Does Homeowner's Insurance Cover Civil Lawsuits?

Homeowners insurance is a collection of coverages. It protects your property from damage and your liability, or legal obligation, for injuries to others and damage to their property for which you become legally accountable. Your homeowner's insurance policy includes coverage for civil claims to a certain extent and under certain situations. However, its limitations may be insufficient and may require supplementation.

Recognize Your Policy's Limits

Consider what would happen if a guest to your home stepped onto the front porch and fell through. He has sustained an injury. He sues you, alleging that the porch was in a dangerous state and that you were negligent. Your homeowner's insurance policy contains a liability limit of $50,000. If the victim is awarded $10,000 and the suit is resolved for less than $40,000 in legal expenses and costs, your homeowner's insurance will cover this hypothetical civil litigation. If the victim requests $50,000 and your insurance company provides $30,000 in compensation, the victim accepts, and your defense costs less than $20,000, the insurance appears enough. If the victim receives a $500,000 award and your defense costs reach any amount, your $50,000 coverage falls far short.

Adhere to the Terms of Your Insurance Contract

In essence, insurance is a contract. The insurance company agrees to pay within the limits and conditions of the policy. You agree to abide by the conditions of the agreement. For instance, the insurance company may label specific breeds of dogs as high-risk. If you have one of these pets on your premises, your insurance provider will deny coverage completely. Suppose you claim to have a low-risk dog when you have a pit bull, and the pit bull bites a meter reader on your property. In that case, the insurance company may deny your liability claim, withhold payment for your defense, and withhold compensation for the dog bite victim. You may believe that because you pay premiums, the insurance company is obligated to defend you in the event of a lawsuit. If you breach the agreement, your insurer may decline to cover the case.

Eliminate Hazards

Liability difficulties might arise due to an individual's knowledge of risk. As an illustration, suppose you live in a climate with extremely cold winters. You are accustomed to clearing snow from your walks and drives whenever it snows. To melt the ice, you salt or sand it. You take all reasonable efforts to prevent ice build-up from injuring anyone who may walk on your property. The pizza delivery person slips as he steps onto your dry porch. She accuses you of negligence and files a lawsuit against you. Your insurance company may aid you in defending yourself. You are found not accountable. You can help protect both you and your insurance company from financial hardship by mitigating known risks.

Increase Coverage with an Umbrella

You can obtain additional insurance, referred to as an excess liability insurance policy or umbrella policy, and your homeowner's insurance. This insurance policy provides liability coverage over the limits specified in your homeowner's and auto insurance policies. Suppose the liability limitations on your homeowner's insurance are exhausted due to civil action and/or a judgment against you. In that case, the umbrella plan provides an additional layer of protection up to a considerably higher level.