If you take out a homeowners insurance policy, it will most likely include at least $100,000 in liability coverage. You will have the option to purchase additional coverage for a higher premium.
You may think that the minimum amount is plenty and that you don’t need to spend more money for extra coverage. In fact, the minimum may not be enough, and it would be wise to pay a little more for additional protection.
How Your Homeowners Insurance Policy’s Liability Coverage Can Protect You
If someone visits your home and gets hurt, your homeowners insurance policy’s liability portion can cover medical bills, legal fees, the cost of a settlement and other related expenses. If your dog bites someone and your pet is covered by your homeowners insurance policy, it will cover associated costs. Your liability coverage will also pay for repairs or replacement costs if a member of your family or your pet damages someone else’s property.
Why the Minimum Amount of Coverage May Be Inadequate
People often think that $100,000 is a large sum of money but don’t realize how expensive medical bills can be. Some types of injuries can require surgery, physical therapy and long-term care, and can leave an injured person unable to work. If an individual gets seriously hurt on your property and you only have the minimum amount of liability coverage, that amount can quickly be exhausted.
Once expenses related to an accident have exceeded your coverage limit, you will be responsible for other costs if you don’t have additional insurance coverage. The injured person can sue you, and you may lose your house, savings, business and other assets.
How to Get the Right Amount of Coverage
Your homeowners insurance company likely offers several amounts of liability coverage. Talk to your agent about your level of risk and ask how much your premiums would be for various amounts of coverage. Shop around and compare rates from different insurers. You may be able to switch companies and get more coverage with little change in your premiums.
You may want to consider an umbrella policy. It will provide additional coverage that will kick in if you exhaust the coverage in your primary policy. If you have significant assets, having an umbrella policy can give you peace of mind.
Umbrella insurance can be particularly important if you face a higher-than-average risk of having someone get injured on your property. For example, umbrella insurance may be a good idea if you frequently host large parties or employ household workers.
Speak With Your Insurance Agent
You should check in with your insurance agent from time to time to discuss your current coverage and circumstances and to figure out if you should make changes. If you and your agent conclude that you need additional liability coverage, find out how much it would cost to raise your limit and decide whether an umbrella policy would make sense for you. Compare quotes from several companies to find the most affordable option.
