RECONSIDERING YOUR HOMEOWNER LIABILITY LIMITS

For decades, insurance policies for residential risks have been in the form of a package. Typically, policyholders are far more aware of the protection against loss to property such as one’s home and furnishings than they are of liability coverage. The latter protects against harm or loss that policyholders may cause to other persons. Claims of harm or damage from other persons often present themselves in the form of lawsuits.

Defending against lawsuits is time-consuming and expensive. Costs are unpredictable because they are so dependent upon details of the occurrence and the persons involved: litigants, legal representatives, and insurers. Legal expenses commonly involve thousands of dollars, often being similar to the amount of settlements or judgments. Unlike many other sources of products or services, legal cost estimates are difficult to obtain and, when provided, are unreliable.

Homeowner lawsuits, while less frequent than losses involving property, tend to be more complicated and costly. Being sued may involve a variety of reasons such as:

• Pet Bites/Attacks
• Injuries during rough play
• Slips or falls that occur on premises (stairs, driveways, sidewalks, etc.)
• Injury involving private pools
• Home playground or play equipment injuries (swings, climbing walls, trampolines, lawn darts, etc.)
• Harm caused by defamation or libel
• Persons injured in kitchens (burns or serious cuts, etc.)
• Persons injured related to social or business activities related to a home
• Injuries or damage caused to others due to hobbies, sports, or recreational activities
• Injury or damage caused by home maintenance

By the time that a claim of loss involves litigation, it’s perilous not to have adequate coverage. Judgments that aren’t handled by insurance become the responsibility of the policyholder as an out-of-pocket financial obligation and they can be ruinous.

Parties that seek damages via lawsuits often look for compensation that goes beyond medical expenses or value of property. Damages may also include loss of use of property, rehabilitation costs, loss of consortium, lost income replacement, etc.

The net worth (real or perceived) of the party being sued is often a key consideration that affects amounts sought as compensation. The limits of insurance available to provide possible protection must not be an afterthought or just the minimum amount offered by a given insurer. Liability protection is relatively affordable so higher limits, such as $500,000, are worthy of consideration. Even excess coverage that may provide up to one or two million may be a practical move.

You are the chief beneficiary of any tools that exist to protect you against risk of loss. It is increasingly important to take an active hand regarding whether the protection is sufficient. An insurance professional is an expert source to assist your efforts.