Property Liability Insurance: What Isn’t Covered?

Property owners routinely purchase standard liability insurance coverage to protect them from costly lawsuits. Whenever someone is harmed in your home or on your land, they, or their insurance company, can pursue you for damages. If a neighbor trips on your loose front step or your dog bites their leg, they can sue you for medical costs, lost wages, and pain and suffering, which often adds up to a substantial amount.

As a result, you cannot consider liability insurance as optional. In fact, your mortgage company will require that you carry a certain level of this insurance as a part of your homeowners policy. However, just having a standard insurance policy will not protect you from all lawsuits, especially if you do not follow the policy provisions. You need to analyze your current coverage to see if you are properly covered, and if not, purchase additional coverage.

Standard Liability Coverage

When it comes to liability coverage, you should purchase as much as you can comfortably afford. At a minimum, you should have $100,000 worth of coverage, although $300,000 is a better choice. Of course, $500,000 would be even better since medical bills for a serious injury can easily reach that level in this age of soaring health costs. What do you get for your investment? Standard property liability insurance coverage usually covers the following situations: 

• Home Accidents: You are liable if either an invited or uninvited person comes onto your property and is injured. 

• Domestic Workers: You are liable if your landscapers, house cleaners, or nannies are injured while they are working for you.

• Falling Trees: You might be considered liable if one of your trees falls and injures a person or causes property damage.

• Intoxicated Guests: If you have a guest who becomes intoxicated at your home, you might be liable if they hurt someone or cause property damage while inebriated.

• Dog Bites: If your dog bites someone on your property, you will be held liable. Your insurance policy should cover you in that instance, but it may not if your dog bites someone at the park or while on a walk (you need to check with your agent). And you may not be able to get standard liability insurance for some high-risk dog breeds such as pit bulls, German shepherds, and Akitas.

What Doesn't a Standard Policy Cover?

Standard home insurance policies vary to a degree, but most will not cover certain situations. Besides certain dog breeds, your insurance may not cover high-risk features such as: 

• Trampolines

• Treehouses

• Diving Boards

If your insurance policy covers these items, you will pay higher premiums because so many people are injured on them each year. Sometimes, insurance companies will not offer you homeowners insurance if your property has these items. Or the company may ask you to sign an exclusion, saying it will not cover injuries caused by these items. Your other option is to acquire a rider, or additional coverage, for these features. Not all companies will give you this option, however, so you may want to get rid of your treehouse or trampoline in order to get affordable coverage. 

Gun Ownership

Gun ownership complicates your liability coverage. Most policies cover your guns as they do any property up to a certain limit determined by your carrier. Although guns are expensive, the limit is often $5,000 or less. If someone steals, destroys, or accidentally discharges your guns, your policy will probably cover you. 

Your premiums will not be higher simply because you own guns, but you should consider purchasing additional liability coverage through a rider or separate firearm policy. Firearm liability becomes more complicated if you injure someone.

When you shoot someone in your home, even in self-defense, your standard policy will not cover you because policies exclude intentional shootings and shootings that occur during a crime. So any physical injuries and property damage due to an intentional shooting are not covered. In addition, If you miss your intended target, any damage or injury you cause is still outside of your policy. But if you accidentally shoot your weapon while cleaning it, your company will probably cover the damage. In short, standard liability covers guns as property. Companies also cover accidental discharge. When you use guns as weapons, legally or not, companies will not protect you under a standard homeowners policy.

Umbrella Policies

If you have concerns about your liability coverage, you should consider buying an umbrella policy from your insurance agent. These policies, which are usually quite affordable, allow you to buy a high level of coverage that goes beyond your standard homeowners policy. 

How It Works

You must have a homeowners policy in place before you may buy an umbrella policy. Umbrella policies only kick in after your homeowners policy maxes out. For instance, if someone hits their head on your porch and suffers a traumatic brain injury, the medical bills alone can easily exceed your policy limit. After you buy an umbrella policy, you would still need to pay your usual deductible. Then your homeowners policy would pay out up to its limit. If the judgment against you exceeds that amount, your umbrella policy would pay the rest, up to its limit. If your other insurance policies didn’t cover the incident, you would pay a self-insured retention fee (a different type of deductible), and the umbrella policy would pay the rest up to your limit. These policies typically are for a high amount, often $1,000,000 or more. 

Without an umbrella policy, you might lose all of your assets if someone sues you for damages. If the court issues a $700,000 judgment against you, your homeowners policy might pay out $300,000. The remaining $400,000 would then be your responsibility. 

Who Should Have One

You should consider buying an umbrella policy if you have high-risk properties or property items. Gun owners should definitely consider purchasing one since the chance of injury in their homes is so much higher. 

Umbrella insurance may be for you if your assets total more than your current liability limit. You should also purchase a policy if you rent out property, have household staff, own a hot tub, or regularly have big parties. If you are a public figure or simply have a lot of assets, you should invest in an umbrella policy. Plus, an umbrella policy covers you and all members of your family, no matter where you are in the world, with a few exceptions.

Limits of Umbrella Insurance

Umbrella insurance only gives you more liability coverage. If your property is damaged, it doesn’t kick in, no matter how high the repair bill. If you or a family member deliberately cause injury — say by hitting someone with a baseball bat — the carrier will not cover it. Also, if you have assumed certain liabilities by signing a contract, your umbrella policy does not apply. Finally, if you incur liability for business or professional activities, a personal umbrella policy will not cover it. Instead, you will need to purchase business liability insurance for protection.

Some companies will require you to have all of your insurance policies with them before they will issue an umbrella policy. You need to do your research before committing to any carrier.

Final Notes

Choosing insurance may seem complicated, but with the right help, you will find policies that give you excellent coverage in multiple situations. You have to carefully weigh your risk with your financial assets to determine what level of coverage you can afford. In this litigious society, your risk of being sued at some point is significant. Be prepared by investing in quality insurance. PolicyScout makes it easy to do your research on homeowners and umbrella policies. Contact us today for more information or a quick, easy quote.