5 Uninsured Personal Liability Risks to Avoid

As a smart homeowner, you likely carefully chose your home insurance policy to suit your needs, and maybe even purchased an umbrella liability policy for extra protection. However, despite that, you might be engaged in activities that can bring about tremendous personal liability that’s not insured by your policies regardless of where you live – Oklahoma City, Minneapolis, Omaha, San Jose, Tulsa, etc. Many homeowners are involved in seemingly benign activities that are actually excluded from the liability protection offered by their home insurance policy. Read our list for some common exclusions and how to avoid the pitfalls of uninsured risk.

  1. Business Pursuits –

    The personal liability coverage is intended to cover personal activities and not those associated with a business created to generate income. Insurance policies are designed for specific purposes and the home insurance policy is intended for personal use only. Commercial liability insurance policies are readily available if you are engaged in a business. The home insurance policy can be so strict as to sometimes exclude the use of your house as a regular rental, since it also considers this a business pursuit. Occasional rentals tend to be covered, but permanent use of your home as a rental may void any liability coverage on your regular home insurance policy. If you intend to engage in business activities from home, be sure to explore a separate liability policy and don’t expect your home policy to offer any coverage.

  2. Planes, Autos, and Boats –

    Automobiles and aircrafts are absolutely excluded from home insurance policies and must be insured on separate policies. Watercrafts are a slightly more complicated issue, as there is some degree of coverage provided on the home insurance policy depending on the type of watercraft. Most are excluded, though, unless they fall under a certain length for sailboats or horsepower for motorboats. Double-check your policy to see if any of your “fleet” qualify for coverage, or if they require separate policies.

  3. Childcare Services –

    It’s not uncommon for homeowners who are at home caring for their own children to watch a neighbor’s child at the same time. Home insurance policies, in these cases, exclude everything except for occasional childcare services. If you are regularly providing daycare services to others, the policy considers this to be similar to a business and will exclude those activities. As with the business pursuit exclusion, there are more appropriate insurance policies available to insure any liability you may incur as a result of these services.

  4. Loss Assessments –

    If you belong to a homeowners association, you may be liable for costs incurred by the association to pay for damages to the property or for its liability to others. Usually loss assessments occur when the association is uninsured or does not have sufficient insurance. The uncovered loss is then passed to individual association members as a loss assessment. Even though you are liable for the loss, your personal liability insurance policy cannot cover the assessment. The home insurance policy does sometimes offer optional loss assessment coverage, though, so that might be a solution.

  5. Care, Custody, and Control –

    This exclusion is for damage to property that is rented to you, occupied or used by you, or is in your care. This exclusion is very broad, but its intent is to exclude coverage for things that should be more appropriately covered by a first party property policy. If you find yourself regularly in situations where you may have such liability, consider how you might cover the property on a different property policy but do not expect the personal liability policy to protect you. The solution may be as simple as specifying the replacement value on your existing home insurance policy’s first party property coverage section.


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