Homeowners Liability Insurance
Liability insurance provides reimbursement for covered lawsuits and more.
Written by
Christine Lacagnina has written thousands of insurance-based articles for TrustedChoice.com by authoring consumable, understandable content.
Reviewed by
Jeff Green has held a variety of sales and management roles at life insurance companies, Wall street firms, and distribution organizations over his 40-year career. He was previously Finra 7,24,66 registered and held life insurance licenses in multiple states. He is a graduate of Stony Brook University.
Having homeowners insurance to protect your property against physical damage is essential, but it also provides reimbursement for covered lawsuits. The liability insurance included in a homeowners policy can help you get the reimbursement you desperately need if you get sued by a third party. But making sure you get set up with enough coverage before an incident ever occurs is key.
An independent insurance agent can help you get set up with the right kind of homeowners insurance and amount of liability coverage for you. They'll make sure you have enough protection against many kinds of lawsuits. But first, here's a closer look at homeowners liability insurance.
Why Liability Protection Matters
A homeowner's responsibility is to keep their property safe for guests and other visitors, as well as their own family. But did you know that homeowners can even be on the hook for injuries to someone who trespasses on their property if it's found to have been unsafe? It's true.
Homeowners can be held liable for any dangerous conditions they fail to repair, such as shaky stairways, slippery sidewalks, etc. They can also be held responsible for injuries that occur due to leaving property on the ground, such as ladders and equipment that can be tripped over. But possible liability doesn't stop there because homeowners are also responsible for many injuries and property damage caused by their pets.
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What Is Homeowner Liability?
"Liability" can be defined as “a legal or financial obligation.” As a property owner, you're legally responsible for making sure the premises of your home and property are safe, and you can be held accountable if disasters like injury or property damage happen on your property, whether due to oversight or negligence.
Typically, you will only be held responsible for an accident, injury, or property damage if you are in some way negligent or if you have failed to ensure that your home and property are safe for visitors. You need to be certain your sidewalks and steps are not icy, that there are no tripping hazards, and that a person walking across your yard wouldn't trip due to a gopher hole.
If your home is under construction, or if you have a landscaping project in progress, you can be held liable for harm to others who get harmed by the equipment and tools. As a homeowner, do everything you can to keep your home and property safe, and ensure you have adequate coverage for unforeseen incidents. That's where homeowners liability insurance comes in.
What Does Homeowners Liability Insurance Cover?
The liability coverage section of your homeowners insurance protects your financial assets if you or another member of your household get sued and are found to be legally responsible for bodily injury or damage to another person's property.
Homeowners liability insurance can cover:
- Repairs to another person’s property
- Medical treatments for an injured third party
- Legal defense costs for lawsuits related to third-party property damage or bodily injury
Your liability coverage in your home insurance can reimburse you for attorney, court, and settlement fees if a third party sues you for a covered claim. Also, depending upon the specifics of your homeowners insurance policy, you may be covered for defamation. Under other circumstances, this coverage may be available if you add a separate endorsement to your policy.
Homeowners Liability Coverage Protects You From Potentially Huge Financial Losses
The assets your homeowners liability insurance is designed to protect include everything from your liquid assets, such as your checking and savings accounts, to your investments and retirement accounts, your valuable personal property, your home itself, and any other properties like vacation homes.
The nature of litigation today is that your financial assets can all be at risk if you get sued. When you have adequate liability coverage in place, it can provide peace of mind that your assets will be protected in case of a lawsuit. Make sure to work with an independent insurance agent to get set up with an adequate amount of liability coverage to protect your assets ahead of time.
What If I Don’t Have Enough Liability Coverage?
If someone gets injured or suffers property damage on your premises or as a result of negligence on your part, you might need to use your liability coverage to pay for lawsuit costs or medical treatments. A simple settlement could involve you just filing a claim through your home insurance to pay for the third party's medical treatments or property repairs or replacements. However, in the case of an extreme disaster like a severe injury at your home, it's critical to know you're fully protected.
Your homeowners insurance comes with a liability limit set at the time you purchase your policy. A common liability coverage limit in standard home insurance policies is $100,000.
If someone files a large lawsuit against you, your legal defense and settlement costs can potentially exceed this coverage limit. Then, your other assets could be at risk, including your home, savings, and investments.
You can increase your liability coverage in one of two ways:
- Increase the amount of coverage in your homeowners policy: For example, from $100,000 to $300,000 or $500,000. The cost of increasing homeowners liability coverage is typically very affordable.
- Buy an umbrella insurance policy: Umbrella insurance is a separate policy that stacks additional liability coverage onto an existing policy. One type of coverage umbrella insurance works with is homeowners insurance.
You can also ask your independent insurance agent about increasing your homeowners liability coverage limit if you're concerned you don't have enough. They can recommend the course of action that would make the most sense for you based on your personal risk and assets.
When to Consider Adding Umbrella Insurance
An umbrella insurance policy provides extra liability protection for your current assets and future income if a large legal claim exceeds your homeowners liability coverage or auto insurance liability coverage. While your home insurance liability coverage would reimburse the costs of medical expenses, property damage, and legal claims up to your policy's limit, an umbrella policy would provide protection up to a limit of $1 million dollars or more.
You can buy umbrella coverage in increments of $1 million. Policies are also often highly affordable, especially given the amount of coverage they provide. Evaluate your risks and the assets you want to protect to determine how much liability coverage you really need. Have this amount already calculated before you shop for umbrella insurance.
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Our independent agents shop around to find you the best coverage.
Why Work with an Independent Insurance Agent?
Independent insurance agents are experts in finding you the right kind of homeowners liability insurance and any other type of coverage you need. They can shop and compare policies from tons of different insurance companies for you, then present you with only the best quotes together in one place. Also, they're available down the road to help you file claims if you ever need to.