074: Dissecting homeowner’s policy

Yesterday we started going into details about homeowner’s policy and covered dwelling coverage to make sure you had appropriate limits.

Today I would like to talk about:

Liability coverage

You need to understand that homeowner’s policy not only provides coverage:

-For your home and your property but it also provides coverage to you in case someone gets hurt on your property and might sue you for the damages.

- It also provides coverage for your family members (children)

- As well as pays for damage caused by your pets

So, if your son, daughter or dog accidentally ruins a neighbor’s expensive rug, or you dog bites a postman you are covered.

The liability portion of your policy pays for both the cost of defending you in court and any court awards—up to the limit stated in your policy documents.

Liability limits generally start at about $100,000, however, it’s a good idea to discuss whether you should purchase a higher level of protection.

The rule of thumb I use to determine how much liability you might is to look at your net worth and get a coverage equal to that. If you are a high earner, you might want to get additional coverage, because in case of bad lawsuits your future wages can be garnished.

Your policy also provides no-fault medical coverage, so if a friend or neighbor is injured in your home, he or she can simply submit medical bills to your insurance company.

Your homework for today is to check how much liability coverage your homeowners policy has.

 
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