What is insured in household contents liability insurance?

What is liability insurance?

Personal liability insurance is a part of your home insurance that protects you from claims for injury or damage to someone else’s property. This coverage also extends to other members of your household, including pets.

For example, let’s say you’re throwing a pool party and your neighbor slips on the deck. Your neighbor can sue you for all medical expenses related to the pool injury. At this point, your liability insurance kicks in, covering both your legal fees and medical expenses. In this way you avoid the financial ruin of having to pay the costs out of your own pocket.

Now suppose your neighbor doesn’t want to sue you but needs your help to pay his medical bills. In this case, your insurance company can still cover these costs as a gesture of goodwill.

What does liability insurance cover?

Liability insurance covers your legal fees if you are sued after an incident that harms someone outside your household or damages someone else’s property. This includes any medical expenses and related payments awarded in a court proceeding.

Liability insurance covers:

Medical payments for guests

If someone is injured on your property, your liability insurance may choose to pay medical expenses either as a result of a court proceeding or as a goodwill gesture. Coverage protects you financially from being held personally liable for any expenses incurred.

Let’s say someone new comes to your house and your dog bites the stranger out of fear. That person sees a doctor after the bite and is billed for the emergency room visit. Your liability insurance would step in if that person then decides to pursue you for damages, Wilson says.

Damage to another person’s property

If you cause an accident in which someone else’s property is accidentally damaged, your liability insurance can help cover that damage.

Let’s imagine your children playing soccer in the garden. Halfway through the game, one of the kids shoots the ball through the neighbor’s window, smashing it. Your liability insurance will also step in and pay for the window repairs.

legal fees

If someone is injured in an accident or their property is damaged, they may choose to sue you. In this case, your liability insurance will help you pay for legal fees, regardless of whether you are responsible for the accident.

For example, let’s say your postman is trying to deliver a package when he slips and falls on your porch. He suffered life-threatening injuries during the fall and decides to sue you for payment. Instead of paying for an attorney out of pocket – which could cost you thousands of dollars – your insurance company steps in and covers those costs.

However, there is a limit to what liability insurance pays if you are sued.

Now suppose your postman slipped because you forgot to salt your porch. Your postman decides that he wants to be compensated over and above his medical bills to punish you for your negligence in salting the porch. This additional claim for compensation is known as punitive damages, which are not covered by liability insurance.

Liability Coverage Limits

How much your liability insurance pays out is limited based on your policy limit, which is typically between $100,000 and $500,000. When determining how much insurance coverage you need, consider your overall financial situation, the risks in your home and the items on your property, says Ted Olsen, vice president of Goosehead Insurance.

Suppose a court case finds you responsible for an injury sustained by a guest at your home and the judge orders you to pay $500,000 in medical payments. If this comparison could potentially eat up all of your net worth, you should opt for the maximum coverage offered.

On the other hand, certain items like pools can increase the risk of a guest being involved in an accident and filing a liability claim against you. Additionally, recreational vehicles such as snowmobiles, quadricycles, and jet skis may pose a higher risk of damage. For this reason, the Insurance Information Institute recommends raising the minimum coverage limit to at least $300,000 if you own any of these items.

“Going from $100,000 to $500,000 costs you maybe $10 to $20 a year, so going to the top is cheap,” says Olsen. “It’s important that you have enough cover if something like this happens.”

If you’ve exhausted your liability insurance but feel you need extra protection, you should also consider umbrella liability insurance. This adds additional coverage over and above your liability insurance.

Is there liability insurance only for your own home?

No, you can purchase liability insurance for your car or recreational vehicle such as an ATV, golf cart, snowmobile, or dirt bike. It is also available for boats and jet skis. In these cases, liability insurance helps pay for personal injury and property damage to those affected by the incident.

For example, let’s say you and your friend go snowmobiling. Her friend accidentally hits a mailbox and breaks his arm. Your liability insurance on your snowmobile would cover damage caused to the mailbox as well as any medical expenses incurred during the accident.

It is important to note that this coverage is separate from your home insurance. You must purchase additional coverage to insure these items.

What is not covered by liability insurance?

In general, liability insurance helps you pay the costs associated with an accident that injures another person or damages their property. Your liability insurance would not cover your personal medical expenses or those of any member of your household. It also doesn’t cover damage to your own property – even if the damage was caused by someone else.

There are a few other instances where your liability insurance wouldn’t cover, including:

• punitive damages in a court proceeding
• Willful damage such as B. intentional injury to a guest
• Criminal offenses such as arson, in which the neighbor’s property is burned down
• Damage caused by normal wear and tear including animal and insect damage
• Injury or damage related to a business operated from your home

take that away

Unfortunately, accidents do happen and sometimes the associated costs can be devastating to your financial security. Liability insurance is meant to be a proactive way to plan for unexpected accidents that may occur. It’s important to be transparent with your insurance agent about the items and potential risks in your home so they can help you get adequate coverage.

“To me, liability is the number one reason why we have insurance because it’s the only thing that can completely change our lives,” says Olsen. “Simply because someone else’s life has changed for the worse.”