If you want a good scare on Halloween, all you need to do is contemplate the financial risk you’re taking if you don’t have adequate homeowner or renter liability coverage when visitors come calling.
Liability claims stemming from injuries are common. When ghosts and goblins arrive on your front porch, you’ll have greater peace of mind if you have a liability policy that can protect your assets.
It’s financially risky for homeowners and even renters not to carry adequate personal liability coverage, said Bob Courtemanche, senior managing director at the Risk Strategies Company insurance brokerage and risk management company. “We live in a litigious society and people are prone to file lawsuits more than ever before if they feel that they have been harmed by your alleged negligence,” he said.
It’s a good goal to have enough coverage to protect your net worth. A standard homeowners or renters policy will cover your legal fees if there’s a judgment against you — but only up to your policy’s limits. That means you could be held personally liable in a legal judgment for any costs your policy doesn’t cover. Liability limits generally start at about $100,000, but that’s not always enough to protect your assets.
If you don’t have money to pay a liability claim, which in some cases can exceed $1 million, a court could garnish your wages or go after your personal assets, leaving your credit ruined, explained San Diego attorney Evan W. Walker. “In short, it can be devastating.”
Here are five scary liability claims that could haunt you long after Halloween has come and gone:
1. Swimming pool and spa injuries
If you own a swimming pool or spa, you can be held liable if you fail to take precautions to prevent drowning or other injuries. According to a report from the Consumer Product Safety Commission, there were, on average, about 5,900 pool or spa-related hospital emergency department-treated nonfatal submersion injuries in the U.S. each year from 2014 through 2016. There were 356 pool or spa-related drownings each year from 2012 through 2014 involving children under age 15.
2. Accidents in the home
Even if a person comes onto your property without your invitation, you can be held liable for their injuries if you’re judged to be negligent. In 2014, 20.2 million Americans, or one in 16 people, experienced an unintentional injury in the home that required aid from a medical professional, the Insurance Information Institute (III) reports.
3. Dog-bite claims
If you own a dog and it bites someone, you should be prepared to face a liability claim. Dog bites and other dog-related injuries accounted for more than one-third of all homeowners insurance liability claim dollars paid out in 2016, costing more than $600 million. The average cost paid out for dog bite claims nationwide was $33,230 in 2016.
4. Intoxicated guests
As a Halloween party host, you could be held responsible if you served a guest enough alcohol to become intoxicated and that guest caused injuries to himself or others.
Anyone who serves alcohol at a party needs to be very conscious of the risks, said Lisa Lindsay, the executive director with the Private Risk Management Association. “Should someone leave their party under the influence and injure themselves or others, [the host] may be named in a lawsuit,” she said. “Proper insurance coverage ensures there is coverage for defense costs and coverage for a judgment.”
5. Attractive nuisances
Homeowners have a legal responsibility to make sure their property contains no “attractive nuisances” that could interest and cause harm to children, but it’s hard to foresee all accidents. Each year about 50,000 children are sent to hospital emergency rooms because of injuries on home playground equipment alone, says the U.S. Consumer Product Safety Commission.
Other examples of attractive nuisances include untended construction sites, wells, drainage ditches, appliances that could trap a child inside, and trampolines.
Protecting your future
As people move into middle age and accumulate property and wealth, they can’t afford to play trick-or-treat with their assets. They typically have much more to lose than they did in their 20s. People who don’t have enough homeowner or renter liability coverage are taking a big chance, said Lindsay.
Adequate personal liability coverage “is an absolute must for everyone,” she said.
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