Coverage E: Liability in Homeowners Insurance
Your home insurance policy includes a line for Coverage E: Personal Liability. Personal liability offers protection when a guest files a lawsuit against you for damage or bodily injury that occurs on your property. Set your liability limit to protect your entire net worth. Net worth generally includes the value of all your savings and assets outside of your primary home and retirement accounts.
If you have a net worth above $500,000, look into buying an umbrella policy -- an affordable boost to your liability protection, providing up to $5 million in coverage.
Home Insurance Personal Liability
Intentional damage caused to property or others is never covered. Personal liability includes coverage for the following in your standard homeowners policy:
- Accidents Abroad: You are traveling, and accidentally break a statue in the hotel lobby, the hotel sues you for damages. In simple terms, home insurance can cover your negligence if you were unaware.
- Slips and Falls: A neighbor trips and falls on your entryway step, breaking their hip, and sues you for lost wages and pain & suffering.
- Social Media Drama: You post something personally defamatory or slanderous about a social media star, and they sue you for lost revenue. Coverage E would not cover this claim unless you purchased the Personal Injury endorsement on your policy. Even after you buy the Personal Injury add-on, cyber liability can still require a separate cyber policy.
- Unfortunate Splash: A pool diving board or slide can end in a splitting headache. If your child's birthday party leaves a neighbor's kid with a broken shoulder, you could be facing a lawsuit.
- Broken Bounces: Trampolines can be fun -- but also are dangerous. Many carriers will not offer home insurance if there is a trampoline on the property. Others will accept a trampoline, but only if there is a safety net around the trampoline. If a neighbor's kid jumps and lands the wrong way or collides mid-air, you could be receiving a lawsuit.
- Unlucky Mailman: If your dog Rover gets a little too friendly with the mailman and leaves a flesh wound, you can face a lawsuit. Dog bite claims run around $45,000, and many carriers exclude coverage for dog liability. Carriers also limit coverage for certain breeds of dogs but still include personal liability.
- Dangerous Debris: A tree falls in your front yard without causing any damage -- no big deal. When the neighborhood's kid falls off his bike and punctures his leg on the sharp branches you left piled in your driveway, that is your responsibility. A lawsuit is possible.
- Fenceless Tragedy: Most carriers will require there to be a fence or barrier around your pool. Without a four-foot fence or a latching gate, an unsuspecting toddler can wander into your backyard, fall in the pool, and drown. Expect a big lawsuit if this happens.
- Condo Waterfall: Your mother calls and says she accidentally left the water running in your condo. The water is flowing down into the unit below you, causing $55,000 in damages to their condo unit. Your liability coverage in your condo policy will be useful.
These are just nine examples that can use your Coverage E: Liability. To know what is and is not covered by your home insurance policy, read your plan or check with your insurance agent. As a reminder, your home insurance policy will always deny coverage for intentional damage.
Liability is a complicated coverage in home insurance. If you are dealing with a specific lawsuit that you believe may be covered by your home insurance policy, check with your insurance agent before filing a claim. Even if you submit a liability claim that is not covered by your plan, it will still go on your insurance record for five years.
Insurance carriers hate liability claims and charge more or outright reject coverage. A liability claim on your insurance history will cost you a lot of money in your future home insurance costs.
At your service,