Homeowners Liability Coverages
Liability Exposures...The Homeowners Liability section is a most important part of a homeowners policy. Individuals face many direct and indirect exposures to liability. A homeowner may be held liable for damages from his or her home or anywhere on the insured's premises. There are many instances when an insured is liable, such as, someone slips on your doorstep and is injured, your son or daughter breaks the neighbor's window with a baseball, a tree or limb fall and crushes your neighbor's car or bike, the family dog bites the mail carrier. In fact, an individual may be held liable for damages arising out of personal activities away from the home.
Personal Liability:
There are two major coverages of liability provided in the Homeowners policy;
Coverage E - Personal Liability covers damages that the insured becomes legally obligated to pay because of bodily injury or property damage caused by an occurrence to which coverage applies.
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Bodily injury means bodily harm, sickness or disease, including care, loss of services and death
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Property damage means physical injury to or destruction of tangible property, including loss of use
Coverage E applies to liability for bodily injury or property damage arising out of the insured's personal, non business activities that occur anywhere. Coverage E also applies to liability for bodily injury or property damage arising from the insured's locations. These include:
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The premises described in the policy Declaration
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Residences newly acquired during the policy period
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Locations where an insured is temporarily residing
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Vacant land owned or rented by the insured
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The insured's land on which a residence is being build
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Cemetery plots or burial vaults
A little known fact: You can be held liable for bodily injury, if someone given access or otherwise receives bodily injury while on land owned by you.
The policy also states that the insurance company will provide a defense for the insured at the insurer's expense, even when the charges are groundless. The insurer's duty to defend ends once the amount it pays for damages reaches the policy limit. This is a very important point to remember!
The standard liability limit provided for all bodily injury and property damage is $100,000. This includes any prejudgment interest awarded on any amount of a judgment the insurer is obligated to pay.
A Word of Advice: The cost of liability in a Homeowners policy is pennies on the dollar. For an additional few dollars yearly, you can increase your liability limit. I would estimate that $300,000 liability coverage would only cost an average of $10 - $12 more a year.
Coverage F - Medical Payments To Others pays all necessary medical expenses incurred within three years of an accident that causes bodily injury. This applies to injuries:
- Sustained while the injured party is on an insured location with any insured's permission; or
- Sustained while the injured party is off the insured location if the injury arises out of certain conditions:
- On the insured location
- On a location immediately adjoining the insured location
- Caused by activities of an insured
- Caused by any residence employee in the course of his or her employment
- Caused by an animal owned by or in the care of any insured
Note: Injury to the named insured or regular residents, other than resident employees, is not covered under Coverage F. Coverage F is sometimes called Guest Medical.
Exercise
Which of the following would be covered under Coverage F--Medical Payments To Others?
A. The insured's maid hurt her back when she fell down the stairs while cleaning the carpet.
B. Mary Smith, the insured, agrees to walk the neighbor's dog. While walking the dog, the dog breaks free and bites a child.
C. Joe Smith, the insured, allows several neighborhood children to use his backyard to play a baseball game. One child is cut while running into a barbed wire fence.
D. The insured's dog bites the insured's child.
E. While attempting to break into the insured's house, a burgular fell off a ladder and broke his arm.
Answer: A,B and C are correct. D is not correct because Coverage F does not pay for injuries sustained by the insured. E is not correct because the the burgular didn't have the insured's permission to be on the property.
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