Coverage guide · liability

Liability: the part of the file that answers to somebody else

Every other coverage on this site is bought to put the household back where it was. Liability is bought for the opposite purpose — to answer a claim made by a person who is not in the household at all, on a day nobody planned. Its limit is therefore the one number on the file that is chosen for somebody else’s benefit.

Coverage E, and the defense that normally comes with it

Inside a homeowners policy, the California Department of Insurance describes Section II as the liability half, and Coverage E as personal liability: this section will provide coverage in the event you, or a resident of your household, are legally responsible for injury to others. It adds a second element that is easy to overlook next to the limit — Coverage E normally provides a defense and will pay damages, as the insurance company deems appropriate. The qualifiers are the Department’s own: normally, and as the insurance company deems appropriate. The exceptions and the specific language, it says, are in your policy.

Medical payments, and who it deliberately leaves out

Coverage F sits beside it and does something different. It pays for reasonable medical expenses for persons accidentally injured on your property — the Department’s example is a neighbor’s child hurt while playing in your home. The exclusion is the part worth memorising: medical payments coverage does not apply to your injuries or to injuries of those who reside in your household, it is not a substitute for health insurance, and business activities are excluded as well. It is written for people accidentally injured on your property who do not reside in your household.

Where the promise stops

The Department is direct that the liability coverage will not protect you in all situations, and the example it gives is an intentional act. Personal liability, in the Department’s licensing description of the line, protects the insured against claims alleging that a property owner’s negligence or inappropriate action resulted in property damage or bodily injury to another. Negligence is the territory that description names; an intentional act is the Department’s own example of where the promise stops.

The same question, on the road

An auto policy asks the household the identical question and answers it with its own numbers. Liability coverage there helps pay for injuries or damage that you cause to others, and does not pay for injuries to you or the people in your household. California’s statutory minimum answers with three separate numbers: $30,000 where a single person is killed or injured; $60,000 as the total available where more than one person is killed or injured in the same accident; and $15,000 for damage done to property belonging to other people. Above them, the Department states the consequence without qualification: you will be responsible for any damage you cause beyond the limits purchased.

Asked directly whether a household should carry more than the minimum, the Department declines to prescribe. What it offers instead is a reason to think about it — you may want higher liability limits than the law requires, since in general, the more assets you have, the more you could lose in a lawsuit — and then sends the question itself to an agent, broker, insurance company or financial advisor. This page sends it to the same place.

Umbrella and excess limits over what is already in force

Where a household concludes that its home and auto limits are the exposure rather than the answer, the Department’s own description of the line is the place to start. An umbrella or excess liability policy is written to provide excess limits over existing liability provisions that a customer may have, such as automobile, homeowners, liability and watercraft policies; it may provide additional coverages not provided by the underlying policies, and it is available in both personal and commercial forms. The words that govern are “over existing”: an umbrella is built on top of underlying policies, so the limits underneath it are part of the design and not a detail to be settled later.

What none of this can do is tell a particular household what figure is enough. The Department sends that question to an agent, broker, insurer or financial adviser, and so does this page. What it can do is make the question precise: which limits are in force today, on which policies, and what sits above them.