Don’t let the name fool you: home insurance can protect much more than your property. With third-party liability coverage, for example, you might be surprised to find out just how far your home insurance coverage could go.
When you’re batting a thousand
Whether you’re out for some exercise or socializing with friends (or both), nothing’s more satisfying than the sound of your bat cracking a ball high into the air, past the outfield. But what if, in a perfect storm of lousy aim and excitement, you manage to hit a cyclist out for an afternoon ride? You might be on the hook for repairs to the cyclist’s bike and any injuries you’ve caused.
Well, not to worry. If they sue you for these costs, the third-party liability portion of your homeowner’s policy will likely cover the lawsuit. If they don’t sue you but you still feel responsible for repairs to their bike and their injuries, your home insurance will likely cover those costs, too — but under the section for “voluntary payment” rather than your liability coverage, which is reserved for situations where you’re held legally responsible for injuries or damage to someone else’s stuff.
When you’re out of the country
Accidents can happen no matter where in the world you are. Maybe your candlelit wedding proposal ended with fire damage to your hotel room, or the kids got a little too excited while swinging for an authentic Mexican piñata at the resort. If you’re held legally responsible for any damage that takes place beyond your own property, your home insurance can help pay for repairs or replacements. And as an added bonus, deductibles don’t apply to liability claims.
When you’re at fault, plain and simple
While it can be hard to think of every possible thing that could go wrong, do your best to look for avoidable risks around your home. Could someone fall down your rickety staircase? Might the family dog nip a little too enthusiastically at the mailman?
Take an inventory of potential hazards and take steps to prevent injuries to your guests or damage to their belongings. After all, you’re responsible for not only the maintenance of your property, but also the actions of your kids, your pets, and yourself.
You should know, though, that if you or members of your own household trip on those steps or get nipped by your own dog, the consequences are your own: liability coverage doesn’t apply when there’s no “third party” involved.
An umbrella policy is a good idea
If you need higher liability limits than your insurer will permit on your separate home and car insurance policies, you have the option to extend your liability insurance with an umbrella policy.
Why is this important? Well, consider the fact that courts today tend to award damages that far exceed the $1 million liability limit on most insurance policies. If you’re ever held legally responsible in an injury or property damage lawsuit, a settlement over the limit of your existing policy is a real possibility.
An umbrella policy, which adds (over and above your existing limits) liability amounts in increments of $1 million up to $5 million, could mean the difference between breathing easy and bankruptcy.
Get the facts from a broker
If you want to make sure you’re covered for liability at home, around the block, or on the other side of the world, talk to your insurance broker about a home insurance policy that fits your needs.
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