Homeowners Insurance - The Liability Coverages

Raziel Ungar

April 17th, 2012 - 3 min read
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Usually, when people think about Homeowners Insurance, they think about the coverage that rebuilds the home after a fire - otherwise known as the Property coverages. But what coverage applies if a person is injured as a result of visiting your home? These coverages -- the Liability coverages -- are also essential pieces of a Homeowners Insurance policy. Unlike Property coverages, Liability coverages in Homeowners policy are not subject to deductible.

The main Liability coverages are described below:

Personal Liability

Personal Liability covers damages that a member of your household is legally obligated to pay to another for bodily injury and/or property damage. Bodily injury refers to physical harm, including sickness or disease. Property damge means destruction of tangible property and the resulting loss of its use.

Personal Liability claims generally involve a lawsuit against you. But the good news is that most Homeowners Insurance policies will provide unlimited coverage to defend you against any Liability claim or suit. So, if someone trips on your sidewalk and claims paralysis as a result of the injury, the defense costs will not be limited.

On the other hand, the Personal Liability coverage limit that would apply to the final judgement is applied only up to the policy limits. Most Homeowners policies can provide Personal Liability limits of $100,000, $300,000, or $500,000. Your Liability coverage limit should at least be equal to the market value of your home, but you should also consider your net worth when selecting a Personal Liability limit. After all, you could be sued for your net worth!

Personal Injury

Personal Injury coverage pays for damages associated with the following injuries:
  • Shock/mental anguish
  • False arrest/false imprisonment
  • Wrongful entry or eviction
  • Libel, slander, or defamation of character
The Personal Injury coverage limit is usually the same as the Personal Liability coverage limit. However, Personal Injury coverage is not automatically included on all Homeowners Insurance policies (though in my professional opinion, it should be!).

If you are purchasing a home that you'll be renting to tenants, ensuring that your policy includes Personal Injury coverage is important.

An example of a Personal Injury coverage claim is as follows:

In 2010, parents in Northern California were sued by a high school teacher for damages in the amount of $10,000,000. The claim arised because their daughter was posting negative remarks on Facebook about the teacher, who claimed that the student caused significant damage to her professional career.

Medical Payments

Medical Payments coverage pays the necessary medical expenses up to the policy limit for injury to anyone except you or a family member. These expenses must be the result of an accident that:
  • occurs at your home,  or at the steps, driveways, or sidewalks immediately adjoining your home
  • is caused by a member of your household
  • is caused by animal owned by or in the care of a member of your household
Medical Payments includes reasonable charges for first aid, medical, surgical, and hospital expenses. More importantly, Medical Payments coverage includes charges for items not generally covered by or limited by Health Insurance, including funeral, dental, and rehabilitation expenses.

Medical Payments coverage is no-fault coverage, so you do not need to be found liable in order for the coverage to apply. Having sufficient Medical Payments coverage can often deter a lawsuit against you, which is a definite advantage!

For example, if a guest at your home trips on your sidewalk and suffers a broken arm resulting in $10,000 of expenses, Medical Payments coverage would pay for the expenses associated with the injury up to the limit on the policy. If your Homeowners policy has only $1,000 of Medical Payments coverage, the injured party would likely need to file a lawsuit against you to collect the additional $9,000 to cover the damages.

Most Homeowners Insurance policies for homes in Burlingame, Hillsborough, and San Mateo can provide Medical Payments coverage of at least $5,000 and up to $50,000. So buy the highest Medical Payments coverage limit possible - it's inexpensive and valuable!

This guest post is part of the series Uninsured – Tips to Protect Yourself Using Insurance written for the Burlingame Properties blog by Meghan O’Neill Hanson. Meghan is a personal insurance expert at MacCorkle Insurance Service in Burlingame and works with clients throughout the peninsula. She has worked previously as a CPA at PricewaterhouseCoopers as well as at the private equity firm Kohlberg Kravis Roberts & Co (KKR). Meghan is a Bay Area native with roots in thoroughbred horseracing throughout Northern and Southern California.

Meghan's other helpful articles:

Homeowners Insurance Coverages - Other Structures, Personal Property, & Loss of Use

Homeowners Insurance Policy - Property Coverages - Part 1: Dwelling Coverage

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