How to Get the Best Homeowner Liability Insurance

Whether we like it or not, one of the common features of our culture has become our propensity to take each other to court.  People seem to sue other people for just about everything imaginable.  Therefore, it has become necessary to carry liability insurance for just about everything, including homeowner’s insurance.  If someone were to get hurt or injured while on your property, you could well be found liable. 

The basis for the need of liability insurance is the idea that it is the property/homeowner’s responsibility to provide safe conditions for anyone who may come onto the property.  This even includes the process of building a home.  So before you actually live in a home you may be building, or even before you have contents placed inside it, or even before there is even much of structure erected, you will need liability insurance.

Something that many homeowners do not know is that you are liable even when people may be on your property uninvited. That’s right, you are responsible even for trespassers.  Homeowners are responsible to provide reasonable care to prevent injuries for anyone who comes onto their property.  The intent for that person’s presence on your property is irrelevant.

Two types of liability insurance are necessary, personal and medical.  Personal liability covers the homeowner in case there is an accident, you are sued and found to be liable.  That accident could result in injury to an individual or property damage.  This insurance is designed to cover the homeowner’s legal costs, if such is necessary. 

The second type of liability insurance is medical.  This insurance pays for medical treatments resulting from someone being hurt or injured in an accident while in your home or on your property.  These expenses would include x-rays, doctor’s visits, medicines, hospital stays, and so forth.

Liability coverage in a typical homeowner’s insurance policy has set limits as to the amount of coverage provided.  Medical costs, depending on the kind of injury incurred, could easily exceed those set limits.  In order to address this scenario, some insurance companies offer “umbrella” liability insurance.  This insurance is designed to provide coverage for any liability that exceeds the limits set within individual policies (homeowners, auto, etc.).  Here’s the good part – umbrella coverage is surprisingly affordable. 

It should be remembered, the amount of liability coverage needed is not determined by the total value of one’s assets.  In other words, the determination of a dollar amount for you which you may be judged liable does not stop at the total value of your assets.  You may well be responsible for amounts exceeding that amount.  This could mean not only the loss of your assets, but also future wage garnishment.

Here’s an example of how umbrella liability insurance would work.  Suppose you get sued and a judge awards a $1 million settlement against you.  You have a $300,000 limit on the liability portion of you homeowner’s insurance.  You pay your $1,000 deductible and your insurance provider kicks in the remaining $299,000.  But what about the remaining $700,000? 

Suppose you have an umbrella policy covering $1 million with a $300,000 deductible (notice this is the same amount as the limit on your primary insurance policy).  The deductible has already been met, so now this policy kicks in to cover the remaining $700,000.  So for $1,000 paid for your primary insurance’s deductible plus the reasonable premium’s for this umbrella policy, your insurance company has paid $999,000.