How Much Liability Homeowners Insurance Do I Need
One of the more vexing elements of a homeowners insurance policy for many people is the liability portion. How much is enough? It easy to get a home appraisal and to fix a value for buildings and other structures on the property, but how do you know how much liability homeowners insurance you need?
Defining Liability Homeowners Insurance
Liability homeowners insurance is coverage in case someone has their property damaged by your property or they are injured while on your property or due to your property. You can be found personally liable for their expenses related to their loss or injury. In some cases, especially if medical bills are involved, you could be liable for a large amount of money. Simple things, such as having a dog that bites someone, can turn into thousands of dollars in medical bills and lost wages for that individual. If someone falls on your slippery driveway or a dead limb from one of your trees falls on a visitor or neighbor’s car, you can be held responsible. Liability insurance through your home insurance policy offers financial protection for this.
Liability Homeowners Insurance—Getting Rid of a Myth
The most found answer to the question of how much liability homeowners insurance do I need is to determine your net worth. Add assets to income and subtract debts is how you arrive at your net worth. The problem is there are way too many people with debts as much or more than assets plus income. If in this position, you still need liability coverage. You can still get sued, and if you lose, you may face wage garnishment and/or bankruptcy. If you have a high net worth, then you can certainly want to use that formula as a guide, but if not, that formula is not useful.
Types of Liability Homeowners Insurance
There are two forms of liability coverage that can be a part of your homeowners insurance policy. One, personal liability insurance, is a standard part of any policy. In fact, most mortgage companies will require you to have a certain amount in place. Personal liability pays for expense claims and any lawsuits that are the result of your negligence in the injury or loss those outside your household may suffer. Medical payments coverage is a common add-on to a homeowners insurance policy. It focuses specifically on the claims and lawsuits resulting from someone being injured. Personal liability would pay if that tree limb fell on a guest’s car, but medical payments would not. If the limb falls on a person, medical payments coverage may step in.
Monetary Limits of Liability Homeowners Insurance
The amount of liability insurance you need is a product of several things. How much your home and property are worth is a factor. Also, if you are wealthy to the point your net worth is above $300,000, you may want to consider going higher than what is normal. Normal is anywhere from $100,000 to $300,000 in personal liability. Lender requirements are generally in this range for most homes. While that number may seem high, remember how easy it is for medical bills to get out of control. Also, the liability coverage is not that expensive, so don’t let the big number scare you.
Get Quotes on Your Total Homeowners Insurance
To find out how much your liability coverage, as well as your total coverage, will cost, you can use online homeowners insurance quotes. The quotes will give you the overall cost of your homeowners insurance. Although, you can also use them to gauge the cost of liability coverage levels: get quotes with one liability monetary level of coverage, change that level and get more quotes. This will help you understand how raising and lowering your liability coverage will affect overall rates. You can use our free rate quote tool to do this in a matter of minutes. It’s that easy to find the right coverage and the best homeowners insurance rates.