Navigating the intricacies of insurance coverage for homeowner can be difficult, particularly if you are faced with a lawsuit. Many people often wonder if their home insurance will cover civil lawsuits. Home insurance offers coverage for civil lawsuits if the claim is covered by your policy. If the lawsuit is related to a covered claim, and it arises from property damage or bodily injury, the personal liability coverage in your homeowners insurance will pay for the cost.
Essentially, personal liability coverage is designed to cover legal defense, investigation costs, and other types of damage incurred. The extent of coverage provided by your insurance company will be determined by the limits on your policy. This denotes that you will only be covered up to the limits of your home insurance policy.
What Does Home Insurance Cover In Civil Lawsuits?
Typically, home insurance helps to pay for costs related to a civil lawsuit due to an incident that occurred on your property; it could be property damage or bodily injury. As mentioned before, liability coverage on your homeowner insurance policies specifically covers lawsuits of any type. This applies as long as it is a covered claim.
That being said, let us give an insight on the type of coverage that home insurance offers in the event of a civil lawsuit. Home insurance helps to pay for;
Legal defense cost
Your insurance company will cover the cost of representing and defending you if you were sued for a covered claim. The legal defense cost provided by your insurer will cover attorney fees and costs incurred from the court proceeding. If there are other legal expenses for bodily injury and property damage, they will also be covered, up to the limit of your policy.
Medical payments
Home insurance features coverage for medical expenses in a situation where someone got injured while on your property, irrespective of whether you’re the at-fault party or not. This coverage can be used to prevent a possible lawsuit if the medical cost associated is taken care of as soon as possible.
Settlement costs
In the event that the other party requests a settlement fee, your insurance company and the attorney will negotiate the terms and the specific amount that will be used to compensate the other party. Your insurer will only offer a settlement amount up to the limits of your home insurance policy.
Beyond these aforementioned types of coverage offered by home insurance in the event of a civil lawsuit, your policy may also offer personal injury protection and liability coverage. If you are deemed responsible for the cause of an injury or property damage, your policy will pay for the cost associated up to your policy’s limit.
What Home Insurance Will Not Cover in the Event Of A Lawsuit?
While home insurance offers financial protection when you are sued for property damage or any other covered claim, there are limitations to the level of coverage it provides. For instance, if you file a claim that was caused by intentional acts or damage caused by a business activity done on your property, you will most likely not be covered. We have helped to curate typical scenarios where homeowners insurance will not cover civil lawsuits;
- Intentional acts or criminal behaviors
- Business-related claims
- High-risk activities
- Neglect or lack of maintenance
Home insurance will not also cover a claim that is not included in your policy. Ensure to check your insurance policy to be sure the type of claim you want to file with your insurer is covered. If you are unsure, reach out to your insurer for detailed and accurate information.
What Happens If a Lawsuit Exceeds the Limits of My Policy?
Well, if a civil lawsuit exceeds your policy limits, then you have to pay the remaining cost out of pocket. This typically means that your insurance company will pay up to the limits of your policy, and the remaining expenses related to the lawsuits will be paid from your personal pocket.
To mitigate this risk, we encourage home owners to purchase an umbrella policy that provides additional liability coverage beyond the basic home insurance.
FAQs
Does home insurance cover intentional acts?
No, if the damage was caused deliberately, your home insurance policy will not pay for the damage incurred and legal fees if you’re sued.
Will my premiums increase if I face a civil lawsuit?
If you are deemed responsible for the cause of the lawsuit, your premium is most likely to increase. This is because your insurer will now view you as a higher risky, hence the reason for the increase in the amount you will pay for coverage.
Can I purchase additional home insurance coverage for lawsuits?
Of course, you can! If you seek adequate protection for civil lawsuits, consider getting an umbrella policy. This policy offers maximum coverage and guarantees protection even beyond the limits of your home insurance policy.
