buy supplemental liability coverage that can fill those gaps, and protect you in case of an accident or legal battle. If you don't own a car, it will cost less than $100 each year. If you do have a car, expect to pay $300 to $400.

There are also umbrella policies that cover a broad range of incidents.

Also, if you own a home and have an investment portfolio, protect them. Increase the bodily injury limits in your auto liability coverage to $250,000 per person and $500,000 per accident, and buy personal excess liability insurance worth at least $1 million.

I would recommend you buy excess liability coverage that covers your total net worth.

Take a look at your current coverage, and supplement it so you can protect your family and your finances.