I’ve Been Sued. Will my Insurance Cover it?
A lawsuit is filed every two seconds in the United States. If you think big businesses or wealthy individuals are the only ones targeted, think again. All homeowners can be found liable for damages if a person is injured on their property. With the average settlement around $90,000, losing a lawsuit can quickly result in financial ruin if you don’t have the right insurance.
Liability Coverage Basics
Most homeowners insurance policies contain several different types of coverage, including damage to your house, personal property, and personal liability. The standard policy limit for personal liability coverage is $100,000. This covers your legal expenses as well as damages and medical expenses to the affected party if you’re ever sued and found responsible for damages.
If the damages or judgment against you exceed the limits of your policy, you will be responsible for the remaining amount. Some lawsuits, especially those involving serious injuries, can be extremely expensive. For additional protection, you could increase your policy limits or purchase umbrella coverage, which is optional coverage that kicks in if a lawsuit extends beyond your policy limits.
What Your Homeowners Insurance Covers
All insurance policies are different, so read the fine print or contact your insurance agent to find out exactly what your policy covers. As a general rule, however, most policies cover lawsuits and expenses resulting from a number of situations, including:
• Dog Bites — Over one-third of all homeowners insurance liability claims were the result of dog bites, with a $27,862 average settlement. If your dog bites a guest on your property or breaks loose and bites another person or pet, most policies will cover damages.
• Injuries on Your Property — You could be found liable for injuries on your property if they result from negligence. This could include tripping on a large crack in your walkway or falling down broken stairs.
• Accidents Away From Home — One of the nice things about homeowners liability coverage is that it follows you away from home. For example, if you’re on a sightseeing tour on vacation and accidentally ride your bike into another person, your insurance will cover their medical expenses.
• Damage to Other People’s Property — Let’s say you’re visiting a friend, and your toddler spills grape juice all over your friend’s $50,000 Persian rug, ruining it. Your homeowners policy will cover the replacement cost.
What Homeowners Insurance Won’t Cover
In certain situations, your liability coverage won’t cover the costs if you’re sued. Some of the most common liability exclusions include:
• Certain Dog Breeds — In nearly every state, insurance companies are allowed to exclude certain breeds they consider the highest risks from coverage. Some companies may refuse to insure you altogether, while others will simply exclude all claims related to the dog. Check your provider for more specific information.
• Damages Caused by a Vehicle — Your auto insurance policy will cover damages caused be vehicles, even if it occurs on your property. For example, if you’re backing out of your driveway and run over your neighbor, your homeowners insurance policy will not cover medical expenses or damages.
• Accidents Occurring While Conducting Business — If you have a home business, you will need separate business insurance to cover liability. As an example, if you have a home-based salon and a client slips in a puddle of shampoo, breaks her ankle, and sues you, your homeowners policy will not cover the costs.
• Intentional Acts — Insurance will not cover damages or injuries from acts that are considered intentional, willful, or malicious. For example, if your teenager spray paints graffiti on someone’s garage, you’ll have to pay for damages out of your own pocket.
When to Hire a Lawyer
Dealing with insurance companies, especially when litigation is involved, can be confusing at best. In some cases, you’ll want to rely on the expertise of an attorney as you battle your lawsuit. Consider hiring a lawyer when your claim was denied, if you’ve been sued for an amount that exceeds your policy limits, or you don’t think you’re responsible for damages.
The liability coverage on your homeowners insurance policy could save you from serious financial trouble if you’re ever sued. If you’re worried about the limits of your policy, or you’d like to find excellent homeowners insurance, contact us today. Our agents can help you find the perfect policy—and the peace of mind it brings.
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