This is part two of our post answering the question, “How much home insurance is enough?”
Coverage E – Third-Party Damages, Injuries, and Losses
If you or a member of your household is responsible for injuring another person or causing accidental property damage, you can be sued for third-party losses. Coverage E on your home insurance policy is protection against most types of personal liability with a few exceptions for certain types of incidents, such as boating or car accidents. It covers you against incidents occurring on your property and also follows you when you travel away from home.
How Much Will a Lawsuit Cost You?
It is impossible to predict the future, but you can always be prepared for it. While liability claims are handled on a case-by-case basis, the average cost of claims in many categories is higher than ever before. The average cost for a dog bite claim, for example, is now nearly double what it was in 2003, reaching more than $37,000 per claim. Other incidents could cost you much more, particularly if they result in disfiguration, disability, or accidental death.
We typically recommend that homeowners purchase high liability coverage limits, as doing so helps to protect your income and assets against litigation. Without adequate coverage, you may be ordered to pay for any excess damages beyond that which is covered by your policy, even if that means making payments from future income. That is why many homeowners choose high limits of at least $100,000 to $300,000, although an agent here at Carrigan Insurance can help you determine how much is right for you.
Coverage F – Medical Payments
The next section on your home insurance policy is coverage for medical payments. This includes payment for medical bills stemming from accidental injuries occurring inside your home or on your property regardless of fault. Often, medical payments coverage is just enough to help pay for a trip to the doctor or to cover a health insurance deductible. You can choose your medical payments coverage, which is typically between $1,000 and $5,000.
Endorsements are an important, but optional part of your home insurance policy. There are many different types of endorsements that can be used to personalize your home insurance coverage and reduce your exposure to risk. Our team can help you assess your individual needs and determine which endorsements may be right for you.
Some types of coverage are generally recommended for all homeowners, such as water backup and sewer coverage. We also recommend considering a ‘personal property replacement’ endorsement to assure reimbursement for your possessions based on the cost to purchase them new – not their depreciated value. Other endorsements may be more suitable for only certain homeowners, such as scheduled coverage for high-value belongings or additional coverage for inventories and items involved in a home business.
Beyond Home Insurance
Even the highest personal liability limits on your home insurance may not be enough to protect you against a major lawsuit. While high-limit liability coverage covers most incidents, some far exceed it, leaving homeowners with hundreds of thousands or even millions of dollars in excess financial liability. For these circumstances, many homeowners choose to purchase an umbrella policy, which typically provides supplemental liability protection of $1 million or more. At an average of $200 per year or less, this is an affordable way to protect your income, assets, and financial future. For additional information about the benefits of adding an umbrella policy to your insurance portfolio, contact our office today.