Don’t Skimp on Liability Home Insurance Coverage

Pay particular attention to issues involving liability. This coverage protects your assets against lawsuits. Review the liability limits of your insurance policies. In the past most of the personal liability risks you faced probably came in some degree from your business or work. For most people, homeowners insurance coverage offers their main protection from non-work related personal liability. As you spend more time away from work, and as you accumulate more assets, your homeowners insurance policy assumes more importance as your primary liability coverage.

A standard homeowners policy provides $100,000 of home liability insurance. For a nominal increase in your premium, you can increase your coverage to $300,000 or more.

A standard HO-3 policy with $100,000 in liability coverage that costs $745 annually (in 1994) cost only $8 more with a liability limit of $200,000. It cost only $15 more to increase the liability limit to $500,000. But lowering your liability coverage will cost you more. By any measurement, the added coverage is a good deal.

Remove your adult children from your policy if they no longer live at home. Many people continue coverage for their children for too long. There are a couple of advantages to removing adult children from your policy. First, you will no longer be liable for their accidents (and those of their children). Second, they can buy the coverage that best meets their needs.

Liabilities created by children or grandchildren who live with older relatives make up a major portion of the homeowner insurance disputes that result in litigation. Especially problematic are situations where your relatives could be considered part of your ”household”, because they live in a house or apartment you own, or rent their living quarters from you.

You probably do not intend that the insurance on your home and belongings should be put up as collateral for the actions of your children or grandchildren. If a grandchild who rents your upstairs apartment causes injury to another person, is it fair that you could be held liable, just because you’ve purchased insurance on your home?