Most of the time, homeowners have a choice to carry or not carry liability insurance. Although, in some situations, it’s required as a condition of another agreement. If you’ve been wondering if you should get liability insurance, here are all of the best reasons to get a policy right away.
1. Personal injury lawsuits are expensive
Anyone who gets hurt on someone else’s property has the right to sue. In most cases, a lawsuit is the only way an injured party can get their medical bills covered, provided there’s an insurance company paying the judgment. It’s been reported that the median award in a premises liability case is $90,000. That’s a lot of money for someone to pay without insurance.
With limited exceptions, you are legally responsible for the safety of everyone who sets foot on your property, whether they’re a guest, a service professional, or even a trespasser. If someone comes to your house and you fail to warn them about known hazards, like a slippery walkway or holes in the dirt, and they become injured, they can sue you and will probably win. However, even when the injury is caused by an act of nature – like a tree falling on them – you’re still likely to be held financially responsible because it happened on your property.
There are plenty of instances where porches, decks, and balconies have collapsed, injuring people and sometimes resulting in death. The homeowners and even people just renting an apartment have been found legally responsible in court.
If someone gets injured on your property and they sue you, you’re looking at a massive financial loss. When you have an insurance policy that covers injuries, your insurance provider will pay the judgment up to your policy’s designated amount, which could be thousands or even millions. Your policy dues will increase, but you won’t have to pay anything out of pocket.
Without insurance, you’ll be liable for any judgment or settlement completely out of pocket, and if you can’t afford to pay, the injured party can get a lien on your house, car, or any other property you own. If that happens, you’ll have to pay them first when you sell the item. For example, if someone has a lien against your house for $20,000, when you sell your house, the first $20,000 you receive will go to them.
2. You need liability insurance to get a mortgage
If you’re thinking about buying a home, keep in mind that most mortgage lenders require liability insurance that covers at least $100,000 in damages. This makes sense since the lender technically owns your home until you pay off the mortgage. If someone gets hurt on your property and goes after your house, the lender will be out financially. In some cases, you’ll also need additional coverage for earthquakes and floods, but it all depends on your individual circumstances.
3. Some HOAs require liability insurance
While many states don’t have laws requiring homeowners to carry insurance, homeowners associations (HOAs) almost always have requirements for carrying a general liability policy. If you’re planning on buying a house governed by an HOA, be prepared to get liability insurance as a condition of owning the property.
4. You have renters
Having a liability insurance policy for your protection is critical when you have renters. As a landlord, you are liable for injuries sustained by your renters if you fail to maintain a safe and habitable living space. For example, not fixing slippery porches, poorly built structures, and failure to remove danger trees are all grounds for a lawsuit when it results in injury to a tenant.
You’re also going to be legally responsible for injuries sustained by your renters’ guests. Unfortunately, renters tend to lack the urgency to warn people about hazards. They also tend to create and ignore hazards that can cause serious injury to their guests. Don’t count on your tenants to protect themselves or their guests.
5. You host Airbnb guests
Just like tenants, guests, and trespassers, you’re legally liable for injuries sustained by Airbnb guests. If they can prove their injury was caused by your negligence, you’ll have to pay. For most hosts, this will be covered by Airbnb, but only if the guest was registered. If an unregistered guest gets injured on your property, Airbnb won’t cover it and you’ll need liability insurance.
Liability insurance is worth the cost
Insurance policies cost money, but they buy you peace of mind. Carrying premises liability insurance is the only way to avoid paying tens of thousands of dollars out of pocket, should someone become injured on your property.
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