This is part two of our post answering the question, “How much home insurance is enough?”
Home insurance protects much more than your home; it protects your livelihood should you ever face a personal lawsuit. Today’s lawsuits can easily total tens or even hundreds of thousands of dollars or more for property damage, medical bills, lost wages, emotional trauma, punitive damages, and legal fees. If you are at-fault for a third-party’s loss, how much would you stand to lose to litigation?
Who is at Risk?
Unfortunately, everyone is at risk of being sued – including you. Personal liability insurance can help protect you against the financial responsibility of accidents that occur on your property, as well as many types of damages you, your pet, or a household member cause while away from home. Examples include:
- Dog bites
- Damages to a hotel room
- Bicycling accidents
- Slip-and-fall accidents
- And more
In fact, home insurance liability generally covers most accidental losses, with exceptions for certain events, such as boat and car accidents.
How Much Coverage Do You Need?
Instead of putting your income, assets, and savings at risk, we encourage our customers to choose adequate personal liability coverage limits that will help safeguard against a possible loss. Many of our clients opt for at least $100,000 to $300,000 of coverage, although one of our team members can help you determine how much liability protection may be right for you.
The next section of your home insurance policy – medical payments coverage – helps pay for medical bills stemming from third-party injuries on your property. Unlike personal liability coverage, medical payments benefits do not require establishment of fault. However, this coverage also comes with much lower limits – usually between $1,000 and $5,000. If someone is injured, this should be enough to help cover a doctor’s office visit, co-pays, or perhaps even a health insurance deductible. Medical payments coverage does not eliminate personal liability or the possibility of being sued, but it may help prevent litigation for a minor injury.
To help keep home insurance affordable for everyone, a standard policy comes with broad coverage designed to meet the needs of the general population. However, this may not be adequate to meet the needs of an individual homeowner. In these cases, endorsements can provide more comprehensive protection by increasing compensation for certain types of losses and broadening coverage to include more events.
For example, we often recommend that homeowners purchase a water backup and sewer endorsement to protect against the high cost of water damages due to a backup in the home. Likewise, many homeowners opt for an inflation guard endorsement that protects against the rising cost of rebuilding, as well as a replacement cost endorsement that compensates homeowners for the full replacement value of damaged belongings. Other common endorsements include coverage for home based businesses, day care, and to extend coverage for valuable collectables and jewelry.
Beyond Home Insurance
In addition to the personal liability coverage on your home insurance policy, your family may also benefit from an umbrella insurance policy that provides supplemental liability protection against major lawsuits. This type of coverage is designed to protect your income and assets when a legal fees and judgments exceed the limits of your primary liability coverage. With an umbrella policy, you can have an additional $1 million or more of liability protection – all for an average of just $200 per year.