What Does a Homeowners Liability Insurance Plan Cover?

Liability coverage is a major part of a standard homeowners insurance policy. It provides financial protection that pays for legal and medical bills if someone is injured or becomes ill on your property. Liability covers a wide range of perils, but each policy is written specifically for the policyholder. This post provides an in-depth description of homeowners liability insurance and everything it covers.

Medical Bills for Visitors

If someone slips and falls on your property, your liability coverage will pay for hospital visits and treatment. In the case of a dog bite, which can be very serious, different policies have different stipulations. Insurers, for example, typically don’t like to cover dangerous dogs due to the higher risk of causing severe injuries to humans. In many cases, insurers increase premiums for the owners of dangerous dog breeds.

When an injury is so serious that the medical bills surpass your coverage limits, the victim may file a lawsuit to cover the rest. That’s why you need to consider setting higher limits if you engage in high-risk activities with your guests at home.

Due to the rising cost of healthcare, it’s wise to revisit your homeowners policy annually to see if you need to update your coverage limits. If you are worried about cutting monthly insurance costs, consider raising your deductible or minimizing the risks.

Pain and Suffering

A victim can include pain and suffering as a part of their claim for injuries if you are responsible for the accident. If the victim decides to file a lawsuit, your liability insurance should at least cover some of the legal expenses. Pain and suffering are related to physical discomfort and emotional distress that develops from a traumatic incident in addition to the injuries. The following physical conditions may qualify as pain and suffering:

  • Headaches
  • Back or neck pain
  • Fractured or broken bones
  • Nerve damage
  • Damage to internal organs
  • Paralysis
  • Sprained muscles
  • Traumatic brain injury

Emotional pain and suffering may encompass anger, anxiety, fear, and grief. However, there’s no one strict formula for calculating the cost of this pain, especially if it cannot be resolved by medication. Some attorneys use a cost-per-day model such as $100 per day throughout the course of pain and suffering. Defamation suits may also be covered by liability insurance if a guest feels you ruined their reputation.

Lost Wages

Not only can a victim who suffers an accident in your home needs to be reimbursed for medical bills by your insurer, but they can also claim benefits for lost wages. You won’t have to pay them out of your pocket if you have sufficient liability coverage.

Death Benefits

Nobody likes to imagine someone dying at their home due to an accident, but it can happen. Your liability insurance may pay death benefits to the family of the victim. These benefits may include funeral costs. When a surviving family member files a wrongful death suit, it can lead to many complications that run up high legal fees.

Legal Costs

The most expensive lawsuits can extend into millions of dollars for severe injuries. While your net worth would be considered for how much a settlement may result, you probably don’t want to pay legal costs out of your pocket. Liability coverage will pay attorney bills up to the limit you set, which should be based on risk levels. If you frequently invite guests over, you may need higher coverage limits than the average homeowner.

Be aware that some attorneys use the multiplier method to secure the highest settlement possible. The multiplier method involves adding up all the damages then multiplying it by a number between 1 and 5 based on the severity of the injuries.

Personal Liability Coverage Away from Home

Your personal liability coverage will follow you on vacations. That means if you cause damage at a hotel property, your liability insurance may cover it. When applying for a homeowners policy, read it thoroughly to understand the types of disasters your personal liability insurance covers. Each homeowners policy has fine print and intricate details on what the coverage encompasses.

Exclusions: What Home Liability Doesn’t Cover?

Like all insurance policies, you will only get so much coverage. Don’t assume everything you imagine is covered and will just be worked out. Be aware that insurance policies are usually very specific on what they cover. It’s common for homeowner plans to not provide coverage for damage that results from intentional destruction and outright negligence. If you run a business from home, your personal liability coverage probably won’t cover lawsuits related to your business dealings. You’ll need business insurance for that.

Set Your Coverage Limits Wisely

No one likes to predict bad experiences, but it’s important to consider liability insurance as protection against bad luck. Coverage limits are crucial if you engage in a risky activity such as serving alcohol at parties. Did you know if someone gets into a car accident after you’ve served them drinks at a party, you can be held liable?

The riskier activities you engage in with guests at your home, the higher you should set your liability coverage limits. Once a settlement exceeds your set dollar limit, you may have to pay the rest out of your own savings. One way to prepare with extra coverage is to buy umbrella insurance, which is an affordable add-on option.

When you buy a home, make sure you buy the right amount of homeowners liability coverage to go with it. You will sleep better at night knowing friends and family who visit you will be covered if they somehow get injured on your property. Contact our insurance professionals at Family Financial Insurance Group for more information about ensuring you have the proper coverage for your home.

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