Home insurance covers more than just damage to your house and property. Included with most home insurance policies, legal liability or third-party liability coverage protects you if you’re held legally responsible for accidental damage to someone else’s property or a physical injury. Often referred to simply as “liability coverage,” it covers the costs that arise out of your legal liability for damage or an injury.
You might think you’ll never be responsible for an issue that results in litigation — but accidents can happen in the blink of an eye, and it’s important to make sure you’re protected when they do.
What kind of situations are covered by liability insurance?
Liability insurance covers legal expenses you’re liable to pay, specifically related to accidental bodily injuries or damage to someone else’s property, whether or not you’re at home when the accident happens.
Here are some examples of scenarios where liability coverage might apply:
- You’re hosting a party, and one of your guests trips on a loose floorboard in your house and requires medical care.
- Your dog unexpectedly bites one of your neighbours while you’re on your daily walk, leading to medical costs or a lawsuit.
- You’re cutting down trees on your property and accidentally damage your neighbour’s fence, and the they seek compensation from you for the repairs.
- While staying over at a friend's house, you accidentally break an expensive item in their home, and they seek financial compensation from you to replace it.
In each of these situations, the liability coverage in your home insurance policy could cover the medical or legal expenses you’re required to pay.
Why is liability insurance important?
If you’re involved in litigation, the costs can add up quickly, escalating beyond your financial means. Having adequate liability coverage in your home insurance policy ensures you don’t get stuck paying for these expenses out of pocket, which could lead to financial trouble. You could say liability coverage protects your financial future.
How do you choose the right limit for liability coverage?
Many home insurance policies will include a standard $1 million limit for liability. While this may sound like a lot of money, it’s important to be aware that an incident resulting in a serious injury could easily end up exceeding $1 million. If possible, you may want to consider increasing your liability limit beyond $1 million, especially if you have things on your property that may come with a higher risk of injury, such as a swimming pool, a swing set, or pets.
Does homeowner’s liability coverage apply if you’re driving?
The liability coverage included with your home insurance policy doesn’t cover property damage or injuries that you’re responsible for while you’re driving. In Bermuda, all drivers are required by the Transport Control Department (TCD) to have a motor insurance policy with third party liability coverage, which would cover you if you’re legally responsible for a collision that causes damage or injuries.
Learn more about your liability coverage and review your policy limit
If you have a home insurance policy with BF&M, you can review your policy online to learn more about your liability coverage, including your coverage limit. If you have questions or want to make changes to your policy, you can reach our team at +1 441 295 5566, and we’ll be happy to help.