Question from Amelia P. from Fishers:
I saw someone take a spill at my daughter’s graduation party last weekend. They were OK, but it got me worried about what I would be on the hook for if they were seriously injured. What’s the best approach to protect my family from this issue?
Response from Jamie Ianigro:
Thanks for your note Amelia. What you are asking about is a liability issue. If someone is injured on your property, you would be liable. Best case scenario is a minor injury that is easily remedied. The worst case scenario is a death or major injury that requires specialized care for the rest of that person’s life. You would be liable for the cost regardless of which scenario you end up with.
Luckily for most, a homeowner’s (or renter’s) insurance policy provides liability coverage to protect you from scenarios just like the above. Is the amount of coverage that is automatically included in your policy enough, though? That is a question that I highly recommend posing to your independent insurance agent, but my approach is that it is not.
We like to look at the coverage options available as adequate, good, and best.
“adequate” coverage is what you automatically get with any policy. The department of insurance has your back and won’t let sneaky agents drop coverages like this to manipulate the total cost of the policy. This means, at worst, you have adequate coverage when you buy a homeowner’s or renter’s policy. People stick with adequate coverage because they’re not afraid of the added risk, they don’t know about the added risk, or protecting their assets from that added risk is not worth the small added cost of increased liability limits.
The “good” coverage is the baseline of what I would recommend to any person I speak to. You get increased liability protection and pay a small increase to the price of the policy. However, a $1,000,000 liability claim is painful with low limits and can still hurt with $500,000 to $750,000 liability limits. That’s why I always inform people about the “best” coverage option.
The “best” coverage option is liability from your homeowner’s policy covering the first $500,000 (varies depending on the carrier) of a loss and an umbrella policy stepping in to cover the remaining $500,000. You can get an umbrella policy in pretty much any amount you can imagine, but $1,000,000 is a great place to start. It also costs much less than you might imagine. There is no cost to being informed though. I highly recommend discussing this further with your independent insurance agent.