This is part two of our post answering the question, “How much home insurance is enough?”
The next coverage on your home insurance policy is Coverage E – personal liability. Under this section, you are personally protected against the financial responsibility of a lawsuit if you are at-fault for injury to another person or damage to their property. This can include accidents that happen at your home or while you are traveling away from it. Outside of certain circumstances, such as boating and car accidents, personal liability coverage generally follows you and your household members wherever you may go.
We typically recommend a minimum of $100,000 to $300,000 of personal liability coverage since you are personally responsible for any damages that exceed the limits of your policy. Without adequate limits, any excess damages could threaten your personal savings, investments, and assets, as well as your future income and wages.
The Cost of a Lawsuit
As an independent insurance agency, our team knows firsthand the impact a personal liability lawsuit can have on a family. Often, damages reach tens or even hundreds of thousands of dollars to cover the cost of property replacement, medical bills, lost wages, emotional trauma, legal expenses, punitive damages, and more. For example, Wisconsin ranked eighth in the U.S. for dog-related injury claims during 2015. Nationally, the average cost per claim was more than $37,000, although it could cost you much more than that to compensate a victim for a severe injury.
Additional examples of personal liability damages include:
- Damages to a hotel room
- Injury due to a bicycle accident
- Slip-and-fall accidents on your property
The next section on your insurance policy covers medical payments for accidental injuries that happen on your property. This coverage would pay benefits even if you did not show negligence or have any fault in the incident. Limits are usually low – between $1,000 and $5,000. However, this is often enough to cover a health insurance deductible, stitches, some x-rays, or a doctor’s visit for minor injuries. Though you may still have liability for the accident, having this coverage could also help to deter a lawsuit.
Endorsements are add-ons to your home insurance policy that allow you to customize your coverage better to meet your needs. Endorsements can provide extra benefits for claims or extend coverage to include additional loss events not covered under a standard home insurance policy. We typically recommend adding only the endorsements that will help mitigate specific risks you may be vulnerable to.
For example, most homeowners can benefit from additional coverage for water backup and sewer. Likewise, many homeowners prefer to increase their coverage with inflation guard protection for their dwelling or a replacement cost endorsement for personal belongings. On the other hand, some endorsements are only suitable for specific needs. Examples include endorsements for home business coverage, as well as scheduled coverage for high-valued physical assets.
Beyond Home Insurance
Even with a well-tailored home insurance policy and high coverage limits, you may still need supplemental protection for extreme loss scenarios. We often recommend purchasing umbrella insurance to provide secondary protection against personal liability. With this coverage, your home insurance or other primary liability coverage pays for initial damages up to the limits of the policy. Any damages that remain are then covered by the umbrella policy, which usually carries a high coverage limit of $1 million or more.
Contact an agent here at Mayville Insurance for more information about umbrella insurance and how as little as $200 per year could better protect your income and assets against litigation.