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Liability Insurance under Your Homeowners Policy

Are you covered by insurance if your dog bites a neighbor? How about if your tree falls on a neighbor's fence? And what if you're sued when someone slips and falls on your front walk? You can find the answers to these and other questions in the liability section of your homeowners policy.

The second part of your homeowners policy focuses on liability. Here, you're covered for bodily injury and property damage suffered by others in connection with your property. There are two types of liability coverage: personal liability coverage and medical payment coverage. You should understand the types of coverages, the exclusions from coverage, and the conditions that must be satisfied before liability coverage applies.

Personal liability coverage pays damages to people injured by you or your property

Most homeowners policies provide a standard amount of liability coverage (usually $100,000) per occurrence, but you may be able to increase this amount. If you or another insured are found responsible for someone else's bodily injury or property damage, your personal liability coverage may kick in and pay the damages. If an injured or damaged person brings a lawsuit, your insurance company may also pay to defend you or any other insured named in the lawsuit. You should note, though, that you're typically covered only for negligence (carelessness); you aren't covered for intentional injuries and damage.

The liability part of your homeowners insurance covers you both at home and away. It also covers those family members who live with you. It protects you against many types of accidents and occurrences, including slip-and-fall injuries on your property, dog bites to the letter carrier, and damage done to your neighbor's siding by your son's baseball. Read your policy carefully to find out what's covered.

Medical payments coverage pays an injured party's medical bills

If all conditions are met and no exclusions apply, your insurance company will pay the necessary medical expenses (for up to three years) of someone injured on or through your property. This coverage doesn't apply to your own medical expenses and the medical expenses of your household residents, except for your household employees. Injuries that take place away from your premises are also covered, as long as you, another insured, a household employee, or your pet caused the injury.

Medical expenses may include reasonable charges for medical, surgical, X-ray, dental, ambulance, hospital, and professional nursing services, as well as prosthetic devices and funeral services.

What about exclusions from coverage and conditions of coverage?

The liability insurance section of your homeowners policy also contains an exclusions section that denies or precludes coverage in specific instances. These exclusions are listed and described. For example, your homeowners policy won't cover damages caused by your car. In addition, liability coverage doesn't apply to injuries or damages arising from business or professional activities (including those related to a home office), to injuries or damages intentionally caused by you, or to injuries suffered by members of your household.

Your insurance policy will also list the conditions you must satisfy before coverage will kick in. For instance, you'll probably be required to provide written notice to your insurance company of any covered occurrences. You'll also be obligated to promptly forward any notice, demand, or summons related to a claim.

Make sure you read all exclusions and conditions carefully. If you don't understand a particular point, ask your insurance agent.

If you need more liability protection, consider a personal umbrella liability policy

If you need more liability protection than your homeowners policy offers, consider purchasing a personal umbrella liability policy. This type of policy can significantly expand your liability coverage by providing a liability limit above that contained in your homeowners policy. Without adequate liability protection, a large judgment against you could cost you your assets, as well as your potential future earnings and inheritances. Most insurers who write home insurance policies also sell personal umbrella liability policies.