Celebrate Safely this Summer: Three Things to Know About Liability Coverage

Summer is almost here! With summer comes cookouts, parties and gatherings, as well as increased risk of fire, pool or grilling mishaps, fireworks-related accidents and more. If you plan on celebrating or entertaining guests at your residence, you should consider how your homeowners’ or renters’ policy liability coverages will respond in the event of an unfortunate incident.

Here are three things you should know about the insurance needed for liability protection.

#1 What Does the Liability Portion of Homeowners’ or Renters’ Insurance Cover?

The liability portion of a homeowners’ or renters’ insurance policy protects the homeowner or renter against injury or property damage claims filed by others, including friends, neighbors or other guests; (essentially anyone who is not a member of the insured household), up to the policy limit of liability.

The injury or property damage must result from an allegation of negligence and not due to an intentional act on the part of the insured.

Other homeowners’ and renters’ policy liability coverage exclusions could apply if the injury or property damage occurs due to motor vehicle, watercraft, hovercraft, or aircraft liability, to name a few.

#2 How Much Should Liability Coverage Cover?

Depending on the homeowner’s or renter’s appetite for risk, amount of assets and lifestyle, I recommend a minimum of $300K to $500K in Liability Coverage (Coverage E under your homeowners’ policy).

However, if you love to host and entertain guests in your home, there’s a greater likelihood of someone getting injured. You may want to consider higher liability limits or even a $1 to $2 million umbrella policy as part of your broader liability insurance coverage strategy. An umbrella insurance policy is a supplemental coverage product that provides additional personal liability coverage limits. An umbrella policy also provides widened coverages for allegations of libel and slander and covers claims in excess of regular homeowners, renters, auto, or watercraft policy coverage limits.

#3 Is There Additional Coverage I Should Consider?

Lastly, as part of your homeowners’ or renters’ policy, there is also medical payments coverage under Coverage E, which carries a separate coverage limit. Medical payments provide a “goodwill” coverage designed to pay for medical expenses to others who are accidentally injured at an insured location, regardless of whether the insured is negligent or not. I recommend homeowners carry a minimum of $5,000 to $10,000 in medical payments coverage.

If ever in doubt about what types of liability or medical payments coverages your homeowners’ or renters’ policy insurance provides and what potential exclusions or limitations exist, speak with a representative from your insurance carrier or insurance agent’s office to ensure you are well protected based on your risk profile and assets.