When discussing and rating homeowner insurance policies, personal liability coverage is often an afterthought. Insurance companies and insurance agents don’t always take the time to explain what it is and what it covers. Don’t fall into the trap of thinking personal liability coverage isn’t important. It most certainly is!
For starters, let’s look at the types of claims that are potentially covered by this part of the homeowner insurance policy: bodily injury claims and property damage liability claims. It is quite common to see personal injury coverage added to personal liability coverage via endorsement, as well. For the sake of discussion, we will include personal injury coverage with the other liability coverages we mention.
So, what exactly does this cover? Let’s say you attend a concert or sporting event and as you are leaving your seat you accidentally trip someone. The person suffers injuries resulting from the fall down the stairs. This could result in a bodily injury liability situation.
Or, let’s say you have guests over to your home and your dog becomes spooked and nips at the hand of one of the guests. Provided your homeowner policy doesn’t have a dog bite exclusion on it, this would potentially be a covered bodily injury liability claim too.
Now let’s move on to the property damage component of coverage. This isn’t coverage for your property. Rather, it covers damage to someone else’s property that you or your family members cause. For example, if your child accidentally hits a baseball or golf ball through the neighbor’s window, that would be considered a property damage liability situation.
Lastly, let’s take a look at personal injury, which is easy to confuse with bodily injury since the “personal injury” attorneys you see on TV or hear on the radio are soliciting bodily injury cases. In insurance terminology, “personal injury” most often refers to one of the following:
- Slander; or
- An oral or written publication that violates another person’s right of privacy.
In today’s world of social media, this particular insurance coverage can quickly come into play. Too often, people post their thoughts and feelings on social media without giving much thought to potential repercussions. A simple review or complaint about the products, goods, or services from a business could turn into a lawsuit if the business alleges unwarranted reputational harm and/or loss of business as a result of the online post.
One more important idea to consider: A simple way to enhance your bodily injury, property damage, and personal injury liability coverages is to purchase a personal umbrella policy. “Umbrella” policies supplement your underlying auto and homeowners liability coverage limits with additional protection of $1 million or more. And that additional peace of mind comes at a very reasonable monthly cost.
In summary, make sure that you are comfortable with your personal liability limits of insurance. Don’t treat that important protection as an afterthought when you are obtaining a new homeowner insurance quote or reviewing the program you currently have in place. Liability limits and coverages can be added easily, and they often come with a nominal price tag. For good measure, add an umbrella policy for an extra layer of liability protection that is in excess of your homeowner policy personal liability limit!