This is part two of our post answering the question, “How much home insurance is enough?”
Coverage E – Personal Liability
It’s easy to focus on the dwelling coverage when shopping for home insurance, but personal liability is also an important part of your policy. In fact, it may even ultimately protect you against the loss of your home, not because of a fire, but rather due to your financial liability after a lawsuit. With the right amount of personal liability protection, your policy can provide payment when you are the subject of claims for third-party injuries or loss.
Types of Losses
There is an infinite amount of scenarios that could lead to bodily injury or property damage liability. Some, however, are more common than others. For example, dog bites are among the most common claims homeowners face, accounting for more than one-third of all claims and costing insurers more than $570 million in 2015 alone. On average, that is more than $37,000 per claim, although severe bites could garner much higher judgments.
Whether the incident occurs at home or while you are away, personal liability coverage typically follows you anywhere you and your household members go, with exceptions for certain events like car accidents.
How Much Coverage Do You Need?
Insurers offer various levels of personal liability coverage, although homeowners typically choose an amount between $100,000 and $300,000. We here at Frydach Insurance urge our customers to select high-limit coverage, which better protects your income and assets against litigation.
Coverage F – Medical Payments
When someone is injured in your home or on your property, medical payments coverage helps take care of the medical bills, whether for a doctor’s visit or a trip to the emergency room. This coverage, which is usually between $1,000 and $5,000, does not eliminate your possible liability for an accident, nor is it contingent upon fault. However, it does assure that those injured get the medical attention they need and may even be enough to prevent a possible lawsuit.
Many homeowners choose endorsements to close coverage gaps and further minimize exposure to certain types of risks. These endorsements are optional, but they can provide significant financial benefits should you ever need to file a claim. Examples include:
- Water backup and sewer coverage
- Home business coverage
- Scheduled coverage for high-value assets
- Personal property replacement coverage (versus actual cash value only)
Some endorsements, such as water backup and sewer coverage, are recommended for nearly all homeowners. Others, such as home business coverage, may only be appropriate for people with certain risk exposures. For help determining which types of endorsements may be right for you, contact our office today.
Beyond Home Insurance
You can reinforce the protection of your home insurance policy by supplementing it with umbrella insurance. This coverage is extra liability protection with high limits – usually $1 million or more. This coverage is above and beyond the limits on your primary liability coverage, helping to pay for excess damages that exceed the limits of your home insurance. In the event you face a million-dollar lawsuit, even a $300,000 home insurance liability limit would not be enough to shield your income and assets against garnishment and liquidation. Fortunately, an umbrella policy can be added to your insurance portfolio, often for as little as $200 per year or less.
For more information about umbrella insurance or to find out if it could be right for you, contact our office today.