Did you know your home insurance policy travels with you?
It sounds strange, but it's true. One of the lesser-understood coverages in a home insurance policy is also one of the most important: personal liability coverage. If someone alleges that you are legally responsible for unintentionally injuring them or damaging their property, your personal liability coverage may help protect you and members of your household by paying for your legal defence costs. If you’re found legally responsible it may also pay for damages including compensation such as medical bills or repair costs to the property.
And contrary to what many people think, the incident doesn't necessarily have to happen at home. Personal liability coverage generally continues to protect you whether you're across town, or travelling on vacation.
When Something Happens at Home
Many personal liability claims arise from everyday accidents that occur on or around your property. Examples include:
A visitor slips on an icy walkway and is injured.
Your dog bites a guest.
A tree from your property falls and damages a neighbour's home.
Someone is injured while using your swimming pool.
These situations are very different, but they share one thing in common: someone could allege that you're legally responsible for personal injury or damage. Personal liability coverage helps protect you financially if that happens.
When Something Happens Away From Home
This is where personal liability coverage often surprises people.
The protection provided by your home insurance policy isn't necessarily limited to your home or property. Depending on the circumstances, it can extend well beyond your property line.
For example:
While visiting a friend's house, you accidently leave the water running, flooding their bathroom.
While cycling, you collide with a pedestrian who is injured.
Your child accidentally damages someone else's property while riding a bicycle.
While staying at a rented cottage, you accidentally cause a fire that damages the property.
What Liability Coverage Doesn't Cover
Like all insurance coverages, personal liability insurance has limits and exclusions. Generally speaking, it does not cover:
Injuries to you or members of your household. Liability coverage is designed to protect against claims made by other people.
Deliberate or intentional acts. Insurance is for accidents, not harm that is caused on purpose.
Liability arising from motor vehicle accidents. That's what auto insurance is for.
Liability arising from a home-based business or other business activities. Those risks typically require commercial insurance or other specialized coverage.
The Bottom Line
In Part 1 of this series, we looked at how home insurance helps rebuild your home, replace your belongings and cover additional living expenses after a loss. But home insurance also helps protect your financial position if a claim is made against you for unintentionally injuring someone or damaging their property.
Coverage details, exclusions and liability limits vary by insurer and policy. That's why it's important to speak with your insurance representative to make sure you understand exactly what protection you have and whether it meets your needs.
Liability claims and lawsuits can be expensive, so it's also worth discussing whether your current liability limit is appropriate for your circumstances and whether additional liability protection may be worth considering.
The next time you review your home insurance policy, pay attention not just to how it protects your home and belongings, but also how it can protect you when you're away from home.
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