When you’re held responsible for an injury or accident, there is a good chance that you are also paying the resulting bills. That’s when comprehensive personal liability comes in – to protect you from spending a ton of money paying for damages.
If your have personal liability coverage, your insurance will pay out claims made against you. Considering some injuries and claims can cost thousands of dollars to settle, this is an important way to protect you from going bankrupt in a lawsuit.
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How does personal liability coverage work?
Personal liability in your insurance policy protects you and the members of your household – the policyholders – from paying out large sums of money out-of-pocket in case of a claim. In other words, if you need to pay for a hospital bill, the money will come from your insurance and not your personal funds.
These policies have limits, but they are usually high enough to cover all but the very most expensive of claims.
What is comprehensive personal liability?
Some insurance policies may not automatically include personal liability coverage, especially if the person with insurance does not own a home or have a car. In that situation, comprehensive personal liability can cover the gap. It may be purchased as a standalone policy, added on, or it may be included with your current insurance.
Personal liability in action
Let’s say the ground is icy, and your neighbor slips and falls on the walkway outside your home. Unfortunately for both you and them, they break their leg as well and are unable to go to work while they recover. Maybe there’s a lawsuit and you’re found at fault.
You’re legally responsible for the fall, and your neighbor wants you to pay his expensive hospital bills. But thanks to the comprehensive personal liability in your coverage, your home insurance pays those bills instead of you.
In another example, you accidentally crash into someone in a car accident, damaging their car and breaking their arm. Personal liability in your auto insurance helps cover damage to their car as well as their lost wages and medical bills. And what if during the accident you also drove into the fence of a nearby home, damaging that as well? Personal liability coverage will also pay to repair that fence so you do not have to.
Overall, comprehensive personal liability makes sure that your personal finances do not suffer just because you were responsible for an accident. It’s a cushion and safety net for emergencies.
Beyond comprehensive personal liability
Personal liability is usually included in homeowners, rental and dwelling insurance policies, but it is important to check the specifics of your policy. Also, payouts max out at certain amounts, so your coverage may only include monetary damages up to a certain point. Know the limits of your coverage before an accident happens.
In addition, it’s important to note that personal liability only applies to home and auto insurance. Businesses and corporations will need to ask for liability coverage within their own insurance.
Similarly, if you have tenants or manage a rental property, you should purchase a separate insurance with defined landlord liability coverage. This helps protect you if you are found responsible for injuries and damages on your properties. You can take every precaution to protect your tenants, but there is always the risk of an accident.
As always, your individual policy may vary and it is best to discuss the specifics and any questions you may have with your home insurance agent.
You can also purchase additional insurance with umbrella insurance, which is also known as excess liability coverage. Umbrella insurance includes situations not originally included in personal liability coverage. In addition, it raises the limits in a possible payout. It also provides coverage for libel and slander lawsuits against you.
Everyday defenses
Of course, it is always important to take precautions and stay safe in everyday life. Shovel snow from your sidewalk and clear debris from your walkways. Comprehensive personal liability, umbrella insurance, excess liability coverage and more are important safety nets, but it is better to prevent an accident than to pay for damages afterwards.
But no matter how your home insurance describes your policy, it is important to not only be covered for all sorts of liabilities, but to know how you are covered. After all, comprehensive personal liability coverage is only useful if you know what services you can receive.
Was there ever a time that comprehensive personal liability coverage came through for you? Tell us your story in the comments.
Remember, home property insurance is there to protect you and your assets no matter what happens in your life. Talk to an agent today or visit AAA.com/Insurance to get a quote.
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