Buying Insurance

Lesson 3: Homeowners and Renters Insurance

Homeowners Liability

The final part of homeowners insurance is liaability insurance. This protects you and members of your immediate family in the event that someone should be injured on your property or that you do physical damage to the property of others. The Culligan man who tumbles down your basement steps because of a rollar skate carelessly left there, or your son's baseball goes through your neighbor's window and shatters a $1000 dollar Chinese vase are some examples of instances where your homeowners liability insurance would come into play. In addition to the standard homeowners liability insurance you may wish to consider two additional coverages. The first is a "personal injury" addition(insurance jargon:endorsement)to your homeowners insurance policy. This adds personal injury to the bodily injury part of your liability insurance. Personal injury means claims arising out of issues like false arrest, malicious prosecution, libel, slander or defamation of character, invasion of privacy, wrongful eviction or wrongful entry. If you are engaged in volunteer work or gratuitous civic or public service activities, this can be a vital addition to your insurance. The second addition you may wish to consider is a "personal liability umbrella" policy. This is self descriptive. This is insurance which is over and above, like an umbrella, the dollar limits of your homeowners liability insurance. The dollar limits of the liability umbrella are usually $1,000,000 or $2,000,000. This umbrella can be significant if you have high value assets such as expensive real estate, a valuable stock portfolio, or high value collectibles which could be at risk in an expensive lawsuit.(Buyer beware: dogs and swimming pools involve additional liability risks. Consider higher liability limits and make sure that you are in compliance with company requirements regarding fencing, etc.) Some strategies for dealing with Homeowners Liability exclusions are outlined by Hungelmann, pp. 115-127.

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