The first story in this two-part series ("Safe at Home, an Owner's Guide to Law and Liability," April 14) centered on what to do to avoid hazards in and around your home. But what do you do if someone is injured on your property?
First and foremost, do all you can to help--express concern, ask what injuries might have been suffered, make the victim as comfortable as possible, call for medical assistance, etc.
Do not, however, say anything to suggest or admit guilt or negligence. While it is natural to feel bad for the injured party and want to soothe any pain and suffering, as well as your own feelings of guilt, it is not a good idea to complicate your potential liability with such statements.
Rather, it's up to the law to decide who is responsible. Notify your insurer in writing (and speak to your attorney) as soon as possible, and don't talk with the other party or his attorney about liability until you have taken these steps. You may well decide later to offer to defray some medical bills for the injured party, but do this after you have had the chance to review the situation with a clearer head and the appropriate parties.
There is one other situation in which the law requires you to act. If someone has been hurt on your property or is in danger, you may have a legal duty to offer humanitarian aid even though you had nothing at all to do with the injury. For instance, a Minnesota cattle buyer became severely ill while inspecting a farmer's cattle. A court later ruled that the farmer had a duty not to send the man, who was helpless and fainting, out on the road alone on a cold winter night.
Given your potential liability, you are asking for trouble if you do not carry adequate liability insurance. Without adequate insurance, it takes only one person seriously injured by your negligence to generate a huge liability award and deplete your financial nest egg, not to mention your psychological well-being.
The liability portion of your homeowner's policy is designed to cover unintentional injuries on the premises and unintentional damage to other people's property--in other words, injuries caused by your negligence are covered but not injuries inflicted on purpose.
A typical homeowner's policy includes $100,000 of liability insurance, which won't go far if someone is severely injured. For a slight increase in premium you can raise that to $300,000 or $500,000, and some companies offer $1 million or more. The coverage includes harm caused by your children and pets, except intentional harm if the child is over 13. If your pet attacks people routinely, the insurer may cancel your policy or refuse to renew it.
Most standard homeowners' policies don't cover:
* Employees and clients of your home-based business, including the children in your home-based day care if you take in more than three children and have no special endorsement.
* Claims by one member of the household against another.
* Any disease you pass on to someone.
If you have a home-based business that involves people coming to your house, be sure to obtain a separate business rider. And if you have a swimming pool or other special hazard, check the policy provisions to make sure you're covered.
If you have domestic employees--even part-time ones such as nannies--you may be required to carry workers' compensation insurance, which costs a little over $100 a year. Workers' compensation sets limits on awards; if you don't have it, you could have to pay far larger damages. And there may be civil and criminal penalties if you don't carry it. Contractors working on your house should already have workers' compensation for their employees. You should ask to see proof of such coverage, and don't hire them if they don't produce sufficient verification or don't have adequate coverage.
What if someone gets so badly hurt on your property that the liability portion of your homeowners' policy doesn't cover your resulting costs? That's when you'd be glad to have an umbrella liability policy, sometimes called a "personal excess liability" policy. This would protect you in case of a big judgment that would quickly eat up your regular policy coverage.
These policies are relatively inexpensive because the insurers are betting you'll never need to file a claim. Their coverage takes up where your home and auto policies leave off, so to obtain one you have to have certain levels of basic home and auto liability insurance--generally $100,000 in liability coverage on your homeowner's policy and $250,000/$500,000 on your auto ($250,000 per person, $500,000 per accident; or sometimes $300,000 in single-limit coverage).
You also have to meet certain eligibility requirements, such as owning no more than four cars. If you've been convicted of driving under the influence of alcohol in the past three years, you are not likely to be approved for coverage.
Some umbrella policies pay the deductible amount that isn't covered by basic policies. Others impose a deductible, called a "retained limit," in certain circumstances. For instance, if your homeowner's policy doesn't cover slander or libel (most don't without a special endorsement), an umbrella policy with a retained limit might require you to pay the first $250 of a judgment for slander. The other kind would pay from the start.
Most umbrella policies don't cover injuries you cause with your motorcycle and certain watercraft, such as high-powered speedboats.
Your premium for the umbrella policy will be determined based on the number of houses, rental units and vehicles you own. If you have one house and two cars, a typical premium costs $100 to $150 for $1 million in coverage. You will get $2 million in coverage for only about $50 to $100 more in premium costs.
People usually determine their need for umbrella liability coverage not so much by how many hazards there are on their property as by the assets they have to protect. After all, the wealthier you are, the more you have to lose if someone is injured on your property. Some people buy $5 million in coverage, and some even take out umbrellas over their umbrellas. Consult your insurance agent for help in deciding what type and amount of coverage is best for you.
Adapted from the book "The American Bar Assn.'s Guide to Home Ownership." Copyright 1995 by the American Bar Assn. Reprinted by permission of Times Books, a division of Random House Inc.