When Does Homeowners Insurance Pay for Legal Fees

Homeowner's insurance covers occurrences that cause damage to the insured's residence. Mortgage firms and other lending organizations routinely purchase these policies to safeguard their financial interests in the homes they finance. These policies also cover insureds against claims by third parties alleging homeowner negligence caused them harm. When pursuing higher liability limits and protection against various claims, homeowners will pay more.

Legal Fees and Expenses

In general, a homeowner's insurance policy will pay to settle a claim against an insured if the policy covers the claim and the homeowner's carelessness caused the losses. In addition to settlement expenses, the insurer will cover the insured's legal fees to defend against the claim. For example, if the insured person is sued due to her pet biting a guest on her property, the homeowner's insurance company would normally engage a lawyer to present a defense.

Frequent Indemnity Claims

The majority of homeowner's insurance policies cover specific categories of claims. Frequently, dog bite claims and libel and slander claims are covered. Personal injury claims are frequently covered as well. Therefore, if a visitor falls on a homeowner's walkway and sues the homeowner for negligence, the insurance policy will typically cover the claim and provide a defense.

Exempt Claims

In general, other forms of claims are excluded from coverage. If an insured is sued for an incident not covered by the homeowner's policy, the insurer will normally inform the insured that there is no coverage. Typically, a homeowner's insurance coverage does not cover intentional conduct. For instance, if a homeowner shoots an intruder on his land, most homeowners' insurance policies will not pay the homeowner if the intruder sues him for his injuries. Some policies may include a provision for self-defense, but the majority will not. Sexual harassment, molestation, and assault claims are often excluded as well.

Conflicts with Insurer

Occasionally, the insured and the insurer disagree on the coverage of a claim. Policy provisions might be complex and unclear, particularly when applied to a particular fact pattern. In most jurisdictions, an insurer's obligation to defend an insured exceeds its obligation to indemnify. If the allegations in a lawsuit against a homeowner could potentially trigger coverage, insurers are often required to defend the insured until a judge decides that the policy does not cover the claim. Some states permit insureds to initiate bad-faith claims against insurers who have improperly refused to pay for legal fees and costs.