What are the 5 most common home insurance liability claims?

Emmet Pierce

common-home-insurance-liability-claimsIf your homeowners insurance policy doesn't have enough liability coverage and a visitor is injured while visiting your home, you could be left footing a very pricey bill.

Liability claims against homeowners are common, says Pete Moraga, spokesman for the Insurance Information Network of California.

Homes have many potential hazards, ranging from slippery floors to pets that bite. If someone gets hurt and files a lawsuit, a standard homeowners or renters policy will cover legal fees and any judgment against you, but only up to your policy's limit.

An insurance agent can help you choose the proper amount of coverage. A typical homeowners or renters insurance policy includes a minimum of $100,000 for liability, according to the nonprofit Insurance Information Institute III). A personal umbrella liability policy will provide you with additional protection. You typically can buy $1 million in umbrella liability coverage for $150 to $300 per year.

Here are five common liability claims that homeowners face.

1. Dog bites.

A typical home insurance policy includes liability coverage for damages and injuries caused by you or other members of your household, including pets. Insurers often exclude some dog breeds from their policies because they represent higher risks. The III reports that the average dog-bite cost per claim in 2012 was $29,752. Dog breeds frequently excluded by carriers include pit bulls, Akitas and German shepherds, Foley says.

If insurance companies determine that a dog breed is dangerous, it can be more costly for the owners to find home coverage, says Peter Foley, vice president for claims administration at the American Insurance Association AIA). The excluded dogs usually are large and powerful breeds that can cause serious injuries if they attack people.

"It isn't that the insurance industry doesn't like dogs," Foley says. "It's just that there are a handful of breeds that have a greater propensity to bite."

2. Home accidents.

Foley says injury accident claims frequently are filed against homeowners. Even if a person comes onto your property uninvited, such as a door-to-door salesperson, you can be held liable for any injuries they sustain, if you are found to be negligent, he adds. "If someone happens to slip on ice and snow that you fail to shovel on your walk," you could be held responsible, he says.

Another example of a home accident caused by negligence is a guest tripping on loose carpet that you failed to warn them about, he adds. A claim could result from an injury sustained by a visitor who fell because of a loose stairway railing that you failed to repair.

While most home accidents don't involve liability insurance claims, home mishaps are common, according to the National Security Council. It reported that in 2011 almost 19 million Americans, or one in 17 people, experienced an injury accident in the home that required aid from a medical professional.

Like homeowners, renters need liability coverage, Moraga says. Some tenants wrongly assume that only homeowners can be sued for injury accidents. If you reside in the home, you could be held responsible, regardless of ownership.

3. Falling trees.

Falling trees are common hazards during snow and ice storms, Foley says.

"In neighborhoods where there are large, mature trees, this is a problem," he says.

If you have a tree on your property that falls and damages your neighbor's house or car, you can be held liable for a home liability claim, he adds. If you own a tree that poses a hazard, it's up to you to trim the branches or have the tree removed entirely.

It is not unusual for tree damage claims to cost tens of thousands of dollars, says Rosemary Campbell, vice president of personal lines for Cheney Insurance in Damariscotta, Maine.

"You may have an incident where a tree falls on a car," she says. "If the car is totaled, it could cost you the full value of the vehicle."

4. Intoxicated guests.

If you host a party and one of your guests becomes intoxicated, you could be held responsible for any harm he or she causes to other people or property. Claims arising from intoxicated guests typically are covered by a standard homeowner's policy, says Kevin Foley, a New Jersey insurance agent.

Typically, homeowner's and renter's insurance policies include host liquor liability coverage, Foley says. Whether you're hosting an event at your home or at another location, these policies will cover claims arising from someone being served too much alcohol, he adds.

These laws, known as social host liability laws, vary around the country, but 37 states have adopted them, according to the III. They allow people injured in car accidents to sue the people or businesses who served liquor to intoxicated drivers.

Hiring a professional bartender can help you control how much alcohol your guests consume, Moraga says.

5. Injured domestic workers.

If you hire domestic workers to clean your home or care for your lawn, you have the potential for liability claims when they are injured on the job.

Some domestic workers have worker's compensation insurance to cover lost wages and medical payments if they are injured while working in your home, Foley says. If these workers are hurt on the job, this coverage covers their losses. However, many domestic workers are independent contractors who aren't required to have worker's compensation coverage, he adds. If you're found to be liable for their injuries, your homeowner's insurance may be required to pay the claim.

For example, if a homeowner failed to warn a gardener about a hole in his yard and the gardener stepped into the hole and was injured, the homeowner could be held liable for injuries, Foley says.

Homeowners also should check with insurance agents to determine if local laws require them to purchase workers compensation coverage.

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