Homeowners Policies and Liability Exposures
Personal Liability, Medical Payments and Personal Injury: Does your Homeowners policy provide protection for these 3 exposures?
While most standard Homeowners policies include coverage for your dwelling, other structures, personal property and loss of use, Personal Liability, Medical Payments and Personal Injury may or may not be included. The Personal Liability component can provide coverage for those bodily injury and property damage claims (other than vehicular related) for which you are liable thus helping to protect you against large financial losses. The minimum standard liability limits found on homeowners and renters policies generally start at $100,000 with optional limits up to $1,000,000 or higher depending on the type of policy you have ( HO3 or HO5). Most policies cover the costs of defending you in court in addition to the damages awarded by the court(s) up to your policy limit. The defense coverage ceases once the damages have met the policy liability limit.
Examples of claims filed under the Personal Liability coverage can include:
- Dog Bite Claims: Your dog bites a guest or neighbor causing bodily injury.
- Your son/daughters friend falls off the bunk beds in your child’s bedroom while spending the night or playing causing bodily injury which requires medical attention.
- A friend slips and falls down your stairs which causes injury and lost wages while recovering.
- While hosting a pool party one of your guests sustains injuries while swimming in your pool.
Personal Liability coverage also extends to some events that occur outside of your insured location. Examples of other potential covered loss might include:
- While playing golf you swing your club striking the person next to you in the head causing bodily injury and lost wages.
- While Skiing/Snow Boarding down your favorite slope you fall and hit another skier injuring them and requiring medical treatment.
- While on vacation you accidentally leave a candle burning in the hotel room which ignites the draperies resulting in significant property damage to the hotel room.
- Your son /daughter injure another person while playing basketball with a group of friends.
What isn’t covered under the Homeowners Personal Liability coverage is:
- Liability resulting from an automobile accident. Auto related exposures are covered under your auto insurance.
- Bodily injury or property damage caused intentionally by you or a family member in your home.
- Injuries or damages sustained by you or a family member in your home.
- Business activities or claims related to your profession or in home business.
Carrying adequate Personal Liability Limits is perhaps the most commonly passed over coverage on the Homeowners policy. The cost to protect yourself is more reasonable than you might think and the coverage is invaluable in the event of a claim which you are held liable. Depending on where you live, your state laws may allow the court to attach your wages and assets (current and future) until restitution is made to the injured party. In most cases there is no time limitation for restitution payments leaving you with the possibility having your wages attached for years to come. Still think you don’t need to carry adequate liability limits just because your current wages and assets are negligible? Think again, you are definitely at risk regardless of your current financial status.
The Personal Liability component of the homeowner’s policy can also include no-fault “Medical Payments” to others. Medical Payments can cover minor medical bills if someone other than a household member or resident is accidentally injured in or on the insured location as a result of activities of the insured, resident employees of the insured or by an animal owned by or in the care of an insured. Medical payments coverages range from the base limit of $1,000 with optional limits up to $5,000 and possibly higher depending on the type of policy form you have (HO3 or HO5). Medical payments are not based on the law of negligence; no negligence on the part of an insured has to be proven for payments to be made.
Examples of claims filed under the Medical Payments coverage can include:
- A guest trips and falls on your walkway sustaining injuries which require a trip to the doctor, urgent care or local emergency room to assure no bones are broken or further care is required.
- Your child’s friend is injured while playing with your child in the backyard requiring stitches.
- Your dog accidentally trips a guest resulting in injuries which require further medical treatment.
The costs to increase the Medical Payments coverage to the maximum limits offered are very reasonable and thus frequently recommended by insurance professionals. Be sure to ask your Certified Personal Risk Manager or Personal Insurance Advisor to review your Medical payments coverage and provide options for enhancing your policy as indicated.
While Personal Liability and Medical Payments coverages are typically included in standard Homeowners Policies, Personal Injury Coverage is not. Personal Injury coverage is perhaps the most miss understood coverage today and one of the most extensive exposures that we all face. Personal Injury is the result of something one does/says which causes another person metal anguish, humiliation or embarrassment or something one says that another party considers slanderous. With the increased use of technology including smart phones, email, texting, tweets, Instagram, Face Book etc. parents can find themselves one text, photo or tweet away from a Personal Injury claim filed against them and their children. Most of us would agree that at some point we have either received an email from another person which was considered funny and/or proceeded to forward the email on to additional contacts and so on. Emails that are forwarded to others that involve another person which could be considered inappropriate and cause embarrassment and anguish to that person and depending on the circumstance could lead to a Personal Injury claim against all that participated in the email chain. Personal Injury claims can also be the result of slander, invasion of privacy or wrongful eviction. Please be sure to check with your Certified Personal Risk Manager or Personal Insurance advisor to determine if your policy includes Personal Injury coverage and if not do you have the option to add the Personal Injury endorsement for additional premium. The cost to endorse a standard policy is typically $30 or less annually. Remember, just because your policy may include Personal Injury coverage it does not give you the right to intentionally cause anguish, harm or embarrassment to another or to intentionally slander someone.
So, how much liability coverage do you need? Selecting the appropriate amount of Liability Coverage varies from person to person depending on your financial status, assets and exposures. If the underlying limits offered on your homeowner’s policy are not adequate additional coverage can be obtained by purchasing a Personal Liability Umbrella policy. Umbrella policies provide excess liability coverage over and above the underlying limits on your homeowners, auto, and watercraft and motorcycle policies with coverage limits ranging from $1,000,000 up to $100,000,000. Personal Liability Umbrella policies will be discussed in more detail in a future article. Be sure to discuss your liability exposures with your Certified Personal Risk Manager, Personal Insurance Advisor, CPA and/or Financial Advisor.
Kimberly Nager, CPRM, CISR