People often assume that their homeowner’s insurance covers only damage to their home and perhaps personal property in their home. Actually, most homeowner’s insurance policies are much broader, covering liability for bodily injury or property damage that you or family members cause to other people, even if it is unrelated to your home. It often pays for both the cost of hiring a lawyer to defend you in court and for any damages a court rules you must pay (or out of court settlement).
For example, ski and snowboarding accidents are common in Utah and Colorado. If a person is injured by another skier, he or she may sue that skier for negligence in the same way as if the accident occurred on the highway while the parties were driving their cars. Homeowner’s insurance generally covers the person being sued for negligence in the same way that car insurance covers a person sued for negligence in an auto accident.
The personal liability coverage in your insurance policy does not protect you and members of your household damage that you sustain in these types of accidents, however. The property damage component of your policy, your health insurance or another party’s liability insurance may provide coverage for those kinds of damages or injuries. While it is not truly a “hidden” benefit, personal liability coverage is often overlooked when buying homeowner’s insurance. Generally, most homeowners insurance policies provide a minimum of $100,000 worth of liability insurance, but higher amounts are available. Increasingly, it is recommended that homeowners consider purchasing at least $300,000 to $500,000 worth of coverage of liability protection.