What Is Personal Liability Insurance?

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Lawsuits have become so common nowadays. Minor accidents like a guest stripping off the stairs in your house can land you in court. Sadly, accountability charges are some of the most expensive home coverage claims. If you are found guilty in such a lawsuit, you will be required to pay the injured party a hefty compensation. But you can protect yourself from such claims with personal liability insurance cover.

Whether you own a home or rent one, this coverage is a necessary addition to your homeowner’s or renter’s policy. Keeping reading and learn more about this coverage.

What Is Personal Liability Insurance?

Personal liability insurance provides protection from accidents you have unintentionally caused or are being held liable for. As the name suggests, the liability cover will protect you against claims that you have personally caused. The claim could be arising from property damage or bodily injury that you are directly responsible for.

With personal liability coverage, you don’t pay any claim charges from your pocket. Medical bills, repair costs, or legal fees claimed by the aggrieved party are paid from your coverage. The coverage is included in the renter’s or homeowner’s policy.

What Is Included In This Liability Cover?

What is included in the personal cover varies from one policy provider to another. Your renter’s or homeowner’s policy limit might also determine what is to be covered by your policy. Generally, the following are some of the circumstances covered by a personal policy:

  • Legal charges incurred by the person who has sued you for an accident they encountered on your property
  • Medical bills that are paid to treat injuries your guest sustained at your home
  • Income lost by the aggrieved party due to their inability to work and earn some revenue
  • Damages and bodily injuries to other people caused by any of your close family members listed in the policy
  • Away-from-home damages or injuries you have unintentionally caused to a stranger in a place other than your home, such as a hotel
  • Death benefits to the dependents of a person who died in your home due to factors you are responsible for
  • Damages you or your family member has caused on the property of another person
  • Property damage or bodily injury caused by your pet, especially dogs

What Isn’t Included in the coverage?

There are several occurrences excluded from the cover. This means you will pay for the expenses incurred by the injured person out of pocket. Scenarios that are not covered in the policy include:

  • The injured person is a member of your family who lives with you
  • If the claimant is found to be dishonest. For instance, if they have intentionally hurt their body or destroyed their belongings while in your home to benefit from financial compensation
  • You have caused damages and injuries to other people in an automobile accident
  • If you are found to have caused the accident intentionally
  • If the property damage or injuries is caused by a person not listed in your policy

How Does the Claim Work?

The claim process is not standard, and it varies in different jurisdictions. In some cases, the insured is required to file the claim. In other cases, the injured party is allowed to claim against the liable party. But, it is best to initiate the claim process yourself to avoid potential lawsuits. You risk accruing additional costs, such as defense fees, if you are reluctant to claim coverage.

A delay could also mean a worsening of injuries sustained by the claimant. Of course, this implies an increment in medical bills. If your policy providers determine that you have intentionally delayed filing the claim, they might decline your request altogether. It is, therefore, important to make a claim as soon as the incident occurs.

How Much Does the Cover Cost?

Usually, this liability cover is included in the renter’s or homeowner’s policy. This means you don’t necessarily pay for the cover by itself. In most states, the coverage is a given proportion of the homeowner’s policy. For instance, it can be $10 for every $100,000 in homeowner’s coverage paid annually. Your policy limit will also determine the amount you pay in monthly premiums. If you have a high limit, your premiums are likely to be high.

If your policy is inadequate, you boost it with a personal umbrella policy. By doing this, you will have extended coverage. In case the amount you owe the claimant is exceeding your initial coverage, the umbrella policy will pay the extra costs.

How Much Personal Coverage Do You Need?

The amount of personal coverage one needs to pay for is a personal decision. But, as you make this decision, you should take into consideration these three factors:

How much can you afford to pay: The personal liability insurance policy is the cheapest coverage in your renter’s or homeowner’s policy. Spending a little bit more on your premiums can make all the difference in your policy limit.

The value of your assets: The injured person can claim all your assets in a lawsuit. Ensure that your policy is sufficient to protect your assets.

Consider the risk associated with your home: It would be wise to increase your policy premiums if your home has inherent risks. These risks include diseased trees, a swimming pool, and pets.

Other Types of Personal Policy Covers

Personal liability insurance cover is sometimes not sufficient. However, you can supplement your coverage by adding other policies such as the business owner policy and the personal umbrella policy. The umbrella policy covers any leftover costs not paid by your coverage. On the other hand, a business policy will cover the cost of damages and injuries to other people due to business activities on your property.

A personal policy does not only protect you and your family from the financial repercussions of your negligence, but it also protects your assets. If you do not have the coverage, sign up for it now. And, if it is insufficient, increase your premiums or add to it an additional policy. This coverage is worth every dollar.


CityScape Insurance, LLC have used their best efforts in preparing this website resource. CityScape Insurance, LLC makes no representations or warranties with respect to the accuracy or completeness of the contents of this webpage and specifically disclaims any implied definitions and/or usage implied usage within. The accuracy and completeness of the information provided are not guaranteed or warranted to produce any particular results. Neither the publisher nor author shall be liable for any loss of profit or any other personal or commercial damages, including but not limited to special, incidental, consequential, or other damage.

Actual Cash Value vs. Replacement Cost Homeowners Insurance

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According to past research conducted by insurance.com, almost half of the homeowners don’t know how to differentiate between actual cash value and replacement cost. In that regard, this article clarifies between the two for you to better understand the concept.

What is Actual Cash Value?

Actual cash value refers to an insurance company’s cost to homeowner insurance policyholders as compensation for the property damaged or lost. It’s determined after the deduction of the depreciation cost. Below is the formula:

 ACV=Replacement cost -Depreciation

In other words, it represents the selling price of the property at the time of loss. The depreciation cost is determinable by the type of policy you choose. Your insurer can determine the value by either doing a proper physical assessment or using any previous repair information. To understand better, let’s have a look at this example;

You have a couch that you bought for $5000.Unfortunately, your house gets burnt. You then decide to approach your insurer to compensate you for the loss. If your policy uses ACV to calculate the amount to pay for the loss, you will get less the amount upon compensation. That is because the actual cash-value takes into consideration the depreciation. Another way of determining the cost apart from using the actual property as a point of reference is to differentiate between purchase and loss.

Why do people choose actual cash value?

Some people like it because it is cheaper compared to other available options. Choosing it makes it easier for them to save a significant amount in the long run. However, the only drawback is that the compensation cost is calculated based on that time’s depreciative value of the property in the event of a loss.

What is the replacement cost then?

As the name goes, it is a form of compensation that allows you to acquire another property or item of the same quality and nature as that which was damaged.

Here is an Instance

Assuming you lose property and it happens that your homeowners insurance coverage uses replacement-cost, you are likely to spend none of the money on replacing the item because it’s your insurer’s mandate.

The Replacement Cost Compensation Procedure

Every company has a policy that dictates how it operates. Similarly, insurance companies have such policies to adhere to whenever they compensate you for losing your property. Surprisingly, some people do believe that they are entitled to full compensation immediately after a loss occurs. Unfortunately, that’s not always the case since the company policies determine everything.

If you incur a loss, and your homeowners insurance dictates that you use this compensatory option, you will have to write all the items damaged or lost. From there, the insurer will take some duration reviewing your request. You will then receive your compensation if the review process is successful. Furthermore, to make the option work best for you, you can go for an extended replacement cost.

You may be asking yourself the difference between the two. Opting for extended replacement cost qualifies you for a higher compensation regardless of your insurer’s specified limit. It allows for compensation of 125% to 150%.

Its advantage is that you will be fully compensated and get back to your initial status without spending any extra coin. Choosing extended replacement cost will also make you have confidence when approaching your insurer because you will be sure of the amount of compensation you are entitled to.

Besides, you can also opt for an alternative policy plan known as a guaranteed replacement cost. It allows you to get full coverage despite the specified limit. In case of a property loss, a guaranteed replacement cost will enable you to get total compensation. In the case of a house, the option will allow you to rebuild your home without having to struggle. It is one of the best dwelling coverage ever.

Opting for extended replacement cost is a good option for you when choosing a good dwelling coverage. Also, guaranteed replacement cost is a better option considering the highlighted benefit above.

Conclusion

All coverage options have their pros & cons it really comes down to the type of risk & level of risk the property owner is comfortable with. It’s also important to point out that each settlement option has certain eligibility requirements, this is where it’s important to discuss with your agent to ensure both your coverage requirements are met and the proper policy is written. Available coverage options vary based on state, property location, property type, age of dwelling, occupancy, condition of property, and other underwriting factors determined by each individual carrier. We recommend discussing this information with a licensed agent prior to purchase of any coverage.  If you’re interested in learning more, have a few questions, or would like a quick coverage review please give us a call and we’d be delighted to speak with you.


 

CityScape Insurance, LLC have used their best efforts in preparing this website resource. CityScape Insurance, LLC makes no representations or warranties with respect to the accuracy or completeness of the contents of this webpage and specifically disclaims any implied definitions and/or usage implied usage within. The accuracy and completeness of the information provided are not guaranteed or warranted to produce any particular results. Neither the publisher nor author shall be liable for any loss of profit or any other personal or commercial damages, including but not limited to special, incidental, consequential, or other damage.

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