As an overlooked piece of a Canadian homeowners' policy, liability stands out as one of the least expensive, yet necessary coverages offered by insurers. Because premiums for liability only cost pennies on the dollar, many property owners might discount liability insurance, believing that the odds of using the protection are slim. However, homeowners who pursue certain activities and possess common items or pets might want to rethink that stance.
What is Liability Insurance Used For?
The Insurance Bureau of Canada (IBC) reported that nearly 10% of all insurance claims incurred in Canada in 2016 were the result of personal liability. In those cases, a property owner acted with some degree of negligence, causing another party injury—physical, financial or reputational. With a one-in-ten chance that some misstep may threaten your own financial well-being, maintaining an adequate liability insurance should figure into your strategy.
Why Do You Need It?
Subscribe to the age-old theory of anything that can happen, will happen. Even the most well-intentioned homeowners can't account for every possible hazard on their property or beyond. As such, most home insurance policies are purchased as a package and contain a base level amount of liability coverage, usually $1million. A prudent plan involves using net worth as a guide to calculate how much coverage you need. If the homeowner would feel more comfortable coverage can be increased to $2 million for a relatively small fee.
A patch of ice or a driveway chuckhole could be the culprit behind vast medical bills and income loss for an aggravated neighbour or stranger. Thus, settling for minimum coverages could have you digging into your own financial reserves to make that party financially whole again. Aside from physical injury, if something from your property blows over and causes damage to your neighbour's property, liability insurance has you covered as well.
How Can You Prevent Claims?
You can't foretell or safeguard against every eventuality but you can take steps to minimize risk. Dog bites account for many homeowner claims, and insurers typically disallow certain breeds on the premises. Despite your love for dangerous pets, know that damages from a bite by a Presa Canario, for example, will likely be excluded from coverage, unless you find a company willing to accept the risk. Some insurance carriers require locked gates and fencing surrounding pools. But those measures, while smart, only go so far. You can take it one step further.
Consider motion-activated cameras around outdoor activity centres that present potential hazards. These devices can alert you to the presence of a child or trespasser who might suffer injury on the property. If no one is home, you could ask a neighbour to intervene. Posted signs containing disclaimers won't stop an individual from stepping on your property but those warnings do show the legal community that you've taken extra precautions to warn wandering individuals. As for the canine conundrum, consider opting for a Dachshund rather than a Doberman, and you should be okay.
You don't have a crystal ball but accidents do happen, and homeowner liability insurance will protect you from financial fallout in an unfortunate claims scenario. Heed the advice of your insurance company and take reasonable care to prevent accidents, and go the extra mile when possible. Kanetix.ca is an excellent resource to compare home insurance quotes and for learning more about how increased liability coverage impacts premiums.