Spring and summer are popular seasons for family gatherings. From graduation parties to weddings to family reunions, it’s a common practice for the host family to rent a hall or a park pavilion. As a host family, you may not have enough space at home and/or may find it easier to hold the party elsewhere – less preparation and mess at home! However, transferring the party from your home to the rental means you are transferring a liability as well. Will liability coverage from your homeowner policy extend to the rental location?
Good news! There is coverage under the homeowner policy for this type of situation. The homeowner policy considers “Any part of a premises occasionally rented to an insured for other than business use to be an insured location.” The homeowner policy does not, however, extend coverage to the owner of the rented property. It only extends the insured’s personal liability coverage to the rental location.
Many party venues that offer rentals require proof that the host carries at least a $1 million personal liability limit! Wow, sounds like a lot, right? Unfortunately, the more litigious our society becomes, the more necessary a $1 million limit is.
With the homeowner policy automatically extending personal liability, it solves all or part of the required limit, but how do you obtain the $1 million liability limit? It’s not as difficult as one would think. Some companies offer personal liability limits up to $1 million on their homeowner policy. However, there are many companies that only offer liability limits up to $500,000. A viable solution would be a personal umbrella policy. A personal umbrella policy extends liability coverage above the underlying homeowners personal liability limit. To demonstrate:
| Rental Requirement | $1,000,000 | |||
| Homeowner Personal Liability Limit | – $500,000 | |||
| Gap in coverage | $500,000 | |||
| Personal Umbrella Policy | $1,000,000 | |||
| Homeowner Personal Liability Limit | – $500,000 | |||
| Filling the Gap in Coverage | $500,000 | |||
$500,000 Homeowner Personal Liability Limit + $500,000 Personal Umbrella Limit = $1,000,000
Oh happy day! You will save wear and tear on your home by holding the party elsewhere and with coverage extending from your personal lines policies, both homeowners and umbrella, you’ll have peace of mind that you’ll be protected from party rental risks! Watch the video above to learn more about the Personal Umbrella Policy!
The coverages described here are in the most general terms, and are subject to the actual policy conditions and exclusions. For actual coverage wording, conditions, and exclusions, refer to the policy or contact your agent.
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