You may not know it, but your home insurance policy provides protection for more than just damage to your house and its contents. Most home insurance policies (including renters and condo policies) contain personal liability and medical expense coverage. Both of these coverages can protect you in the event someone is injured in your home. Let’s review a hypothetical situation in which these coverages are applicable and how you can access the benefit of your insurance policy.
At your barbecue, you ask your friend to help grill the steaks while you prepare some of the other food items. While he is grilling, the flames flare up and burn his hands and arms, necessitating a trip to the emergency room. The burns are serious enough that your friend is unable to work for two weeks due to the pain. He has asked you about his medical bills and lost wages. What should you do at this point?
You should immediately notify your insurance company of the incident involving your friend. The insurance company will assign an adjuster to investigate the claim and will contact you for the facts. The adjuster will also contact your friend, who is known as a “claimant,” for his version of the incident. It is the responsibility of the insurance adjuster to evaluate all the facts and determine whether you’re liable for the claimant’s injuries. If so, they will compensate him on your behalf.
However, before any liability determination is made, your homeowners insurance policy can still assist your friend with his medical bills. The medical expense coverage on your policy can be paid by the insurance company for medical expenses incurred by anyone who is injured in your home, regardless of liability. If the injuries are minor and someone just wishes to have a few out-of-pocket medical expenses reimbursed, this coverage can prevent a more serious claim from developing.
In your friend’s situation, because the injuries are more serious, he will likely pursue a personal liability claim against you. If the adjuster determines it is your fault, he will work with the claimant to negotiate a settlement for his lost wages and pain and suffering. The personal liability coverage portion of your home insurance policy covers this settlement.
Without the proper home insurance policy, you would have been personally exposed to the costs that were paid by the insurance company. However, be aware that there are limits on the amount of medical expense and personal liability coverage on your homeowners policy. For this reason, review your policy and evaluate if the limits are sufficient. If not, you can request an increase from your insurance company or you can purchase a separate umbrella policy to add limits. Accidents happen, so keep your guests (and yourself!) covered with the proper liability and medical expense limits in place before planning your next big shindig.