Property Liability Insurance Vs. Home Insurance

Homeowners insurance is something that every homeowner either has or should have, with the exception being those who are so wealthy that the loss of their home would have no serious effect on their financial situation. Anyone paying off a home mortgage is likely required by their mortgage lender to have a homeowners insurance policy because this is what protects the lender's financial interest in the home, ensuring that if the home is damaged or destroyed, it's protected by adequate insurance coverage.

What Homeowners Insurance Covers

Homeowners insurance typically covers three areas of potential loss:

1. Damage or destruction of the physical dwelling and other structures, such as garages, sheds and fences. This damage or destruction must be the result of a specific peril outlined in the homeowners policy.
2. Personal property that is damaged or destroyed as the result of any of the same perils covered under the dwelling coverage in the policy.
3. Personal liability coverage protects you in the event that you or someone in your household is sued as the result of property damage or bodily injury caused to a third party. This part of your homeowners policy will help pay the costs of defending you in a lawsuit, even if the matter is settled out of court.

Sometimes You May Need More

While your homeowners insurance policy has a section that provides you with a certain amount of liability insurance, it should be understood that any and all claims against that policy will only be paid up to the policy limits set forth in the contract. As an example, let's say you have a backyard trampoline and one of your neighbor's children has an accident and breaks his neck. The medical costs for this injury plus a potential lifetime of this child being confined to a wheelchair could amount to a judgment equaling millions of dollars. This amount will surely be significantly more than the liability coverage limit in your homeowners policy.

One solution to this problem is to take out a property liability policy to address any particularly high risk situation you have on your property. A backyard swimming pool likely puts you into this high-risk category.

Another strategy you can use to cover your excess liability risks is to take out a PUP (Personal Umbrella Policy). This coverage works in conjunction with not only your homeowners but also your vehicle insurance. Consult with your agent.

2 Things to Know About Personal Liability and Your Home and Auto Insurance

We Americans live in a “litigious society,” meaning lawsuits are a common occurrence. With approximately 15 million civil cases being filed in the U.S. annually, it's no wonder 80% of the world's lawyers live here. This is where the business is!
Unless you're a doctor or involved in some other risk-sensitive profession, your chances of being sued may not seem great, but the number of frivolous lawsuits seeking compensation for doubtful damages continues to climb. Consider the following:

• A man in CA sued the owners of a stadium for $5.4M because he felt uncomfortable using the unisex toilets at the venue!
• A Florida couple sued a guide-dog school because one of their graduates leading a blind man around a mall “allowed” the man to step on the woman's toe!
• A woman in New York using the well-known “clapper” to turn her lights on and off sued the company because of injuries sustained from clapping too hard!

Fortunately all of these lawsuits were thrown out due to lack of merit, but many more not considered frivolous were successfully litigated. By far, the greatest percentage of civil lawsuits are the result of automobile accidents. Damages awarded from these cases can be astronomic. Two notable instances include a Texas case where the verdict granted an award of $21M and a California case that paid the plaintiff $49M.

What About Your Auto Insurance and Home Insurance Greensboro Policies?

1. While it's true that the auto and home insurance Greensboro residents carry both include a certain amount of liability coverage, the limits on these policies are typically extremely limited. The State of NC, for example, only requires liability coverage of 30/60/25 on your vehicle insurance policy. Any damages you cause in excess of these minimum limits will fall to you, which means you'll likely be facing a lawsuit.

Homeowners Coverage

2. Your homeowners insurance policy likely has significantly higher limits than your auto policy, but when lawsuit judgments extend into the millions even a $500,000 liability limit isn't enough. The only logical (and affordable) solution is to invest in an umbrella policy, sometimes called excess liability coverage, that kicks in as soon as your regular liability coverage limits are met. A good umbrella policy could easily save you from a total loss of your assets. Most people are under-insured in their liability protection. Umbrella coverage is affordable, even with coverage limits of $1M or more.