You can sue for almost anything these days. If you own a home or vehicle, believe it or not, you may be at risk. Even if you rent your apartment, a guest could decide to sue you. In general, liability insurance protects against claims resulting from personal or property damage. Legal fees and damages are covered. Below, we explain the multiple options for liability insurance and which ones you may benefit from.
This covers you if you damage another vehicle, property, or harm another person while driving. If you need to go to court over a claim someone makes, liability insurance covers these costs as well as any damages you're sued for (pain and suffering, etc.). This type of insurance is required by law for most states and is generally included as part of your auto policy. The minimum limit you can have in Massachusetts is 20,000 bodily injury per person, 40,000 bodily injury per accident, and 5,000 property damage. In New Hampshire, the only state that does not legally require car insurance, you don't necessarily have to purchase insurance but you are required to pay for any losses and damages from an accident you caused. If you elect liability insurance in NH, which we highly recommend, the state's minimum is 25,000 bodily injury per person, 50,000 bodily injury per accident, and 25,000 property damage.
You may still need to worry about limits though. For example, if you choose a 5,000 property damage limit in MA (the minimum legally required), and your slide down an icy road into someone's house, causing 15,000 dollars worth of damages to the home, you would be responsible for the 10,000 past your 5,000 limit.
Make sure you understand the terms of your insurance and what is and is not covered! For example, if you are a MA driver and you cause an accident in New Hampshire, you could be liable for every single penny and your insurance won't pay anything. Auto liability policies in MA apply only to accidents within the state. If you want to be covered for accidents outside the state, you need to add Optional Bodily Injury to Others.
Who should consider auto liability insurance?
Even if you live in New Hampshire, where you are not legally required to have car insurance, we recommend purchasing insurance. Whether you have insurance or not, if you are in an accident and it's your fault, the state holds you accountable. New Hampshire requires you pay for any losses and damages from an accident you caused, and liability insurance can make a big difference. The good news is that most NH drivers are actually carrying insurance: The Insurance Research Institute puts the percentage of uninsured drivers at 9.9% in 2015.
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Homeowner's insurance typically includes liability insurance, meaning any lawsuits claiming bodily injury damage and property damage caused by you, your family, or even your pets are taken care of. For example, let's say a friend drinks too much at your party, drives herself home along with some friends, and gets into a serious crash. Her passengers sue both her and you for negligence. You want liability insurance. If your dog bites someone, if someone trips going down the stairs, if your child's friend is injured on the trampoline or in the pool, or if your tree falls on your neighbor's house, this type of policy will cover medical bills, repairs, damages awarded, and legal costs.
It's important to remember that your homeowner's insurance will have a liability limit. If your limit is less than your total assets, you should consider raising that limit. Why? If your limit is 100,000 but someone is injured in your home and sues you for 200,000, you are responsible for covering that additional 100,000. If you have savings or assets such as property you own, those assets could be seized. Your future paychecks could go towards paying off the damages caused by an accident.
Who should consider homeowner's liability insurance?
If you own a home, you should have a homeowner's policy, meaning every homeowner should have at least some liability insurance. The real question is whether or not you have enough coverage. This can be determined by totaling your assets and choosing a limit that will protect everything you have.
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Renter's insurance typically includes liability insurance, which covers bodily injury and property damage. Similar to homeowner's insurance, there will be limits on coverage amounts and what is covered. If you serve alcohol at your premise and your guest then causes damage, you could be held responsible. Renter's liability could cover the damages and legal fees.
Who should consider renter's liability insurance?
If you rent, you should consider renter's insurance for multiple reasons. As with homeowner's insurance, the real question is if your liability limits are high enough. If your limit is lower than what all of your assets are worth, you should speak with your agent about raising it. Renter's insurance is a lot cheaper than homeowner's insurance, so we really recommend looking into it!
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How do I decide what to buy?
With all policies, you should always understand what events are covered and what events are not. For example, some dog breeds are excluded from certain policies. Another example of an event that is typically excluded from most rental policies: one roommate injuring another. In terms of your auto insurance for MA, make sure you have Optional Bodily Injury to Others so that out-of-state accidents are covered. By asking your agent what events are not covered in your policy, you minimize the likelihood of having any surprises when you file a claim.
What's the bottom line?
Liability insurance protects you from lawsuits and, in many cases, it will be included as part of a larger policy. Whether you end up being responsible for an accident or not, the costs of defending yourself can be a serious expense. The right liability insurance will cover you, but you need to understand your limits and any exemptions. If you don't understand your policy or you're worried about your limits, please do not hesitate to contact our office. You can also request a policy review online.