Will Your Policy Cover Neighbor’s Lawsuit?

Not all of your neighbors are neighborly and sometimes disagreements can arise, from your barking dog to perhaps painting your home a color that’s not pleasing to some others living on your block.

And while you may be able to settle most of these issues through discussions and action, sometimes those complaints can escalate to lawsuits. Before this happens, it is important to know what types of provisions a homeowner’s policy offers for legal issues.

Homeowner’s insurance is really a package of protections. It covers damage to your own property, and it covers your liability, meaning legal responsibility, for injuries to others and damage to the property of others for which you become legally responsible. To an extent and under specified circumstances, the insurance provides coverage that applies to civil lawsuits.

Most individuals think that a homeowner’s policy will cover most lawsuits that are filed against them. But that’s not true.

Say for example, you tear down the fence and replace it with one with higher boards and colors not approved under the subdivision’s code. If the subdivision has rules about the permissible colors and acceptable maximum height of fences, it will try to get the new homeowner to comply.

Homeowners who refuse might find themselves facing a lawsuit for violating the code. The courts will likely favor the subdivision’s rules, and a homeowner’s policy will not provide coverage for defending against the lawsuit. Therefore, it is important to understand exactly what legal issues are covered under the policy.

That’s why if neighbors sue you for erecting eyesores in your front yard or making excessive noise, you will typically not be covered as the alleged issues do not physically harm other people or physically damage their property.

 

So what’s covered?

Under the personal liability portion of the standard homeowner’s policy, the insurance company will typically cover you and your family members against lawsuits in cases when you are sued for causing some physical damage, such as if your dog bites a neighbor or a guest falls on your porch steps due to faulty railing.

Personal Liability Insurance (Coverage E) is the section of a standard home insurance policy that protects you or covered family members against lawsuits. This type of insurance coverage would protect you in various situations where a suit is presented.

Standard home insurance policies will typically include a minimum of $100,000 for each liability claim occurrence. Some common exclusions of this policy include lawsuits involving the transmission of a communicable disease; mental, physical or sexual abuse; or anything involving the sale, manufacture or distribution of a controlled substance.

Some homeowners choose to take out an extension of this liability coverage if they feel they need to further protect themselves against liability lawsuits. One common reason for taking out such an extension would be if your home includes a swimming pool.

Another type of liability coverage is personal injury liability or an umbrella liability policy which protects the insured against lawsuits involving:

  • libel,
  • slander,
  • defamation of character,
  • false arrest,
  • detention,
  • imprisonment or malicious prosecution,
  • invasion of privacy
  • wrongful eviction, or
  • wrongful entry.

 

This policy can also cover liability protection for auto accidents with the minimum underlying auto limits. (Be sure to talk to your agent about this.)

 

Injuries covered too

The standard policy also includes another liability, portion medical payment coverage, which is also known as MedPay. This section will cover medical costs in the event that someone is injured on your property and does not want to sue you.

MedPay would cover injuries sustained on your property when a lawsuit is not present, such as the following examples:

  • A neighbor falls on your steps, hurts her back and does not want to sue.
  • A neighborhood child falls on your driveway, sprains his ankle and his family does not want to sue.
  • Your dog bites a friend, who does not want to sue.

 

Typical MedPay coverage will be $1,000 per injured person. Some homeowners choose to take out an extension of this coverage if they feel they need extra protection.

MedPay does not cover injuries sustained:

  • Due to the transmission of a communicable disease.
  • Because of physical/mental/sexual abuse.
  • Resulting from the sale, manufacture or distribution of a controlled substance.

Are You an Airbnb Host? Make Sure You’re Covered

If you have been considering becoming an Airbnb host to generate some extra income and make use of that extra room that you never use, you’ll want to make sure that you are covered in case of injury to one of your guests.

You may also be concerned about theft by a guest or any damage they may cause in your abode, none of which you’d want to pay for out of pocket. 

Hosts are covered by an Airbnb policy, but it’s not comprehensive and those gaps could leave you exposed to a claim or lawsuit if the loss to the guest is severe enough.

 

Airbnb’s insurance plan

Airbnb carries something called Host Protection Insurance, which all hosts are covered with at no charge. The plan will cover up to $1 million of liability for you and your landlord (if you have one) against property and physical damage claims by third parties.

For example, if one of your guests falls down the stairs because of an obstruction and they file a lawsuit against you, the insurance could cover the cost of defending and also paying out an award.

Similarly, if one of your guests injures another guest or a tenant in the apartment building you live in, Airbnb’s insurance would also cover that.

And if your puppy gets into the guest’s room and devours a $200 pair of shoes and some $300 headphones, Airbnb’s policy would also kick in.

What’s not covered by Airbnb

•          Damage to personal property like furniture, stereo equipment, your prized china set, etc.

•          Theft of your valuables.

•          Sickened guest due to issues at the property, like mold.

•          Slander and defamation. Both can be grounds for a lawsuit and if a guest sues a host for either one, the host will not be able to file a claim through Airbnb.

•          Harm caused by intentional criminal acts. This is actually excluded on any insurance policy, even homeowner’s or renter’s coverage.

 

Do you have a coverage gap?

Fortunately, most homeowner’s and renter’s insurance policies will cover your personal property if it’s damaged or stolen by an Airbnb guest.

While most people who own a home will have homeowner’s insurance as the lender requires it, the majority of renters do not purchase renter’s insurance, which they should, particularly if they are an Airbnb host. It will provide the extra security you need in case a guest sues you for something the Host Protection Insurance won’t cover.

Here are some other tips:

•          Keep the insurer updated. If something happens when a renter is visiting and the insurer does not know that the home is being rented out, there could be major issues with coverage. Insurers want and need to know about the home, who is living in it, or if how it is being used changes.

•          The insurer may deny coverage by citing business use of a home. When a home is rented out frequently, it could be considered a business. A home insurance policy does not cover regular business activities taking place in the home. Talk to an agent to discuss renting basics, renting frequency and what will happen if a guest is injured based on a current policy.

•          Consider landlord coverage. If you are frequently renting out your place, then you definitely may have a problem if you need to file a claim. Often, landlord insurance would cover most of the issues that would arise as an Airbnb host.

If you have any questions or would like to speak to a professional advisor, please contact ACBI Insurance at 203-259-7580.

 

Hiring a Contractor? Make Sure They’re Insured

When you hire contractors, electricians or other home repair specialists, you may shop around on price and go with the least expensive one.

But if a contractor comes in with a bid that is much lower than the competition, it could mean they are cutting corners – and one of the top ways for them to do this is in the insurance they carry, or are supposed to carry.

Consider these scenarios:

  • An electrician’s faulty work starts a fire that guts your kitchen and dining room.
  • A contractor’s worker breaks a leg while working on your home.

If either of these events occurs and the contractor doesn’t have insurance, you’ll be on the hook for the damages.

Even if a contractor tells you they are insured and bonded, you need to verify that it’s true. After all, they could be stretching the truth by just having their vehicle insured, and they could be bonded for another project they have worked on in the past.

While your homeowner’s policy provides some liability coverage, it may not cover all the costs in an especially costly event.

The first thing you should do when hiring a contractor is to ask to see their certificate of insurance. If they don’t have it, they can call their insurance agent and ask them to send it to you. A certificate doesn’t provide all the insurance details, but it’s a good start.

However, if you are having major work done on your home, you need to delve further. You should look for the following:

 

Coverages on certificate of liability insurance

Current dates – Check to see that the coverage is current. If it’s past the policy expiration date, then it doesn’t tell you if they currently have insurance.

General liability coverage – The contractor should have this insurance, which covers bodily injury to you or third parties and property damage arising out of their operations. Check also to see if their coverage includes “products and completed operations,” which covers damages that may arise out of their finished work. If this is not included, then the contractor’s liability ends when they finish the job.

Workers’ compensation – This coverage is mandatory for all employers, except under very rare circumstances. It covers medical expenses and lost wages if an employee is injured on the job. If the contractor doesn’t have this coverage, you could be on the hook for these costs.

Sometimes small contractors will tell you that they don’t need to have it, but that is typically true only if they have no employees and it’s a sole proprietorship.

 

Other coverages to look for

Builder’s risk – If you are building a new home or adding onto your home, this provides protection for the new construction and building materials while it is being built.

While most contractors will buy this coverage, some of them will ask the homeowner to do so. Make sure you are clear who should buy this coverage and, if it is the contractor, make sure you ask for proof that it’s been purchased.

Fidelity bonds – The most common type of bond you could encounter provides protection if a contractor’s workers steal from you. While better than nothing, actually getting paid from these bonds can be somewhat difficult.

It’s probably a better bet to lock up or remove your valuables when contractors are working in your home. Although you have hopefully picked a contractor you trust, he or she is probably not going to be the only one that enters the job site.

If you have any questions or would like to speak to a professional advisor, please contact ACBI Insurance at 203-259-7580.

As Risks Rise, You Need a Commercial Umbrella

As a responsible business owner you no doubt make sure that you are properly insured for any liabilities resulting from damage to other parties.

Imagine some of the following scenarios:

  • What if a visitor trips and falls at your business, breaking a leg and are unable to work for a few months while they recover?
  • What if a customer suspected of stealing later proves his innocence and sues for defamation of character?
  • What if one of your employees, driving a company truck, rams into a passenger car severely injuring some of the occupants?

 

The costs of a large financial settlement could surpass the primary liability limits of your existing insurance policies, leaving your business responsible for the rest of those costs. And a high-cost accident or lawsuit could potentially put your company out of business.

To avoid any of these scenarios, it’s wise to carry a commercial umbrella policy, which will essentially pick up where your primary insurance leaves off – or runs out.

All of your policies have limits. Once those limits have been breached, the other party can sue and go after your firm’s assets. Breaching those limits is getting easier due to the increasing prices of vehicles as well as health care costs, should the other party suffer physical injuries.

An umbrella policy will also cover you for liability for which there is no primary insurance, or when a primary policy includes an exclusion that the umbrella policy doesn’t.

 

Unfurling the umbrella

An umbrella policy will kick after limits are breached for:

  • Commercial general liability (bodily injury, property damage, personal injury, defense costs and attorney’s fees, limited contractual liability).
  • Business owners liability
  • Business auto liability
  • Employer’s liability

 

Most umbrella insurers require you to purchase primary insurance coverage before selling you an umbrella policy – for example, general liability insurance, auto liability insurance, workers compensation or employers liability insurance.

Umbrella policy limits may range from $1 million to $10 million, depending on the policy and the insurance company underwriting the policy.

 

Excess liability

For companies in business that have potentially higher liabilities, can secure an excess liability policy that kicks in after the umbrella policy is breached.

This coverage provides extra liability limits over an umbrella policy. This coverage typically follows the terms of the first underlying insurance policy.

Higher limits may be necessary for businesses with high loss potential, high profile, sizable sales, numerous assets, large auto fleets, worldwide presence, and/or significant public exposure.

If you have any questions or would like to speak to a professional advisor, please contact ACBI Insurance at 203-259-7580.

Drone Liability a Serious Threat to Your Assets

Some personal drone enthusiasts push the limits on how they use their drones, put people’s lives in danger – and sometimes hamper public safety efforts during emergencies.

The problem of individuals flying their drones into disaster areas surfaced in 2017 during the aftermath of Hurricane Harvey. The authorities had to issue warnings for drone operators to stay away from rescue areas after several close calls with rescue aircraft.

And during the 2018 fires in Northern California, the state had to call off firefighting-plane flights on more than 30 occasions because drones were illegally flying in the area.

If any of these drones were to cause an accident, the human and financial cost could be staggering. Likewise, if your teenaged son injures someone or causes property damage with his drone, the liability would likely fall squarely on you.

Even if you fly your drone responsibly, accidents can happen, injuring a third party or damaging their property. Often though, you won’t need to buy a separate drone policy if you have homeowner’s or renter’s insurance.

 

What homeowner’s covers

Besides covering your home and property against fire, leaks, theft and other risks, the standard homeowner’s insurance policy also covers liability claims, like if you crash your drone through your neighbor’s window.

 

There are two coverages that come into play:

Property damage

If you crash your drone into your own living room window, since the drone is your personal property, you may file a claim against the drone and your insurance may pay you out for the damage, after deductibles. Insurers in this case would likely treat your drone like a remote control aircraft.

 

Liability

If your drone injures a third party, your homeowner’s liability coverage would pay their medical bills. Be warned though, if the costs exceed your policy limits the injured party may sue you and you could be on the hook for further damages. The liability portion of the policy would, however, likely cover your legal fees.

Still, you may want to check your liability limits and talk to us to see if they are adequate. Often minimum liability limits in homeowner’s policies may not be enough if someone is seriously injured or loses an eye. If you are regularly using your drone in areas where there are other people, you may want to consider increasing the coverage if you can.

Most homeowner’s insurance policies provide a minimum of $100,000 worth of liability insurance, but higher amounts are available and, increasingly, the Insurance Information Institute recommends that homeowners consider purchasing at least $300,000 to $500,000 worth of liability coverage.

If you still feel like your liability coverage won’t be enough and want to enjoy playing with your drone, anxiety-free, consider an umbrella policy.

 

Umbrella coverage

Umbrella coverage gives you an additional layer of liability coverage for more serious incidents of injury or property damage to a third party. After all, medical and legal expenses can add up quickly and you likely don’t have the cash lying around to cover any excess amounts above your homeowner’s insurance policy limits.

Invest in this type of coverage if you want to protect your assets.

Umbrella coverage consists of bodily injury and property damage liability coverage. It will cover:

  • Injured party’s medical expenses
  • Third party property damage
  • Legal expenses if they sue you.

 

The coverage comes in increments of $1 million to $10 million or more. The premiums are affordable and range around a $300 or $400 a year for each $1 million in coverage.

If you have any questions or would like to speak to a professional advisor, please contact ACBI Insurance at 203-259-7580.

Adult Children and Your Liability if They’re Negligent

If you have an adult child who you are still paying some expenses for, or they are studying in college (living either away from you or at home), you could still be held liable for any damage they cause through their own negligence.

They may even have their own car insurance, in their own name, but if your child ends up injuring someone severely and is sued and the policy limits on their car insurance are not enough to cover the judgment, you could still be held liable for damages that the policy didn’t cover, depending on the circumstances.

And your car insurance or homeowner’s insurance won’t cover it, meaning you’d have to pay out of pocket if your child cannot.

That said, aside from car accidents, negligent and/or intentional acts that damage someone else’s property or injure a third party could be covered under your homeowner’s policy and an umbrella policy.

For the purposes of this article, we are talking about mostly an adult child under the age of 25 living at home or away at college. The key factors that would possibly trigger homeowner’s or umbrella coverage in terms of parents having some liability for their adult child’s actions are:

  1. Their continued financial support of the child, and/or
  2. That the child lives under their roof.

 

The car insurance issue

There may be occasions when parents of a 20-year-old reckless driver who is either still living at home or away at college may want to take steps to separate his liability from their own, like:

  • Putting the car he drives in his name.
  • Removing him from their auto insurance policy.
  • Requiring him to buy his own insurance (they may figure also that if they make their child pay the premium, the financial pain will reform his driving habits).

When you remove a young adult driver from the family policy, you reduce the probability of a claim for property damage, first party and third party injuries, and other liabilities that may result from an accident.

It would reduce the parents’ auto insurance premiums and push the liability to the child’s insurance. However, if they are sued for extreme negligence and the award exceeds the policy’s liability maximum, the additional award could be on your shoulders if your child doesn’t have the personal resources to pay.

Your own car insurance would not cover it and, since it’s auto-related, the homeowner’s policy wouldn’t cover it either.

 

Coverage explanation

The scope of coverage for minor and adult children under their parents’ homeowner’s policies, with respect to personal property coverage and personal liability coverage, rests on the policy definition of “insured” in the typical policy.

The definition, in pertinent part, includes relatives who are residents of the named insured’s household. Children, brothers and sisters, parents and grandparents are examples.

This doesn’t mean that your 40-year-old daughter who is over for dinner is covered, though, since a visitor is not a resident.

Also, the policy will cover persons under the age of 21 in the care of the named insured (such as a foster child), as well.

The next time your homeowner’s or renter’s policy is up for renewal, please call us and let us know if you have any grown children and what their status is in terms of living arrangements, and any financial support that you may provide them. It will help in determining who is and who is not covered in your family and household.

If you have any questions or would like to speak to a professional advisor, please contact ACBI Insurance at 203-259-7580.

What Everyone Should Know about Umbrella Insurance

Umbrella policies provide extra protection beyond standard coverage, and they are available in increments of millions. Most insurance companies offer these policies starting at $1 million and going up as high as $10 million in some cases. There are a few companies targeting people with higher net worth ratings, and they offer policies as high as $50 million and sometimes more. The majority of people who buy umbrella policies pick a standard $1 million policy, but there are quite a few who choose policies totaling $2 million. For the first $1 million, the premium can be as high as $250 per year. However, it may be even higher if a person has more than two cars, has points on his or her record or has young drivers in the home. The premium lowers slightly for each additional million in coverage added.

If a person becomes liable for a catastrophic event, it is better for him or her to have more coverage. The best part about umbrella insurance is how affordable it is. Anyone who is considering buying this insurance should never cut any corners. It is crucial to carefully consider the value of all personal assets. When in doubt, aim for a higher number rather than a lower number. Some people think they only need to buy enough coverage to match their net worth, but this is not true. Many judgments and settlements can exceed a person’s assets. Keep in mind that awarded damages are not lowered due to a lower net worth.

Future wages should also be protected from garnishment. If a person does not have enough insurance, he or she can easily be compromised. When a person is injured and earns a sizable judgment, he or she can count on being a target of the top liability attorneys. While $1 million may seem like an excessive amount of coverage to some people, it is important to keep in mind that the total for a liability claim can multiply very quickly.

One million is not very much in today’s expensive world. Settlements exceeding the $5 million mark are not uncommon to read about in the newspaper. Facing a lifetime of medical care and injuries coupled with losing the ability to earn an income can total well over $5 million. If multiple people are injured, the situation only becomes more complicated and more expensive. Every person should consider what he or she thinks is acceptable for different circumstances. People should ask themselves how much they would be willing to settle for if they were unable to work and were paralyzed for the rest of their lives.

People who have anything to lose should purchase at least $2 million in umbrella overage. For those who stand to lose a great deal of assets and savings, it is wise to purchase at least a $5 million policy, but it might be optimal to purchase more. The best way to determine how much insurance to buy is to discuss personal issues and concerns with an agent.  ACBI can help assess your coverage needs and offer coverage solutions.  Call us today at 203-259-7580 or visit our website.

What Party Hosts Should Know about Serving Alcohol

A person’s role as a responsible party host can keep friends and family protected. Social responsibility is a term that includes everything from planning to overseeing the party.

What Hosts Should Understand
Do not rely on coffee to help the guests sober up. Only time can make a person sober, and hard liquor will intoxicate people as much as beer or wine will. A 12-ounce can of beer, a five-ounce glass of wine, a 12-ounce wine cooler and one and one-half ounces of liquor each contain the same amount of alcohol.

Do not rely on appearance and actions to determine if a guest has had too much to drink.
Mixers will not help dilute alcoholic beverages, and carbonated beverages such as club soda or tonic water promote quicker absorption of alcohol into a person’s bloodstream. Fruit juice and other sugary mixers mask the taste of alcohol in a beverage and may cause a person to drink more.

Office Parties
Arrange for discounted or complimentary rooms when a party is held at a hotel so employees will not drive home drunk. Consider chartering a shuttle or limousine service to provide transport for those who have been drinking. Promote the non-drinking designated driver idea when sending out party invitations. Do not push drinks on people. When offering an open bar, be certain the bartender has had server training to prevent guests’ over-consumption, and be sure the bartender knows how to avoid serving alcohol to guests who may be under the legal drinking age. To encourage party participants to drink less alcohol, consider having a contest for workers to think of creative non-alcoholic drink recipes.

Planning A Party
A host has to be prepared to dodge some curve balls and juggle the unforeseen when hosting a party and protecting guests. Hosts know that part of showing guests a good time is making sure they make it home safely. Dealing with driving safety is an important obligation, and there are several helpful tips to help hosts throw a successful party without sacrificing caution. These include the following:

– Plan activities such as sports, door prizes or amateur fortune-telling.
– Give each person a specific task to do to lessen their likelihood of drinking too much.
– As visitors RSVP, confirm that each carpooling group will bring a designated driver.
– Offer plenty of food to keep guests from consuming alcohol on an empty stomach.
– Avoid salty or empty-calorie snacks, which tend to make people parched and drink more.
– For non-drinking guests, offer mocktails or non-alcoholic beverages.
– When preparing an alcoholic beverage, use non-carbonated mixers such as like fruit juice.
– Be prepared by having the number of a cab service on hand for those who need a ride.
– Make sure there is a place for people who may pass out to sleep comfortably.

Throughout The Party
Never offer alcohol to someone under the lawful drinking age, and never ask young kids to assist in serving alcoholic beverages at parties. Do not let guests mix their own drinks. Hiring a dependable and experienced bartender will help hosts keep track of how many drinks each person consumes and prevent guests from becoming dangerously intoxicated. If a guest seems to be consuming a bit much, offer to refresh his or her drink with a non-alcoholic option. Consuming alcohol at a party is not necessary to have a good time. Have fun but not too much fun. To be a good party host, a person should stay within his or her personal bounds to ensure visitors stay within theirs.

It is helpful to close the bar 90 minutes before the party ends and start offering coffee and refreshments. However, keep in mind that only time sobers someone who has been consuming alcohol. If some visitors drink too much despite careful efforts, let them stay over, send them home in a cab or arrange for them to ride with another guest who hasn’t been consuming alcohol. Whether they are aware guests are drunk or not, hosts can be found liable for DUI accidents if their intoxicated guests drive home and cause an accident.  To discuss your coverage, and be sure you are adequately protected, call the experienced team of professionals at ACBI at 203-259-7580 or visit our website

Dog Bite results in a $1.2 Million Claim against the Owner

Although dogs are some of the most loved pets, they can also create liability issues for their owners. When dogs bite visitors who come on the property, the injured party can file a claim. The following story is a good example of how even a dog that is trained very well will bite visitors if it feels threatened.

In this case, the plaintiff filed a lawsuit against a dog owner, a kennel club and a dog trainer following a bite incident at a dog show. When the case went to trial, the dog owner was the only party left on the defendant side. The dog owner claimed that his pet was defending itself after the plaintiff tripped and hit the dog in the head with her foot.

The dog was a 100-pound male Akita that had not been neutered. At the time of the incident, the dog was on a leash, which was being held by its trainer. It was also noted in the case that a female dog near the male Akita was being held on a leash and was in heat. The plaintiff claimed that the Akita bit her when she walked between it and the female dog. The dog bit her ankle and would not let go. Witnesses said that the dog had to be pulled and kicked to make it release the plaintiff’s ankle. Evidence was discovered that the dog had been returned by a previous owner for aggressive behavior, and the animal had also bitten the leg of the breeder’s neighbor. After this incident, the dog was sold and enrolled in training programs. In her claim, the plaintiff said that the defendant was aware of the dog’s aggressive history.

The plaintiff was 70 when the accident occurred, and she was diagnosed with a tibial crush injury. The foot was nearly severed after portions of the bone were torn out from the injury. Five major surgeries followed this incident as well as the implantation of an orthopedic rod. The doctor of the plaintiff said she would have permanent scarring, and he also said that there was preexisting nerve damage due to radiation treatments. With the help of a three-wheeled walker, the plaintiff appeared in court.

The defendant said that the plaintiff kicked the dog, but she denied this allegation. He also denied knowing that the dog had violent tendencies. In addition to this, the defendant specified that the breeder had said the dog was not vicious. The breeder had said that the dog was provoked by another animal, which is why it had bitten before. The trial included many witnesses, and the jury found the defendant 100 percent liable for the dog bite. Due to the defendant’s negligence, more than $1.2 million was awarded to the plaintiff.

Most renters and homeowners policies include protection for dog bites. However, they do not always include every breed of dog. Some restricted breeds may require separate coverage. Most policies cover dog bites at home and away from home. People who do not have a homeowners or renters policy should obtain one immediately. Legal fees from a dog bite lawsuit will easily run into the millions, so it is important to make sure this coverage exists. People who own condos should purchase their own policies, because HOAs cover only the association if such an incident takes place. Most policies cover between $300,000 and $500,000. If a person wants to protect future earnings and existing assets, an umbrella policy is imperative. These policies are inexpensive, Dog owners who have questions or concerns should discuss them with an agent.  You can call ACBI at 203-259-7580 or visit our website

Teens Drinking at House Parties Means More Insurance Needed for Parents

During the spring, two events most teens participate in are graduation parties and prom after-parties. Both types of events usually also include alcohol. When they are at unsupervised parties, teens are at a greater risk of hurting themselves or others by drinking. Whether parents are present or not, they are the ones who take the responsibility for what happens. Liability insurance may cover financial damages, but the details of the situation dictate which type of policy will respond. This affects the amount of coverage the parents have.

If a house guest drinks several bottles of beer, drives away and is in an accident, the parents of the injured teen and any other passengers in the car may sue the parents whose house the party happened at. The first logical step would be to notify the homeowners insurance company, but liability coverage will not apply in the following situations:

– The actions of a minor while driving.
– The operation, use or occupancy of a motor vehicle by anyone.
– The insured’s failure to supervise people in the motor vehicle.
– Trusting the insured’s motor vehicle to anyone else.

Due to these circumstances, a home insurance policy will not cover the liability. However, a personal auto policy might cover them. Liability insurance for the policy covers the people who are named on the policy as well as residents in the home who are relatives against bodily injury in accidents. Despite the parents not being the ones operating the vehicle that was in the accident, their policy will provide coverage for the liability. The auto policy is also extended to the car involved in the accident. If the owners’ policy does not apply or pays its maximum insurance limit, the hosts’ policy will step in.

If the guest portrayed in the previous scenario had drank the beer but a sober guest drove the individual home only for him to try to swim and drown, the parents of the deceased party guest may be able to sue the homeowners hosting the party on the grounds that their child was allowed to drink and leave with impaired judgment. If the case went in their favor, the home insurance policy would have to pay the damages. Since there was no vehicle involved in the incident, the auto policy would not pay.

One policy or the other might be applicable if there were a liquor liability claim, but the differences in amounts could be drastic. Personal liability coverage with a home insurance policy is usually at least $100,000 for each incident. Some policies have limits of $300,000 per incident, but others may have limits of $500,000 per incident.

Auto policies usually offer significantly less coverage. The majority of states have passed laws designating minimum amounts for liability coverage that auto policies can provide. However, those limits are usually small. If a teen is injured seriously or is killed, the damages could total well beyond these amounts. For this reason, it is important for parents to buy as much liability coverage as they can afford. In addition to this, they should consider purchasing an umbrella policy, which will pay for any damages beyond the limits up to a specified amount. Umbrella policies come in increments of millions. However, the best way to deal with this issue and prevent it is to supervise parties to ensure everyone has an enjoyable time and arrives home without injuries.

If you have any questions or would like to review your coverage, call ACBI at 203-259-7580 or visit our website.