Personal Liability | How Much Coverage is Enough?

Personal Liability Insurance

What happens when someone is injured on your property and is suing you? This is where personal liability coverage comes into effect. There are many different levels to choose from with different insurance companies. Typically this will range from $100,000 to $1,000,000. The insurance company will provide an attorney of their choosing and will only pay to the amount that your policy declarations page has listed.

Claim Situation

The Johnson’s have a standard home policy in effect with a major home insurance company. They currently have their personal liability insurance coverage set to $300,000. The Johnson’s live near a high school and have a fenced in backyard to prevent students from walking through their lawn. Because of the proximity to the school many of the students hop the Johnson’s fence to cut-through to their school. A couple of weeks ago Johnny was running late to school and he hopped the Johnson’s fence to go through their yard. He tripped on a hole the Johnson’s dog had dug and broke his ankle. Johnny’s parents ended up suing the Johnson’s for $150,000 dollars for medical expenses and pain and suffering endured.

The Result

You may be thinking that the Johnson’s took appropriate action to keep intruders out of their yard therefore should not be responsible for the damages.

Wrong.

This is why it is so important to have personal liability insurance coverage in place with the appropriate limits. Regardless of fault, Johnny was injured on the Johnson’s property. The Johnson’s company was able to cover this claim.
It is important to know that not every situation in which you cause bodily harm will you be covered. Under no circumstances if the harm was caused intentionally will the claim be covered. If you injure someone in a bar fight, you can not claim this on your homeowners insurance.
This coverage is similar to but not quite the same as a personal umbrella policy. An umbrella policy essentially will raise all the limits throughout your collection of polices. For more information regarding umbrella policies check out the Personal Umbrella Policy page.

Recap

So how do you decide how much coverage is enough? Well this purely depends on your own financial situation. Do a quick evaluation of your assets. What do you own? You want to make sure you have at least enough coverage to protect your home, cars and business. Personal liability is extremely important and typically inexpensive. Value vs. expense, this coverage is worth it to max out.