Homeowners insurance includes several components. One is liability coverage, which can cover accidental injuries or property damage. Insurance companies offer a wide range of liability coverage limits. You may need more coverage than you currently have to fully protect your assets, such as your home, savings and investments.
What Does Liability Insurance Cover?
Your homeowners insurance policy’s liability coverage will pay for injuries or property damage if you or a member of your family is found liable for an accident. It will also cover injuries or property damage caused by your pet.
In many cases, a homeowners insurance company will settle a personal injury or property damage claim to avoid a lawsuit. If a case goes to court, your liability coverage will pay for legal fees, and any amount awarded, up to your policy’s limits.
Liability coverage can protect both your current and future assets and earnings. If you didn’t have liability coverage and you were found responsible for injuries or property damage, your future wages could be garnished.
Do You Need More Liability Coverage?
Insurance companies define an “attractive nuisance” as a feature of a property that is both appealing and dangerous to children. Common examples include a pool, trampoline or treehouse.
If a child got injured or killed on your property by an attractive nuisance, you could face an expensive lawsuit for injuries or accidental death. You would be held liable for the accident even if a child trespassed on your property. If you have an attractive nuisance, you ask your insurance company if you have adequate liability coverage and if the company requires any safety measures, such as fencing, to keep children away and prevent injuries.
How to Increase Your Liability Limits
If you already have your homeowners insurance company’s maximum amount of available liability coverage, but don’t think it’s enough, you can get an umbrella or excess liability policy to provide coverage beyond your standard homeowners insurance policy limits. The extra coverage will kick in once you have exhausted the coverage provided by your homeowners insurance policy.
An umbrella or excess liability policy may offer coverage that is broader than the coverage from a standard policy. The premiums for an umbrella or excess insurance policy will be based on the amount of coverage under your homeowners insurance policy and your level of risk.
Get Professional Advice on Your Homeowners Insurance Coverage
Many homeowners don’t have enough liability insurance to protect them from the financial repercussions of a large claim stemming from an accident. Talk to your insurance agent about your current liability coverage, risk, assets and whether you should increase your limits.