One of the most critical parts of a homeowners or renters insurance policy is your Personal liability coverage. It provides coverage in the event of any litigation, or expensive medical bills stemming from bodily injuries, damages to someone’s personal property where you are held liable.
Sometimes accounting for amounts that can range from hundreds to thousands, and sometimes millions of dollars, liability losses are often the most expensive. Suppose you are involved in a lawsuit where the legal responsibility for paying medical expenses, pain and suffering plus other costs. That is all it would take to leave a homeowner devastated. Most judgments are made after a lawsuit and can put your current and future net worth in jeopardy. Therefore, homeowners should seek enough personal liability coverage to protect all their assets.
For individuals that have multiple items such as a home, numerous cars, and a boat, and the limits on the policies are insufficient. Investigating a personal umbrella policy to provide you with increased liability limits beyond the amounts on your home or auto limits, is in your best interest.
Homeowners personal liability coverage is a general liability policy. It is not coverage that is only associated with your insured property. Personal liability coverage offers protection from liability incidences that occur at or away from their home. If, for instance, you were to cause injury to someone while riding your bike or at the gym. Your liability coverage would cover any medical bills or judgments stemming from the accident. The limit of the liability coverage available under your homeowner’s liability coverage is the most that you will available from your insurance provider for a covered occurrence. Most occurrences can have multiple claimants and can escalate the judgment amounts due quickly.
The amount that insurance companies offer for homeowners’ liability coverage starts at $100,000. Homeowners can then add higher limits up to $500,000 if they choose. If you have a pool, trampoline, or other items that may invite the possibility of an injury, the highest limits on a standard policy may not be enough, and an umbrella policy should be considered. The umbrella policy will provide provider broader liability coverage and help cover expenses associated with personal injury, wrongful eviction, or false arrest.
What is covered under a homeowner’s personal liability policy?
The portion of your homeowner’s personal liability policy will help protect any assets that you currently have or attain in the future, from damages that you are responsible for that came from bodily injury or property damage. That includes lawyers’ fees, judgments resulting from an accident or negligence. The coverage extends to family members that are part of the policyholders’ family when they are at home or away.
The homeowner’s liability coverage will provide coverage for the following occurrences:
Dog bites and damage caused by your dog (check with your carrier some breeds are excluded).
A dead tree falling on your neighbor’s house
Bodily injuries to employees at home
Physical injuries or damages done by employees at home
Guests injured on your property caused by accident or negligence
Damages caused by accident to someone else’s property by the policyholder or a member of the family.
Intoxicated guests inflicting harm to themselves or others
Which legal expenses are covered under a Homeowners personal property policy?
As part of your coverage, your insurance provider will cover these expenses if you are held responsible for an accident.
Medical costs for a claimant
Property damage costs for claimant
Pain and suffering costs for claimant
Lost wages for claimant
Claimants life insurance death benefits
Costs for legal defense
Which expenses are not covered under a Homeowners personal property policy?
As part of your homeowner’s personal liability coverage, there will be some occurrences that will be excluded from your policy, which will leave the person that is injured to find an alternate way to cover their expenses. They will have to either pay for injuries out of their pocket or file a claim through their insurance.
Injuries or property damage done by a member that is done by a person that is not a member of the insured’s family.
A tree that falls onto your neighbor’s house.
A peril that is covered by someone else’s policy.
Any property damage or injury resulting from the policy holder’s business-related activities (business insurance should cover any business-related claims)
Injuries to the insured or any members of the insured’s family
Homeowners personal liability coverage cost
The cost to get homeowners’ personal liability coverage is around $10 a year for every $100,000 in coverage. If you go with the highest limits allowed on a standard homeowners’ policy, which is $500,000. The cost of your homeowner’s premium will be about $50 for the year. However, that amount can be slightly higher, depending on where your home is located. Homes located in metro areas will pay more than homes located in a rural community.
How much personal liability coverage should a homeowner have?
The amount of personal liability coverage you need will depend on the amount of liability risk you have associated with your property, along with the amount of total assets you may want to protect.
As a homeowner that is involved in a lawsuit, the injured party can go after all your assets if you own multiple properties that have a total value amount of $300,000. That is $300,000 in property assets that you will need to protect with your personal liability coverage. When determining the amount of personal liability coverage, you need to consider the liability risks associated with the home. Do you have a pool, trampoline? Those are items that will increase your homeowner’s premium because they are considered higher liability risks, especially for children that are on your property. Homeowners should know that homeowner’s personal liability coverage may have the most significant impact on their financial stability, and the coverage is relatively inexpensive. Therefore, going with the highest limits is the best option.
Claims under the homeowner’s personal liability coverage can be complicated due to the uncertainty of who should file the claim. The claimant can file a claim against the responsible party’s insurer in individual states. While in other states, claims can only be filed by the individual policyholder. If someone was to sustain an injury at your home and the injured party believes that you are responsible, they may ask you to file a claim. As a responsible homeowner, you may have no problem submitting the claim. After all, you will not have a deductible, just the probability of your rates going up unless you can afford to pay for injured parties’ expenses out of pocket. However, should you refuse to file a claim for the injured party, they will have the ability to file a claim for their injuries.
The claim could be settled quickly and find you responsible or not. If the court does not make a quick decision and the claim must go to trial. You will need to pay for defense costs out of pocket or file a claim with your insurance company to cover the cost of defense. All liability claims can be expensive for homeowners. They can involve multiple claims being filed by different people, which can mean numerous people looking for settlement amounts from you. If you do not have enough personal liability coverage on your homeowner’s policy, you are leaving yourself and your assets vulnerable. To make sure you have enough coverage contact Florida Risk Partners to have us analyze your homeowner’s coverage.