Home Liability Insurance

Home Liability Insurance - What do You Need for Your Home

Don't let the legal language intimidate you: when insurers talk about liability, they're thinking about how to protect you from getting sued. Because we live in a litigious society, you are at risk for a lawsuit any time someone gets injured on your property, even if it isn't your fault.

If you own a home or have investments in real estate, your risks are usually greater than if you're a renter. But no one is completely without risk.

Know that there's a difference between unintentional damages and intentionally unfortunate events. The first is covered by liability insurance, whereas the second one isn't. (If you cause something bad to occur intentionally, you'll really need to find yourself a good lawyer!)

Typical Policy

The most common homeowner's insurance policy includes $100,000 of liability coverage. This will include insuring against losses from incidents such as:

1. Accidental injuries suffered by guests or family members while in your home or on your property.
2. Harm caused by your children (except for intentional acts by those 13 and over).
3. Damage done by your pets (you should note, however, that ifyour pet develops a habit of attacking people, an insurer might cancel your policy or refuse to renew it).

There are some things that aren't included ina basic liability coverage policy that you should keep in mind:

1. Claims by one member of your household against another member.
2. Diseases someone might contract from you or a member of your household.
3. A live-work situation, with your employees or clients of your home-based business.

Each of those three things involves a different type of insurance policy altogether. You might be able to get them covered by the same insurer that you get homeowner's, landlord or renter's policies from. The insurer will likely refer to any of the items above as riders, which is a fancy way of describing supplemental insurance added to a basic policy.

Get Extras

Many homeowners and landlords find that $100,000 in liability coverage isn't enough. Unfortunately, the greater your net worth is, the greater the amount of money people might ask for in a lawsuit against you. The cost of medical care is rising, and going up with it are lawyers' fees and the awards to plaintiffs in personal injury lawsuits.

The money you spend in monthly premiums for home liability coverage is minimal compared to what you'll pay out of pocket for a guest or family member's medical care, and any related legal fees. To decide whether you want a deductible and what size it should be, think through the following questions:

1. What is your total net worth? The more assets you have, the more you stand to lose in legal situations.
2. What are medical costs like in your area?
3. How much do attorney fees run in your region?

You might want to seek the advice of an attorney to find answers to these questions. If you have a financial planner, that person could also give you some helpful insight about how much risk you face.

Your risk also has a lot to do with the location of your building. Luckily, I've got the goods for you on how different places stack up for insurance. Take a look at my guide to different cities and states. When it comes to liability protection, you can never be cautious enough.