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There are many exceptions to the rules, however, so check with an attorney. It's worth noting that some states have so-called homestead laws that can protect homes from creditors. You can even be forced to give up a portion of your future income. Add to that the value of your personal possessions like jewelry, cars, boats, vacation homes, rental properties, and savings, and the assets you need to protect probably exceed the limit of your homeowner policy. The median home price in 2009 was $173,500. Even $300,000 can disappear quickly in the face of a major lawsuit. Most homeowners, however, require more, says Bob Adams, a certified financial planner in Cupertino, Calif. If you own a very modest home and have few other assets, then that may be sufficient.
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Most homeowners insurance comes with liability protection, but it's usually capped in the $100,000 to $300,000 range. Tally Your Liability Needsīefore you shop around for additional liability coverage, determine how much you already have. You shouldn't require a rider for an infrequent house cleaner or babysitter, for example, but check the terms of your policies to be 100% sure. Occasional domestic workers-those who work less than 35 hours a week-should be covered under standard homeowner/umbrella policies. If your full-time nanny falls down rickety basement steps, you probably aren't covered, even if you pay her "off the books" in cash. They aren't likely to have their own insurance, and Brian Mittman, an attorney in White Plains, N.Y., says they may not be covered under yours either. Check before hiring them.įull-time domestic employees, such as housekeepers and nannies, are treated differently. Workers employed by a business, such as landscapers or gutter cleaners, should carry their own insurance, says Gustafson. How you should handle them depends on their status. People who work on your property normally aren't covered either. Riders, costing about $300 to $400 a year, are available for small home-based businesses.
#Umbrella policies driver
This is a business, and your home/umbrella policies probably won't cover you if the van driver gets hurt on your icy driveway. Bob Gustafson, a certified financial planner in Marlborough, Mass., offers the example of a van driver delivering yarn to a homeowner who makes extra money knitting sweaters and selling them on eBay. Other key exclusions for typical umbrella policies involve business activities. (Depending on how these were caused, your standard homeowner policy may cover these.) (Snowmobiles and golf carts usually are covered.) Liability arising from certain exotic vehicles, such as aircraft and jet skis.Damages expected or intended by the insured.While umbrella insurance is comprehensive, there are some exclusions, according to Travelers, such as: Lawyer fees when you have to defend yourself.Protection against slander, libel, wrongful eviction, or false arrest.An additional layer of protection for your vehicles, beyond your auto insurance.For example, if your dog bites a neighbor. Personal liability coverage for occurrences that take place off your premises.This includes what are called "attractive nuisances" such as swimming pools and trampolines. Personal injury or property damage caused by you, members of your family, or hazards on your property for which you are legally liable.Among what's commonly covered by an umbrella policy: While some of these don't relate directly to homeownership, umbrella insurance is in effect protecting your home, probably your biggest asset, from an unfavorable lawsuit stemming from just about anything.
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Travelers, a provider of umbrella insurance, lists items generally covered in an umbrella policy. Umbrella insurance offers the advantage of extending the liability protection on your home and auto policies. An idle remark can get you sued for slander. Increasing the liability limits on your homeowners insurance can help, but homeowner liability extends beyond the property line. The key to making a decision about whether to purchase an umbrella policy is understanding what's covered by umbrella insurance and, equally importantly, what isn't. Umbrella insurance is designed to take over when your homeowners insurance reaches its liability limits. Lose the lawsuit and you could lose all of your assets, including your home.
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If a houseguest slips in the bathtub, you could get sued. But you also need to think about protecting your home against something equally dangerous: a lawsuit. Homeowners insurance protects you if, say, a fire burns your house to the ground.