This is part two of our post answering the question, “How much home insurance is enough?”
Coverage E – Personal Liability
Personal liability is one of the most important components of a standard home insurance policy. Even though it does not provide direct protection for your home and belongings, it can still protect you against the loss of your assets due to a lawsuit. Personal liability coverage safeguards you against financial responsibility when you, your pet, or someone in your household is at-fault for injury to a third party or damage to their property. This can include losses that occur away from your home, as well as on your property. There are only a few exceptions – usually for incidents that would be covered by other insurance policies, such as car or boat insurance.
The Cost of a Lawsuit
How much will a lawsuit cost you? The answer comes down the extent of the damages you cause. This can include medical bills and lost wages, as well as replacement of property. You may also be responsible for emotional trauma, punitive damages, legal expenses, and more. Some of the most commonly filed claims include damages for:
- Dog bites or pet-related injuries
- Damages to hotel property
- Injuries caused by bicycling accidents
- Slip-and-fall accidents
Here at the Don Neeley Agency, we recommend our customers purchase high-limit personal liability coverage of at least $100,000 to $300,000. If you select limits that are too low, you may need to liquidate your own investments and savings to pay for excess damages beyond the limits of your policy. If you do not have adequate assets to cover the damages, you may need to sell some belongings or otherwise make payments from future income to satisfy the debt.
Coverage F – Medical Payments
Medical payments coverage can help pay for medical bills due to injuries that occur on your property. Unlike personal liability coverage, medical payments protection is not contingent upon fault. Instead, benefits are paid for victim medical bills to help cover the upfront cost of injuries, such as deductibles and co-pays. This coverage does not absolve you of any liability, but the extra $1,000 to $5,000 of coverage may be just enough to help avoid a lawsuit.
Insurance companies allow customers to customize home insurance coverage to suit their needs better. Endorsements provide extra coverage for specific claims, helping to minimize out-of-pocket damages after a loss that might not otherwise be covered by a standard home insurance policy. Examples of common endorsements include:
- Scheduled coverage for high-value personal belongings
- Replacement cost coverage for personal belongings
- Inflation guard for your dwelling
- Water backup and sewer protection
- Home business coverage
For help determining which endorsements may be right for you, contact our office today.
Beyond Home Insurance
There are additional insurance policies that can help supplement the coverage in a typical home insurance policy. Even the highest limits of liability protection, for example, may not be enough to protect against a major lawsuit. If you are sued for $800,000 and only have $300,000 in personal liability protection, how will you pay for the remaining $500,000 in excess damages?
For these scenarios, we recommend purchasing an umbrella insurance policy that helps pay for damages that exceed the limits of your primary liability coverage. These policies usually come with a minimum of $1 million of coverage – usually for just $200 per year or less. Having an umbrella in place could give you peace of mind during litigation and protect your family against financial ruin.
For more information or to request your free umbrella insurance quote, contact our office today.