When you own a home you take on a great deal of responsibility. Not only are you expected to earn a living, and support your family, you’re also supposed to pay all your bills, in full and on time. If you have a mortgage it only adds to the pressure. Even more pressure is involved if someone gets hurt while on your property, so carrying liability insurance is a good idea. Following are a few tips on how to buy the right amount of liability insurance for your home.
What Is Liability Insurance?
Liability insurance is a form of insurance that protects you in case someone gets hurt while on your property. It is often included in a basic homeowners insurance policy. It’s important to carry the correct amount of liability insurance, because it will provide financial protection in case you’re sued. That protection could come in the form of paying for legal assistance, or it will pay the claimant if a judgment goes against you. One of the features of personal home liability insurance, typically referred to as Coverage E on your policy, is that a deductible is usually not required.
Peace of Mind
The major reason to carry liability insurance is for the peace of mind it brings. Knowing you have sufficient coverage in the event someone slips and falls on your porch or sidewalk, or inside your home, is worth the expense. It’s risky to go without liability insurance. Being underinsured is nearly as bad. You want to make sure your policy reflects your needs.
Determine Your Needs
Before deciding on how much liability insurance to carry, it’d be a good idea to check with your friends and neighbors to see what level of insurance they have. Be especially attentive to those people who have property that is similar to yours in value, and particularly those who live close by. If they’ve been homeowners for a while, they’ll be familiar with your problem, and probably be more than willing to help you determine your needs.
Professional Advice
It would also be a good idea to seek professional advice. Consulting with an accountant or tax attorney could help you decide on how much coverage to carry. They will be able to let you know how much financial risk you could have, and should also be able to suggest ways of making sure you’re protected. Seek out a professional advisor that has experience in personal home liability insurance issues.
Find an Agent
After you’ve gathered as much information as you can about liability insurance and determined the level of coverage you will need, it’s time to sit down with an agent and discuss the details of a policy. You must first decide on a company to provide this coverage. Again, talking to your friends and neighbors is a good place to start. See if they’re content with their insurance company or have any suggestions on who to contact. Start placing a few phone calls to insurance companies and explain your needs. Gather a few quotes and then decide on a company and agent. Once you’ve done this, your insurance agent will be able to walk you through the process of deciding on how much liability insurance to carry.
Umbrella Policies
Standard liability policies usually start at around $100,000. This is the minimum because the industry has determined that you’d be underinsured with less coverage. You can raise this limit by increasing your monthly premiums, but another way of making sure you’re protected is to take out a personal umbrella policy. The term ‘umbrella policy’ refers to the fact that it protects your assets more fully than a regular liability policy. It does this by covering the gaps that may occur in your regular homeowner’s policy. There are few limits on an umbrella policy. You can get coverage for as much as you think you need.
Image: Flickr/james.thompson
Guest post from Bailey Harris. Bailey enjoys writing about 
