Demystifying Personal Liability Coverage for Homeowners and Renters

Did you know…

There’s a reason why you don’t often think about personal liability coverage— you already have it as part of your basic homeowners coverage.

When you purchase insurance for your home, personal liability is typically included by default. Homeowners are generally covered in the event a claim is initiated by a third party, for injury or property damage due to events or circumstances occurring on your property that could result in a payout.

This includes some of the more common risks that might occur at your home, such as dog bites, or slip and falls; covered risks also include incidental damage to someone else’s personal property, such as a broken window or damage to a parked vehicle. You, as a homeowner, renter, or condominium owner, have a responsibility to safeguard the people that visit your home from injury.

However, in today’s world, the base payout limit may not be enough.

A typical home insurance policy will usually include a $1,000,000 in liability coverage. However, it’s often in the lower range of what might be required for the cost of something on the catastrophic end of the spectrum, such as legal costs, physical injury requiring hospitalization, or chronic conditions resulting from a severe physical injury, such as extended rehabilitation.

You might also be unaware, that personal liability coverage would even cover your income or job loss resulting directly from such events, and of course any settlements that might be awarded on your behalf.

Unless you’re prompted to talk about the type of liability risks that may be associated with your home or family members, you might not end up with coverage limits appropriate to your situation. As a minimum, always purchase the maximum liability coverage available to you for your policy, it will provide you the peace of mind needed in our litigious world.

Therefore, it’s important to talk to your broker about what might merit greater coverage limits, such as $3 million or more. Depending on your needs you can also purchase a Personal Umbrella Liability policy. This policy can increase your overall liability from $3 million to $5 million, or even higher with broader coverage that can include your auto, home and watercraft, as well as additional properties

Being sued for something that happened at your home can be incredibly expensive; beyond the examples listed above, any number of random occurrences could result in an unexpected lawsuit and thus result in significant financial exposure to you.

The good news? Personal liability coverage represents a very small portion of a policy’s premium; adding additional coverage won’t break the bank, but it will protect your bank account.

To find out more, look for more from our series of “Demystifying” blog posts, coming soon.

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